Groupon LivingSocial Problem -- Local Business Promotion Through Daily Deal Sites May Collapse Your Business

Problem Statement – undoubtedly, the daily deals websites like – Groupon,LivingSocial, Tipper,BuyWithMe and many more other sites has a great impact on local business and their promotions. They are not online coupon distribution sites; they have another aspects in today’s marketing era, which is commonly known as social buying. Apart form its huge sales generation features; it can do more
harm then good for your company, if you are a small or medium sized business owner.


Analysis:

More Expenses – Usually, all daily deal sites offer 50% off on the original price as discounted price. Beside that, Groupon keeps 50% on all voucher sales. Thus the business owners earn only 25% of the generated sales through a daily deal aggregator site.

Proposed Solution – Need in-depth price analysis, before going for a daily deal advertisement campaign.

Brand Dilution – brand dilution is the weakening of the brand due to over use of the brand name.Immense price cut surely damage the brand image. It takes its place while the brand competing with other higher quality products and services with a massive sales lead generation. By providing the huge discount may causes the vulnerable brand name and reduce the seeming value by the customer. For more protecting measures, please Check my Next Post.

Proposed Solution – Need strong brand building and brand establishment countermeasures before launching any daily deal advertise campaign.

Attracting the Wrong Customers – some business owners using the daily deal aggregator for their promotional purpose. But unfortunately, the daily deal aggregator sites are not being able to reach to the right and targeted customers. According to the business owners – the customers referred form those sites are just spend only the necessary amount of money in order to redeem their coupons or
deals. This also affects the lower tips on average and a lower rate of tipping.


Proposed Solution – This is one of very difficult part of this campaign. The best practice is – using localized content delivery system to reach the targeted customers.

Too Many Concurrent Users – the power of group buying or daily deal site is extensive. Those sites can generate a really huge numbers of buyers for your business. It is good for every business to generate the new business leads. But alternatively, within a very short period, huge amount of business leads can collapse your business infrastructure as well as create poor quality of customer services. This situation is not acceptable for any business. It will more destructive if the business doesn’t have enough manpower and well-established infrastructure, because new customers always need special attention. As result of this, customers will suffer with poor quality of services and the online rating of the business surely dropped.


Proposed Solution – the best way to handle the situation is, build a good enough manpower resource on ad-hoc basis and develop the strong business infrastructure including the product supply line (If any); After that going for the campaign.