Effectiveness of Groupon Promotions for Local Business (Essay Sample)

Groupon Promotions
Effectiveness of Groupon Promotions and Variables Influencing their Effectiveness for Local Business
A Dissertation
By:
A Dissertation Report Submitted in partial Fulfilment
of the requirements for the degree of
MSc International Management
University of
September 2011
Copyright
Name ©2011
ALL RIGHTS RESERVED
The author hereby certifies that the thesis presented herein is an original scholarly work, not copied, adopted or submitted elsewhere for academic and or any other purposes whatsoever, and that, all parts of this thesis have originally been written by the author unless otherwise referenced.
Acknowledgement
An undertaking of this magnitude is rarely an individual effort. As such, the task of planning and preparing for this dissertation has incorporated the contribution and participation of many people besides me. Consequently, I appreciate every other individual who facilitated the conception, development and completion of this research paper. While it is impossible for me to mention all the people who deserve recognition by name, I feel that several these individuals deserve at least a mention for their valuable aid, guidance and input.
In this accord, I heartily appreciate the kind, insightful and understanding assistance of the supervisor. Please accept my humble gratitude for your immense and yet patient assistance. Again, I interacted with several classmates, each of whom played a significant part in the development of the dissertation. They are all appreciated, with good wishes for success in their respective endeavours. Finally, though not least, I also acknowledge the support, love and goodwill of an enabling family who have always been a source of inspiration to me.
Table of Contents
 TOC \o "1-7" \h \z \u  HYPERLINK \l "_Toc302115329"
Copyright  PAGEREF _Toc302115329 \h
2
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Acknowledgement  PAGEREF _Toc302115330 \h
3
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Table of Contents  PAGEREF _Toc302115331 \h
4
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List of Tables  PAGEREF _Toc302115332 \h
6
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List of Figures  PAGEREF _Toc302115333 \h
7
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Executive Summary (Summary)  PAGEREF _Toc302115334 \h
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CHAPTER 1  PAGEREF _Toc302115335 \h
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1.0 Introduction  PAGEREF _Toc302115336 \h
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1.1 Background  PAGEREF _Toc302115337 \h
10
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1.1.1 History of Coupons and Price Discrimination Marketing  PAGEREF _Toc302115338 \h
10
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1.1.2 History and Story of Groupon and thepoint.com Website  PAGEREF _Toc302115339 \h
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1.1.3 The Groupon Business Model, Groupon Website and Group Buying  PAGEREF _Toc302115340 \h
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1.1.4 Groupon’s Global Position and Expansion Strategies  PAGEREF _Toc302115341 \h
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1.1.5 Groupon’s Main Competitors  PAGEREF _Toc302115342 \h
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1.2 Purpose, Research Objectives, and Aims of the Study  PAGEREF _Toc302115343 \h
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CHAPTER 2  PAGEREF _Toc302115344 \h
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2.0 Literature Review  PAGEREF _Toc302115345 \h
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2.1 Groupon Promotions in the Literature  PAGEREF _Toc302115346 \h
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2.2 Criticisms of Groupon Marketing  PAGEREF _Toc302115347 \h
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CHAPTER 3  PAGEREF _Toc302115348 \h
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3.0 Research Methodology  PAGEREF _Toc302115349 \h
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3.1 Research Design  PAGEREF _Toc302115350 \h
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3.2 Secondary Research Strategies  PAGEREF _Toc302115351 \h
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3.3 Primary Research Design  PAGEREF _Toc302115352 \h
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3.2.1 Population and Sample  PAGEREF _Toc302115353 \h
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3.2.2 Data Collection Instruments and Strategies  PAGEREF _Toc302115354 \h
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CHAPTER 4  PAGEREF _Toc302115355 \h
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4.0 The Case Studies  PAGEREF _Toc302115356 \h
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4.1 Case Studies about Groupon promotions’ Experiences  PAGEREF _Toc302115357 \h
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4.2 Findings from Interviews among Merchants  PAGEREF _Toc302115358 \h
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4.3 Findings from Online Survey among Merchants  PAGEREF _Toc302115359 \h
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4.4 Findings from Online Survey among Groupon Customers  PAGEREF _Toc302115360 \h
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CHAPTER 5  PAGEREF _Toc302115361 \h
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5.0 Data Analysis and Results  PAGEREF _Toc302115362 \h
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5.1 General Pros and Cons of Groupon Promotions  PAGEREF _Toc302115363 \h
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5.3 General Variables Influencing the Effectiveness of the Promotions  PAGEREF _Toc302115364 \h
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5.4 Amplifying the Benefits of Groupon Promotions for Local Businesses  PAGEREF _Toc302115365 \h
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CHAPTER 6  PAGEREF _Toc302115366 \h
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6.0 Conclusion of Study  PAGEREF _Toc302115367 \h
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5.1 Conclusion of Findings  PAGEREF _Toc302115368 \h
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5.2 Limitations of the Study and Recommendations for Further Research  PAGEREF _Toc302115369 \h
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Bibliography  PAGEREF _Toc302115370 \h
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Appendices  PAGEREF _Toc302115371 \h
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Appendix A: Interview and Survey Items Designed for London-based Retail SME Merchants  PAGEREF _Toc302115372 \h
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Appendix B: Survey Questionnaire Items Designed for London-based Groupon Customers  PAGEREF _Toc302115373 \h
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List of Tables
TableTable TitlePage No.Table 1Table of a Sample ROI of Groupon Promotions 34Table 2A Tabulated Summary of Findings Generated from Case Studies’ Observation 46Table 3Tabulated Summary of Responses from the Four Interviewees48Table 4A Table Summarizing Coefficients for Influential Factors on the Success of Groupon Promotions53Table 5Tabulated Summary of Products/Services Mostly Purchase from Group Buying Websites56Table 6Tabulated Summary of Elements in Voucher Redemption57Table 7Tabulated Summary of Products-Services Bought from Groupon Website58
List of Figures
FigureFigure TitlePage No.Figure 1A Figure Illustrating Groupon Customers Purchase Behaviours57
Executive Summary (Summary)
The present study purposed to determine how effective promotions conducted by Groupon are for local businesses, to investigate the particular variables that have the potential to influence the effectiveness of Groupon promotions for local businesses, and ultimately, to recommend ways in which local business can gain the most from their Groupon promotion based on the strategic service sector that such businesses operating in. Based on this purpose, the study adopted three specific objectives namely, to identify the effectiveness of Groupon discount promotions for local businesses, to identify the variables that influence Groupon promotions for local businesses based on their sector and to identify Groupon consumers buying behaviors and loyalty towards local businesses.
A mixed research design was employed in the study, incorporating a qualitative analysis of the literature review along the study’s thematic areas of interest and a quantitative primary research. In primary research, the retailers and local merchants who have already used Groupon promotions were consulted directly in face to face interviews, to establish how successful or otherwise, their experiences were. Primary research also consulted customers at Groupon who are active subscribers and who have participated in various Groupon promotions, again to establish their experiences and the group buying behaviours that have a potential impact on the effectiveness of these promotions. The research settled on all SME retail operators in London as the target population of the present study, incorporated all local retail businesses ranging from those that were relatively small to those that were of medium size, and which traded in consumer goods and or services. The researcher randomly and objectively picked 26 of these retail merchants as the ideal sample of the study, all being part of and representative of the larger sample and further, 100 active coupon customers at Groupon.
Upon implementation of the research design, the study found that the most prominent benefits of Groupon promotions included helping local businesses to gain new customers, to gain publicity and raise awareness about their products and services in the local community by providing exposure, to improve their cash flows, to fill out empty spaces if their existing customers do not exhaust available facilities and capacities and to sell out any of their excess stock. On the other hand, the disadvantages associated with Groupon promotions included, stretch out of facilities due to high turnouts during promotions, low conversion rates for the return and repeat customers,...