Online Marketing at Groupon Company - Research Proposal Example

Online Marketing Proposal of Table of Contents Introduction 3 Industry Overview 3 PEST analysis 3 Online Marketing Solutions 5 Implementation 6 Conclusion 7 References 8 Introduction Groupon is an online global leader of local commerce which brings buyers and sellers together. The company offers attractive deals and discount on almost anything, starting from consumer goods, food items, restaurant services, holiday packages and hotel bookings. The company helps to increase the footfall of the merchants and at the same time allows the customers to have attractive value propositions. Groupon was introduced in the year 2008 and is headquartered in Chicago. The company operates in the online deal industry and is currently holding the leadership position. Groupon operates in more than 500 marketplaces and in over 48 nations (Roberts, 2013). This paper is based on the online marketing proposal of Groupon and the marketing activities of other players in the industry. It will also encompass the discussion of implementing different strategies proposed and how it will help the company to further improve its business. Industry Overview Groupon operates in online deals industry, where subscribers can browse through hundreds of deals and discounted offers across thousands of products and service categories. The company operates as an E-commerce firm, but its business partners who offer the deals are from a wide range of industries. The company acts as a business broker that helps other business houses and respective customers to come together under a common roof and conduct their business activities. The online deals industry runs on the commissions gained from the merchants whose business is highlighted in the website of Groupon and other similar sites (Rueter, 2012). This business model is relatively a new one and is currently at its growth stage. This as a result increases the future prospects of this sector. Moreover, over the recent years, the rise of popularity of online shopping has resulted in the expansion of E-commerce at a global perspective. This as a result has attracted the customers to look out for best deals online and at the same time, it has also allowed them to get acquainted with new products and services. PEST analysis Political Economic The political relations with the US and other host nations may influence the market expansion of Groupon. The unstable relationship between the US and the Middle East countries can pose a challenge for the companies to enter in that region. The aftermath of the economic crisis has compelled the customers to seek out for discounted purchases (The Economist. 2013). This as a result increased the popularity of the online deal sites. Social Technological The rise of online shopping and use of internet has helped companies like Groupon to increase its customers base by reaching out to a wider audience by utilizing the high popularity of online search for discounts. Since companies like Groupon are largely dependent on the online presence, so the technological availability of a nation largely dictates the success of the E-commerce companies (Internet World Stats, 2015). The countries with the highest internet usage and popularity are most likely to prove to be lucrative. Rueter (2012) mentioned that the online deals industry will grow at a fast pace over the coming years. It has been predicted that the overall spending on deals and coupons will increase from $3.6 billion in 2012 to $5.5 billion in 2016. This suggests that this industry have a high attractiveness owing to its rapid growth and future prospects of E-commerce. This in turn has attracted several firms to enter in this industry, such as Living Social, Saveology, Kgbdeals, Buywithme, etc (Moreau, 2015). These firms operate in almost similar fashion and offer deals and discounts to the customers. Despite of the fact that they operate in the same industry, each of them has a different business models that allows them to create a differentiation among the others. Living social is the biggest rival of Groupon. Living Social offers daily deals to the customers via mail and most of the deals are from the local dealers or retailers. The company offers the deals at a certain price and they also provide referral program that allows the customers to share the deals to their friends and peer. If the person to whom the link has been referred to makes a purchase then that deal becomes free for the referrer. The company offers deals that may yield discounts up to 90% in products and services in the nearby locations of the customers (Moreau, 2015). The business structure of this company is almost identical to that of Groupon, which as a result leads to strong rivalry between the two companies. Saveology on contrary offers a more streamlined and narrow value propositions for the customers. Unlike Groupon and Living Social, Saveology offers deals, discounts and gift vouchers via email on satellite television, cable services, home security and telecommunication and internet services. The discounts are offered across a wide range of telecommunication and satellite broadcasting services and the discounts mostly range from 50-90%. However, Saveology is limited to only 28 cities of the US (Moreau, 2015). Buywithme offers identical services like Groupon. The company offers deals from local merchants and retailers by leveraging the bulk buying power (Moreau, 2015). The company is able to conduct business deals of bulk purchase by channelizing the foot fall of the customers to their business partners. Buywithme only operates in the US and Canada. The company also offers the free referral schemes which provides free deals on sharing them. The online deal industry is relatively narrow than other e-commerce sectors, but it has proved to be quite lucrative for the firms and the business partners. The business model used in this sector relies on the B2B transaction. The companies offering deals make business collaborations with retailers, where companies like Groupon offers higher market exposure and brings them closer to the customers and in return, those retailers offers high discounts to their business partners. The companies also offer a portion of their sales to the firms offering deals and discounts (Edelman, Jaffe & Kominers, 2011). The deal offering companies also generates a portion of the revenue from the customers by selling discounted offers, gift vouchers and coupons. This rise of internet usage and the increasing dependence on online shopping have compelled the customers to look for discounts and deals over several product and service categories. Companies like Groupon and Living Social has recognized this need and has created a business model that offers value proposition for both buyers and sellers. The increasing competition in the industry has posed a significant challenge for the existing companies that are dependent on a single streamline business model. Roberts (2013) have mentioned that the Groupon has made a series of mistakes and as a result of those bad decisions; the company has face severe downfall in its share prices and its valuation as well. The author also mentioned that the downfall of the company has caused out of the myopic vision of the company. It has been stated that the company has focused only on the customer acquisition and got distracted from its long term goals of customer retention. Although acquiring new customers is crucial to the development and expansion of the business operations, but the company must have a proper balance between its long term and short goals (Hughes & Beukes, 2012). Therefore, in order to improve the business operations of the company, it must implement certain business strategies that will help the company to regain its former glory. In the following section, different marketing solutions have been discussed which can help Groupon to improve its business operations. Online Marketing Solutions Groupon is currently holding the leadership position in the industry and holds significant brand awareness among the customers. It has managed to create a good corporate image as one of the most successful entrepreneurial company. However, due to the myopic vision of the company, the financials of the company has suffered severe downfall. In order to increase its financial performance, Groupon needs to improve its customer retention strategies (Kiang, Raghu & Shang, 2000). The company can devise strategies like social media marketing and implement CRM systems to improve the long term relationships with the customers. In order to further increase its customer base, it needs to implement new branding strategies by collaborating with the business partners. This can be achieved by opting for a co-branding strategy. The increase in internet usage can also be leveraged by the company by promoting its brand and service offerings through internet advertising. Since, the business model of Groupon is mostly dependent on the B2B relationships, so it is imperative for the company to maintain a good relationship with the existing business partners and at the same time gain new ones (Gurau, 2008). This can be achieved by offering more value for money for the business customers through banner ad slots on group on sites. This as a result will not only increase the overall exposure of the partner companies but at the same time Groupon will also increase its revenue generation from the advertisements in their websites. The company can also increase its brand awareness by implementing the search engine based ads, which is more cost effective than any traditional advertisements like television commercials or print media. Thirdly, Groupon can also improve its business activities by expanding its online presence and conducting geographic diversification in more nations by merger and acquisitions of existing firms. This can prove to be lucrative strategies for the company for improving its financials in the long term basis. The company can also enter in the online retail segment by creating a joint venture with one of the major online retailers, this as a result will help the company to increase its product and service portfolio thereby increasing the customer base of Groupon. Implementation The proposed strategies mentioned above needs to be properly implemented by the company in order to improve its business operations. Firstly, the company needs to implement a robust marketing communication strategy in order to create brand awareness and at the same time make a top of the mind brand recall and higher customer preference. This can be achieved by leveraging the social media marketing strategies. The rise in popularity of social media can prove to be lucrative for Groupon, owing to the access to a large number audience. Social media marketing will also allow the company to closely monitor the consumers’ behavior and at the same it will also be able to make close communication with them. Social media marketing is quite essential to keep constant communication with the customers, as it helps to retain the old customers and gain new ones. Advertising on social media is quite hassle-free. The company can choose most popular social media websites like Facebook, Twitter and Facebook and then create its own personalized page. This page will help the company to make a close communication with the customers and at the same time it can also advertise the upcoming deals and discounts. Social media services can also be used for cost effective advertising (Kiang, Raghu & Shang, 2000).Websites like Facebook and Twitter offer banner ad slots that can help the company to reach a particular target customer of a particular geographic location or with a particular product and service preference. Maintaining a good customer relationship is essential for Groupon so that it can retain its existing customers and maintain a steady cash flow for the company. This can be achieved by implementing robust CRM (customer relationship management) software, which will help the company to track its existing customers and business partners and at the same time it will also help the company to be able to meet their needs in a better way. Groupon not only needs to regain itself to its former glory but at the same time it also needs to acquire new customers. In order to do so, developing good brand awareness is necessary. This is quite imperative for the company in terms of its long term survival. The company can opt for co-branding strategies with its business partners. The business collaboration terms can be set in such a way that the business partners such as retailers, restaurants or other service organizations will use the branding of Groupon in their establishment. This can also be implemented by the online retailers as well. The online E-commerce websites which are in business collaboration with Groupon can be leveraged by the company to publish its logo and link to its official website. This will not only increase the brand awareness of Groupon but at the same time it will also help to increase the perceived value and credibility of the company. Since, traditional media advertisements are quite costly, so the company must focus on the more cost effective options like the online advertising such as banner ads on popular websites, video ads on YouTube, etc. This will eventually help to draw more customers for the company. The business model of Groupon is limited and dependent on only one business operations. In order to ensure sustainability and long term growth, Groupon needs to ensure that it can offer a wide range of service offerings. The industry overview clearly suggests that the existing rivals in the industry are offering almost identical services and deals. In order to create a firm differentiation, the company has to delve into new business ventured by making vertical integration or horizontal diversification. The vertical integration can be conducted by taking over smaller online retailers and expand its online presence and business structure. This will facilitate the company to not only offer deals and discounts, but at the same time it can also sell products and services (Cravens & Piercy, 2008). The company can also consider entering the telecommunication and satellite TV deals business. The rise in telecommunications sector along with the rise in internet usage can prove to be lucrative for the company to enter in the telecommunication deals business. Over the coming years, the company needs to expand its business into the E-commerce industry and widen its reach in terms of geographic diversification and also in terms of its business portfolio. Conclusion Groupon is currently holding the leading position in the online deals market. It has created a robust platform for the retailers to have access to a wider customer base and at the same time it has also increased the overall bargaining power of the buyers. This as a result has allowed Groupon to create a wider customer base of both B2B and B2C customers. However, the sole focus of the company was in the short term goals of customer acquisition, this as a result led to poor customer retention and revenue leakage. The online marketing proposal discussed in this paper will help Groupon to rejuvenate its former glory. The overall brand image of the company needs to be improved so that the customers have a high brand recall when making their purchases of deals and gift vouchers. This can be achieved by implementing a proper social media marketing to address the needs of the customers and by implementing a CRM system in order to meet the needs of the customers and business partners easily. The company also needs to create good working relationships with its business customers, which as a result will allow Groupon to implement co-branding strategies. These proposed ideas discussed in the paper will help the company to improve its sustainability and increase its competitive advantage. References Cravens, D. & Piercy, N. F. (2008). Strategic marketing. New York: McGraw-Hill. Edelman, B., Jaffe, S. & Kominers, S. D. (2011). To groupon or not to groupon: The profitability of deep discounts. Marketing Letters, 1-15. Gurau, C. (2008). Integrated online marketing communication: implementation and management. Journal of communication management, 12(2), 169-184. Hughes, S. & Beukes, C. (2012). Growth and implications of social e-commerce and group buying daily deal sites: the case of groupon and livingsocial. International Business & Economics Research Journal (IBER), 11(8), 921-934. Internet World Stats. (2015). Internet Usage Statistics. Retrieved from http://www.internetworldstats.com/stats.htm Kiang, M. Y., Raghu, T. S., & Shang, K. H. M. (2000). Marketing on the Internet—who can benefit from an online marketing approach? Decision Support Systems, 27(4), 383-393. Moreau, E. (2015). Groupon Competitors: Sites Like Groupon. Retrieved from http://webtrends.about.com/od/socialshopping/tp/Groupon-Competitors-Sites-Like-Groupon.htm Roberts, G. (2013). What You Need To Learn From Groupons Unprofitable Business Model. Retrieved from http://www.businessinsider.com/lessons-from-groupons-business-model-2013-3?IR=T Rueter, T. (2012). Daily deals are big business for online merchants. Retrieved from https://www.internetretailer.com/2012/09/26/daily-deals-are-big-business-online-merchants The Economist. (2013). Crash course. Retrieved from http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article Read More