Groupon, one of the fastest-growing companies on the web, is reinventing web advertising. For broadcasting discounts to its subscribers – such as 50% off a manicure-pedicure if 100 people sign up – Groupon receives half of whatever the merchant brings. Businesses on average collect only about 25% of what they would normally make, yet they are throwing themselves at Groupon. Why? Because this is a new form of advertising that has one very big advantage over the old-fashioned kind: it actually works.
Date: November 19, 2010
Questions for discussion:
- Why is Groupon such an effective way to market a business?
- If merchants are collecting only about 25% of what they would normally make, how are they justifying that loss?
- Groupon plans to implement software to deliver more relevant offers to its subscribers. How does that “targeting” give Groupon an edge over its competitors?
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