Mobile marketing goes local with Groupon Now

Back in January we reported on Groupon’s group buying system (read our original post).  Now, the coupon giant is looking to expand even more.  The company is set to launch its new service, Groupon Now, in less than a month.  The service is accessible via a smartphone application that monitors your location and the day of time.  Based on this information, Groupon Now delivers time-sensitive deals at a number of local venues including eateries and mom and pop shops.

The traditional Groupon “deal-of-the-day” has been extremely successful.  Not only has it spawned a number of knock offs, but it has also given Groupon the title of the fastest growing company ever.  In 2009 the company had 120 employees and offered deals in 30 cities.  Today, the company has to 5,900 employees and offers more than 900 deals in 550 markets.

Despite Groupon’s success, the “deal-of-the-day” is a one-time “have coupon will use” model.  The new Groupon Now taps into the enormous and fluid market of consumer foot traffic.  The Group Now app will work by providing consumers two options—either “I’m hungry” or “I’m bored.”  Clicking either button will reveal time and location-specific deals.

The new model allows restaurants to offer deals during specific days and hours that are generally slow, attracting businesses that saw little advantage to the traditional Groupon coupon system.  The main benefit for businesses is greater efficiency and cost savings.  Groupon Now allows merchants to cut down on perishable waste—like food ingredients, labor hours and anything else that has to be disposed of if not used immediately.  Groupon Now seeks to eliminate 10 percent of parishability for small businesses, which could equate to huge savings.

Some small business owners, however, are worried about the value of their product dropping due to Groupon Now deals.  While these coupons will certainly get customers in the door, they may discourage customers from ever wanting to pay full price.  For these businesses the one-time coupon model is more appropriate.  One restaurant owner in Raleigh, N.C. said “There’s no reason for customers to come in all the time if they can always get a discount.  That’s the reason we like Groupon; it’s only a one-time deal.”

So, while Groupon Now offers new capabilities for consumers and an innovative marketing approach for merchants, its benefit for small businesses is arguably questionable.  Will the new service boost the awareness and efficiency of small businesses or will it devalue their products?

Sources:

Bloomberg Businessweek: http://www.businessweek.com/magazine/content/11_13/b4221070014682.htm

Mashable: http://mashable.com/2011/03/17/groupon-now/

Reuters: http://www.reuters.com/article/2011/03/22/idUS221071843620110322

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5 Responses to Mobile marketing goes local with Groupon Now

  1. sherlynk says:

    I am excited to see how the Groupon Now function creates keener competition from other companies. While some companies like The DealMap and LivingSocial have launched smartphone applications to compete with Groupon , other websites like BloomSpot and LifeBooker have yet to catch up. The time sensitive format for Groupon Now will be a revealing marker for how often consumers seek such personalized and immediate services, and encourage Groupon to increase the number of options offered at each time to the bored and/or hungry in each city. This business model has effectively given service-based businesses a way to manage discounts and sales events, evolving the way consumers think about the customer service and food industries. The mundane everyday of “buying/paying for food” can now be like attending a sale for a “popular dining experience”, helping businesses package their offerings more attractively.

    • KC says:

      I completely agree with the above. Groupon broke into a new market upon its first creation, and quickly other companies jumped on the opportunities. This new strategy shows that Groupon is striving to come up with new ideas and stay in front of the competition. It is so impressive that Groupon has decided to capitalize on the on-the-go nature created by mobile phones. There have been numerous times that I have personally seen restaurants on Groupon that I wanted to buy the deal for, but actually couldn’t be sure that I would make it by the time it expired. Having quick, accessible deals could allow for more daily decisions.

  2. menewell says:

    In response to your question “Will the new service boost the awareness and efficiency of small businesses or will it devalue their products?” I think it will ultimately boost awareness and efficiency for small business that have high-quality products. The key here is that you have to have a good product, if you do then by all means utilize Groupon as an advertising vehicle because it will get people in the door and trying your product and if it is good enough, then people will come back and won’t mind paying full price for it.

  3. meimeila says:

    I definitely think Groupon’s move into mobile phone promotions is a step in the right direction. Recent research has shown the growth of smartphone adoption and how it has been increasingly used by marketers to push their products/services to an increasingly mobile audience. Here’s a link to an infographic that sums up that research and highlights the opportunities for marketers:

    http://mashable.com/2011/03/23/mobile-by-the-numbers-infogrpahic/

    Other interesting ways in which mobile phone technology can help drive traffic into retail outlets include promotions tied in with location-based apps such as FourSquare and Facebook Places – essentially making the coupon promotion a socially based one as well.

  4. bephelps says:

    In relating this idea back to our discussion of QR codes and Google’s recent launch of NFC (near field communications) that we had in class a few weeks ago, I think these technologies would be an awesome way to integrate a coupon service like Groupon, with a review service like yelp. Think about this–you walk up to a Thai restaurant you have been dying to try. You scan the QR code or NFC with your phone and you are immediately able to read reviews and take advantage of current coupon deals. It could revolutionize the ever important question, “what should we have for dinner tonight?”