The Groupon Case Study
Groupon's Success and Programmed Decisions
Groupon's founder, Andrew Mason, made two choices that significantly increased the success of his business. One option entailed introducing the idea of the coupon expiration date. After being made available for a short time, the coupons were set to expire. The coupon might also be canceled if it failed to draw the minimum amount of customers anticipated. One could say that the two options are predetermined. According to Pettigrew (2014), a programmed decision is one that has been encountered in the past by a business entity, is well structured, and may be repeated in the company's future ventures.
Additionally, the said decision is based on readily identifiable factors and can be incorporated in a standard process. Introducing an expiry date on a discount imposed on a product is a strategy that has been adopted by many business entities over the years. Moreover, setting the minimum number of people to access a coupon, is a tradition that continues to be utilized by many business establishments. Therefore, the two decisions made by Andrew Mason are programmed because they have been adopted by numerous business organizations all over the world and he kept applying them in his bid to secure top position in the online market.
Impact of Coupon Expiry Date on Groupon's Success
The two decisions were undoubtedly the right move for the prosperity of Groupon. This argument is valid in the sense that those decisions were vital to realizing Groupon's dominance in the online Coupon market. Introducing an expiry date on a coupon increases the motivation of a consumer to purchase. Buyers have a high tendency of redeeming coupons as the expiration date approaches to avoid economic losses. This phenomenon, in turn, increases the number of customers shopping for the discounted product within a short period. According to Danaher (2015), expiration dates on coupons temporarily limit the financial liability incurred by a business owner upon issuing the incentive. Therefore, Mason's strategy of coupon expiration date was the reason behind the increased number of registered users, two years after Groupon's inception.
Minimum Number of Buyers Strategy by Andrew Mason
Andrew Mason's strategy of introducing the minimum number of buyers to access a coupon can be perceived as both a business strategy and a creative strategy. This argument is undoubtedly correct because a minimum number of people introduces a collective buying power, where a business owner acquires the guarantee that enough customers will purchase the coupon-imposed products and still realize a profit (Edelman, 2016). This argument fulfills the business perspective of the strategy. From a creative point of view, setting a limit to the number of customers to be attained before allowing a coupon to be redeemed necessitates interested buyers to look for interested parties to be able to access it. In the process, new customers are acquired, and the financial liability associated with the coupon is scaled down.
Decisions for Launching an Online Coupon Business
For a person considering to launch an online coupon business, several decisions would determine the success of the launch. For example, the interested party should decide which format of the coupon to adopt. There are three basic formats namely; image coupons, web-based coupons, and text-only coupons. Image coupons, for instance, are best when utilized on social media, emails, or on Multimedia Message Service. Web-based coupon, on the other hand, can be created in HTML and put on a website while a text-only coupon is best for texts and emails (Pandey, 2017). The interested party should also decide which method to use to reach the customers wanting the coupon. For instance, the individual can either place the voucher on a high-traffic page accessible with a mobile phone or can use the text-messaging provider to deliver a text-only voucher to the permitted list of customers. The above decisions are crucial to launching an online coupon business organization, competent enough to compete with Groupon among other coupon entities.
References
Danaher, P. J., Smith, M. S., Ranasinghe, K., & Danaher, T. S. (2015, September). Where, when, and how long: Factors that influence the redemption of mobile phone coupons. American Marketing Association.
Edelman, B., Jaffe, S., & Kominers, S. D. (2016). To groupon or not to groupon: The profitability of deep discounts. Marketing Letters, 27(1), 39-53.
Pandey, N., & Maheshwari, V. (2017). Four decades of coupon research in pricing: Evolution, development, and practice. Journal of Revenue and Pricing Management, 16(4), 397-416.
Pettigrew, A. M. (2014). The politics of organizational decision-making. Routledge.
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