Decision Making Analysis in Daily Deal Sites - Case Study Example

DECISION MAKING ANALYSIS IN DAILY DEAL SITES By Student’s Name Code + Name of Course Professor/Tutor Institution City/State Date Decision Making Analysis in Daily Deal Sites The acceptance of daily deals sites offering discounted local product or service has been on the rise. According to BIA/Kelsey, the spending of Americans on flash sales, daily deals, and instant deals is expected to hit over $ 4.3 billion in 2015 (Edelman, Jaffe & Kominers 2011, pg. 2). Bargain-a-day websites such as Google Offers, LivingSocial, Groupon and KGB deals provide daily new deals with varying magnitudes. In these sites, consumers click to obtain a coupon good for a deal, which is greatly discounted on a local or national service or product. In most cases, the offers are valid for one or two days or even less than a day. Boutiques, and bakeries, stores and spas cafes and clothing companies have exploited deal sites to lure new consumers who would not otherwise have considered buying them. Of these deal sites, Groupon has the widest reach and fastest growth with 143 million emails in its universal database and numerous participating merchants in over 40 countries (Hughes & Beukes 2012, pg.922). Its rival LivingSocial often gives deals on “social experiences” like travel destinations and restaurants and is expanding steadily in the UK, the US and Canada. Since Groupon's start in 2008, the consumers purchasing them and the retailers offering the deals have learned many lessons (Hughes & Beukes 2012, pg.922). Daily deal sites continue creating a different kind of value and they pursue providing the best consumer experience. By offering deals, which are not available everywhere, businesses can stimulate mass consumer demand within a short time period. This essay assesses the consumers’ choices towards the deals, how the deal sites can influence their marketing in certain regions, and the role of variety seeking in influencing the consumer’s decision to use the sites. This essay also assesses whether a business can lure customers from a competitor by offering great discounts. How Customers’ learning Choices Affect their Subsequent Decisions of Using Deal a Day Sites Daily deals sites clearly bring benefits to both customers looking for discounts and businesses attempting to reach new customers. People are exploiting daily deals sites to try new places and services, and businesses are productively leveraging them to generate repeat business and connect with their clients beyond one discount. In most times, satisfaction with deals normally stimulates consumers’ decisions regarding their future purchasing decisions. According to a Consumer Search, Daily-deal sites such as LivingSocial and Groupon and LivingSocial maintain earning buzz (Liu & Sutanto 2012, pg. 84). The experience of great discounts and subsequent savings of money is what motivates these customers to opt for future repeat purchases. According to a survey documented by Tuten and Ashley (201, pg. 16) in their Small ‘Business Institute Journal,’ sentiments by customers towards Daily deal sites is decidedly positive, with consumer participation, interest, and participation being high. Businesses are also stimulating repeat visits because of the discounts offered by these sites.  When consumers learn about the idea that they are going to reap benefits if they manage to get their friends to join the daily deal sites, it will affect their subsequent social buying experiences. Energized by collective buying, several daily deal sites comprise social inducements with the offer to stimulate sharing. For example, Groupon, necessitates a set number of participants to buy the deal before it is ‘on.’LivingSocial provides the deal for free to its consumers if they get three of their friends to purchase it. Facebook Deals lays less focus on the deal and more on attracting friends together to the business site to obtain the discount. Once a customer learns that they will earn more discounts by bringing more friends, they will most likely change their decisions to purchase (Norton et, al. 2012, pg. 522). Once the customers are satisfied with the daily deal offers, they are likely to subscribe to these sites in order to stay in the know so that they never feel like they are missing a deal. Some sites offer restricted deals to their members only. For example, Gilt City does not have a minimum number of contributors needed for a deal to be “activated.” Rather, it offers limited volumes of deals from local events and businesses only three times weekly. Unlike other rivals, it uses deals for access to secret places, exclusive happenings, and even and wide ranging wedding for $30,000. This stimulates its consumer’s subsequent decisions to come back just to experience what is next. Research by Byers, Mitzenmacher and Zervas (2012, pg. 544) shows that deals for redeeming coupons are very satisfying and thus, many consumers venture to discover local businesses, which they were not aware of and this is highly likely to lead to repeat purchases. Most customers who have redeemed a deal voucher from a site will subsequently return to the site. Aaker and Kumar’s research (2008, pg. 42) asked various respondents about their general personal feelings about daily deal sites. More than 25 % of these respondents believed that not many deals appealed to them. How Daily Deal Sites Affect the Places of Acceptance for Their Products and the Implications to Marketers Daily Deal sites differentiate in numerous ways-revenue, strategy, and audience. Thus, they apply different strategies to influence the zones of acceptance for their products. The two largest actors in the daily deals sphere are LivingSocial and Groupon. Whereas Groupon has more consumers and generates more income, LivingSocial has a bigger presence in metroregions (Srinivasan, Anderson & Ponnavolu 2002, pg. 42). Smaller daily deal businesses are focusing on diverse strategies, such as establishing a niche audience by interest and places. Daily deal sites ensure the acceptance of their products to their consumers by providing greatly discounted price for particular categories of products (Campbell & Diamond 1990, pg. 26). To scale up the acceptance of their goods, these sites seek to attract mostly new consumers to their product categories. In order to influence the acceptance of their products, the deal sites cause traffic spikes, in influencing the experience of customers. To ensure the acceptance of their products, daily deal sites maintain high levels of services during their peaks seasons. For example, restaurants may limit their offer to weekdays, hairdressers /spas can schedule appointments for non-peak times and gyms can fill classes, which will occur anyway. Businesses seek to influence the acceptance of their products by successfully luring new clients in new areas and initiating repeat purchases in their old locations. In order to sell at a particular zone, the businesses usually develop a plan for attracting new clients such as considering the provision of an inexpensive giveaway (Dholakia 2011, pg. 13). In most cases, daily deal sites develop new approaches to marketing in order to ensure their businesses grow. For their goods to be accepted by new customers, daily deals sites influence the zones of acceptance for their product categories by creating platforms or services, which most accurately intercept customer impulse – either through content curation or through technological innovation (Hoffman & Novak 1996, pg. 50). Personalization, real-time, and mobile technology influence trends in these areas. Given the nascent market operated by daily deal sites, brands will comprehend the value that daily deal platforms can have to their businesses through experimentation. Marketers cynical of the value of daily deal sites can still learn from their excellence in order to stimulate the acceptance of their products to new markets. For instance, marketers can establish their own deals provided on their site or Facebook wall, make offers, which increase in worth the more they are shared, and exploit other kinds of social commerce. Implication for Marketers The success of daily deal sites across different areas suggests that marketers should include daily deal offers in their product promotional mix. Research shows that the daily deal market still has a lot of room to develop. Many people have exploited daily deals offers and what is even more inspiring is the number of clients who show happiness with their daily deal purchases, with many of them pointing out that offers provide exceptional value for their money. With numerous happy customers and with the immense room to grow, the daily deal market is poised to lure more consumers. Given that deep discount is a big draw, research by Campbell and Diamond (1990, pg. 27) establish that about 40% of users believed that they saved a lot of money through the daily deal sites. Moreover, many daily deal site consumers indicate that they have considered pursuing new activities because of discount offers. The daily deal market shows no indications of slowing down, and if marketers could give great deals, which provide new experiences to users, this kind of promotion can positively help acquire new consumers. Despite their popularity, daily deal sites should exploit the platforms sparingly to protect their brand. This is because the promotion of services and products on these sites could also tarnish their brand image. Some firms can damage their reputation by advertising too much through these sites. The occurrence of daily deal campaigns and the offer itself can influence brand perceptions. Engaging customers through social media, surveys, or insight communities can be a great way of gauging how regular a company’s brand should exploit daily deal sites. Moreover, using sites with high rates of satisfaction (for instance, LivingSocial), can assist marketers to ensure better customer experience and assist protect their brand. Brands can gain from daily deal sales in the long term only if consumers turn into loyal or repeat customers. According to Dholakia (2011, pg. 16), in general, brands are inadequate for this task. About 31% of men and 18% interviewed in the UK interviewed said they felt that they were treated poorly as users with vouchers. If the users of a site have bad experiences, a site’s promotional investment will be fruitless. More significantly, the promotion can flop if these users spread to their friends concerning their bad experiences. Providing a good experience can also stimulate repeat visits, more referrals, and augmented long-term loyalty. Therefore, it is crucial for marketers to work alongside customer-facing teams to guarantee high service standards. Marketers should learn about their user’s attitudes towards deal-a-day sites. Businesses need to ask themselves these questions; what kinds of daily deal offers are highly likely to be purchased? Why do clients consider daily deals as attractive, and how do they identify the deals to start with? What kind of experience do they anticipate from brands after buying them? Most critically, how can a business get people coming back after they have redeemed their vouchers? These queries can only be addressed by asking the site’s customers (Hoffman & Novak 1996, pg. 51). A two-way conversation with clients can assist in guiding the decisions of the business not merely about the use of deal-a-day sites, but also assisting in informing critical decisions in all facets of marketing efforts. Retaining an online insight community of users can assist in keeping track of the attitude people have towards daily deal sites as well as the kind of experience they come to anticipate from brands. Most people are looking for good deals, and, therefore, similarly to other promotional tactics, marketers ought to pause quickly and consider their customers before venturing in this business. Expectations by Marketers Clients from Competitors Will Shift if they Offer Great Discount Prices The idea of daily deal sites appeals to avid online purchasers. Many consumers subscribe to more than one site. Therefore, a customer has an option of making purchases online from a brand’s competitor. For customers who have subscribed to different sites, provided a huge discount, the consumer would switch to a different brand (White 2015, pg. 26). The decision behind this move is that most consumers buy daily deals because they are afraid of missing any special deal, suggesting that numerous consumers buy the daily deals because they like receiving what they consider as daily deals. With many email alerts from the many businesses the clients have subscribed to, the consumers have an easy choice of receiving an instant deal from a competitor by the click of a button rather than spending hours going through coupons. An article by Kimes and Dholakia (2011, pg. 23) posits that the lure for consumers to competitors is the lower prices offered. More and more users are taking these offers because of the deal they are receiving as opposed to loyalty. Groupon sells businesses’ promotion by showing many people an incredible bargain associated with a particular brand. It gets people into the business, but it cannot keep them there. Most sites give exposure by boosting a blog, website, or social media traffic, leading to more likes, signups, and likes. The social buying scene has grown highly competitive and it is estimated that there are more than 200 social site clones in America alone (Ayadi, Giraud & Gonzalez 2013, pg. 274). Minimal startup costs and low barriers to entry have led to the increased number of competitors in the space of the buying group. Competitive pressures in the discounts offered are likely to change the loyalty of customers to some sites. In addition, consumers who finish using their discounts may never be full-price shoppers. According to Beiles et. Al, (2012, pg. 47), a managing partner at Rose Tech Ventures, an angel investment fund in New York, it is not clear whether the model will legitimately work out for the marketer because people who are always looking for discounts are typically not the type of life cycle consumers that a business may rely upon. There are numerous concerns on low incidences of repeat business from new customers because of the availability of more greatly discounts by consumers. A survey by Lieb (2012, pg. 49) interviewed about 400 merchants about their experiences pursuing daily deals with Groupon, LivingSocial and other providers found that the discounted deals space is characterized by a lack of loyalty from customers, low barriers to entry and have recently experienced heightened competition. Business models of day deal sites are easy to replicate. This has proved, as a major danger to Travelzoo Local Deals as the replication has bred a large number of deal-founded clone sites, which provide related discounts to subscribers (White 2015, pg. 27). Travelzoo competes with firms like LivingSocial and Groupon, which also sell vouchers for deals from indigenous businesses like restaurants, spas, and activity firms. Nevertheless, Travelzoo, contend that their model will be very hard to replicate owing to its aggressive deal quality canons. Still, there is more room for overlapping in the nature of deals provided across firms. This normally tends to minimize user loyalty because consumers will ultimately use a platform, which offers the best value. Ayadi, Giraud and Gonzalez (2013, pg. 276) add that businesses like Gilt Groupe offer great discounts, but, ultimately, the high-end products, which are showcased for a portion of their retail price still need some changes. It has been realized that people who buy those deals are not the unemployed or the underemployed, but rather it is the people who are employed but who are looking for a great experience at a minimized price. Role of Variety seeking in Influencing Consumer’s Decision to Use Deal-a-day Sites The opportunity to try something new normally makes some customers to become spontaneously indulgent. Consumers will revisit daily deal sites or emails because they are interested in buying goods or services, but they do not certainly know which ones (Lieb 2012, pg. 121). This is the reason they depend on daily deals to curate content and familiarities for them. With most deals only lasting a day or less, and some with limited amounts, customers are enticed by more deals more regularly and, therefore, visit these sites on a frequent basis. Once the customers are satisfied with the daily deal offers, they are likely to subscribe to these sites in order to stay in the know so that they never feel like they are missing a deal. Consumers normally find themselves in situations where they have to choose products to use at different points in time (Beiles et. Al, 2012, pg. 47). Thus, they may sometimes identify the category that they prefer most and select it consistently without considering other alternatives. Alternatively, they might initially choose the alternative they like best but then might revert to less preferable alternatives for the sake of variety. Customer’s choice to use deal-a-day sites can be affected by not only the information they get concerning the choice alternatives, but also the ease with which they can obtain the information. Customers of most deal sites have subscriptions to product from other sites and this variety seeking (through subscription to these sites) can be an opportunity for them to choose a superior alternative to considering different aspects (Kimes & Dholakia 2011, pg. 27). Given this ability, the customers are capable of computing the desirability of every offer independently and compare the variations of these overall assessments. Moreover, whenever consumers are able to select a number of products, they might either identify the kind of products they love best and choose it recurrently or might choose different ones. The result of their outcome might depend on the various offers from these sites. Ultimately, some consumers are also more inspired to seek variety and for the best prices, whereas others seek varieties because of the convenience offered by most sites (Dholakia (2011, pg. 19). In most cases, consumers will incline to transform their behavior through learning i.e. visiting different sites based on referrals. In this case, they might visit certain sites to sample the products to which they were referred. In conclusion, the daily deals sites offering discounted local product or service have been on the increase and it is expected that the spending of Americans on daily deals might hit over $4.3 billion by the end of this year. Daily deal sites continue creating a different kind of value and they pursue providing the best consumer experience. By offering deals, which are not available everywhere, businesses can stimulate mass consumer demand within a short time period. Daily deals sites clearly bring benefits to both customers looking for discounts and businesses attempting to reach new customers. Once the customers are satisfied with the daily deal offers, they are likely to subscribe to these sites in order to stay in the know so that they never feel like they are missing a deal. Daily deals sites should influence the zones of acceptance for their product categories by creating platforms or services, which most accurately intercept customer impulse. The success of daily deal sites across different areas suggests that marketers should include daily deal offers in their promotional mix. Low discount rates offered by rivals can lure consumers to the sites. As such, consumers may never be fully loyal to their initial brands. Variety seeking occurs because customers online have turned spontaneously indulgent. Ultimately, most consumers are also more inspired to seek variety and for the best prices and the ease of sampling the products offered by competing sites. Bibliography Aaker, D, A Kumar, V & Day, G 2008. Marketing research. John Wiley & Sons. 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