The collective buying industry has grown by leaps and bounds over the past several years, and Groupon stands out as a major player that has revolutionized this market. This case study describes the beginnings of Groupon, as well as the firm’s rise to power, the rise of its numerous competitors, its decisions and expansion strategies, and the collective buying industry as a whole. Key demographic data about Groupon’s customers (consumers and small businesses) are also described, along with recent developments at Groupon and within the industry in general. While Groupon has undoubtedly discovered a unique model that takes advantage of a ‘white space’ in sales and marketing to local businesses, it is unclear what the future holds for Groupon. Will it be able to sustain its incredible growth rate, or is its business going to peak quickly and then fade?
1. What is Groupon, and how does it work? What is Groupon’s market? What does this company do, and how does it make money?
a. What does Groupon do that makes businesses willing to pay for its services?
b. Why is Groupon such a big deal? That is, why should consumers pay attention to what Groupon has to offer?
2. Using Porter’s Five Forces as a framework, describe the competitive environment of the collective buying industry, pre-Groupon and post-Groupon
3. How should Groupon’s business model be classified?
a. What are the core objectives for Groupon, and what are the critical activities and resources that support these objectives? (Outlined in COAR Map, Exhibit TN-3)
b. How does Groupon’s core customer segment fit with the company’s business model?
4. What is the viability of Groupon? Will this business survive in the long run or will it fade away?
a. Is Groupon a pioneer? Does it have a first-mover advantage?
b. What barriers to entry is Groupon trying to create? Are they working?
c. What competitive advantages exist for Groupon’s potentially biggest threat (i.e., Google, which tried to buy out Groupon)?
d. Groupon was started in November 2008. What are the long-term plans for maintaining and creating company growth?
e. How would an initial public offering (IPO) affect the company’s go-to-market strategy? Would an IPO alter the relationships Groupon has with local businesses in various cities?