Why Groupon hurts businesses and you should be careful • Hacker News Board

Re: Why Groupon hurts businesses and you should be careful

#31

Post by michaelbuckbee » Mon, Sep 27, 2010, 9:02 AM UTC

fleitz wrote: post #14

michaelbuckbee wrote: post #13

Offering coupons of any kind (Groupon or not) is just another form of marketing. Whether or not it makes sense for a particular business is much more complex: different structures, margins, repeat customers, etc. So a business "loses" a $1000 with their Groupon deal, they got people into their shop and at least it's a more measurable outcome than most print or radio ads.

The key absent of measurement is the effect on the business, there is no point to a more measurable loss, in comparison to a less measurable profit. I don't care to chime in to the debate on whether radio/print/groupon is effective as I think that like most tools it can be used properly or improperly.

I'm in agreement with you that the success or failure of the marketing endeavor is execution dependent.

However, I do feel that there is a point to a measurable loss, namely that you know not to do it again. If you spend a $1000 on setting up a Groupon deal and don't make your money back then you very clearly know that it was bad marketing move. If you spend a $1000 on a radio ad it's much more difficult to know what impact it has on your business.

Re: Why Groupon hurts businesses and you should be careful

#32

Post by dillydally » Mon, Sep 27, 2010, 9:27 AM UTC

stevejobs wrote: post #8

dillydally wrote: post #7

There's a reason the deals on Groupon last only a day. Your argument applies equally to Gilt, but I don't think people are going to start paying less for Diesel jeans.

Gilt and its clones don't sell regular merchandise, but almost always out of season, overstock, and seconds merchandise that the firm would have to dispose of regardless. Businesses that use Groupon deep discount their normal stuff.

Yes, but the reason these brands weren't doing this before Gilt was because they were afraid selling excess inventory at a discount would associate their goods with that lower price-point.

Gilt gets around this by maintaining a semi-private space and having one-day sales.

Groupon isn't private, but it's time-constrained in the same way and for the same reason.

If I know a sale is on for one day only, I'm going to understand that the deal doesn't represent the every-day price.

Besides, we're in the middle of a huge recession. Damn straight people are price sensitive!

Re: Why Groupon hurts businesses and you should be careful

#33

Post by palehose » Mon, Sep 27, 2010, 5:39 PM UTC

At Starbucks, it is more expensive to hire people to stand around making coffee all day than it is to purchase and roast the coffee beans. This is easily recognizable by anyone who knows how to make coffee themselves. The majority of the money you spend when buying a drink goes into that service aspect of the business. Somehow Starbucks has managed to stay in business despite the fact that what they charge is not the "real" cost of a cup of coffee.

Re: Why Groupon hurts businesses and you should be careful

#34

Post by jkhawaja » Wed, Sep 29, 2010, 2:33 AM UTC

Groupon can be beneficial for some businesses and not so much for others. When restaurants run on Groupon they hardly make money off it. The reason being they have to over staff for the 3000+ people that are going to show up the day after the deal ends. The cost of ingredients equals the value of merchants receivable from Groupon. There is no margin for profit. End of the day if the service is good, new customers will visit that are now willing to pay the whole price. It gets the word out for less known businesses. Takes time but the rewards are fruitful. For other businesses that don't have high costs definitely make good money. It helps people to try out new things. A good example is driving a nascar for an amazing deal.