Assignment 6.3

654 words - 3 pages

Jones International University

Case Study — Groupon vs. LivingSocial: Coupon Wars

Assignment 6.3

Instructor Terry Miller

BBA304

Marketing Management

By Daniel Rhodes

Kabul, Afghanistan

July 12, 2014

Groupon vs. LivingSocial: Coupon Wars
After reviewing our course material this week and reviewing the case study, I believe LivingSocial is using the Sales-Oriented Pricing Objectives approach. With this approach, LivingSocial is looking to maximize sales in the particular bargain shopping market share and increase sales maximization. The overall goal is to increase visibility of small business products and services and reach new patrons (Lamb/Hair/McDaniel, 2014).
From my research, I do not think that this type of marketing will benefit a business with regards to a permanent consumer base. The short term benefits would be attracting more customers, advertising for your business, short term increase in inventory sales with increase in ...view middle of the document...

To answer if I would use this in my business, the answer is no. I have a friend who owns a deli and I asked him about whether or not he would use this service to advertise his business. Hi reply was he used Groupon to initially advertise his business, thinking it would be a great way of improving his market share by bringing in new customers. It brought in more foot traffic, but consumers were just using the coupons, not buying extra merchandise. He still felt it was an ok turnout from the campaign.
Because of the increased foot traffic, he asked for another campaign run through Groupon, but this time realized almost a zero turn on his investment. He said he noticed that the customers who come in were already his customers. Instead of acquiring new customers, he ended up taking a loss with the existing customers, who would loyally pay full price because they like the deli. After the turnout, he emailed the Groupon salesperson and stated he did not want to proceed with another campaign.
Companies selling coupon campaigns do not make financial sense for businesses which need to advertise, the businesses usually ends up losing money. With the amount of information I reviewed, I would say the only time I would push for any type of coupon campaign is if I had a going out of business sale. This would help in moving inventory and would cover the tremendous outlay of cash the business has to provide in order to have a company like LivingSocial or Groupon run a marketing campaign (Gibbard, 2011).

References

Lamb, C. W., Hair, J. F., & McDaniel, C. D. (2014). Chapter 19: Pricing Concepts In MKTG 7 (7th ed., pp. 327-328). Mason, Ohio: South-Western.

Korhan, J. (2011, June 13). Why Groupon is Bad for Small Business. Retrieved July 12, 2014, from
http://www.jeffkorhan.com/2011/06/why-groupon-is-a-bad-for-small-business.html
Gibbard, J. (2011, August 17). Considering Offering a Groupon? Read This First. Retrieved July 12, 2014, from
http://www.socialmediatoday.com/content/considering-offering-groupon-read-first
Cengage Brain, Inc. (2014) Chapter 19 Case Study: Groupon vs. LivingSocial: Coupon Wars. Retrieved July 12, 2014, from
http://college.cengage.com/coursemate/marketing/lamb_9781285092508/student/cases/chapter_cases/mktg7_ch19_se_cases.pdf

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