The Rise of the Grouponomy

In 1950, consumers across America were clipping coupons from the Sunday circular.  These days, couponing doesn’t require scissors but rather an internet connection or smart phone to access deal sites such as LivingSocial, woot!, Daily Deal, and Groupon, among others.  Businesses are looking for broader customer reach while consumers search for the best price.  Despite the popularity, businesses question if this new “grouponomy” can create brand exposure and positive revenue.

The need for businesses to capture and retain market share is as important as the consumer’s need for getting the best deal. For some, brand equity increases with as new customers are introduced to its services through this new form of couponing.  Partnerships with deal sites drive new business, improve customer loyalty, and result in increased profitability.

While success stories exist, many businesses have come forward claiming that deal site partnerships have negatively impacted the business. In the age of print coupons, offering discounts was a cheap and easy form of marketing which often blurred perceptions that lower prices equated to lower quality.  In the era of digital couponing, bargain hunters are more interested in a deal than becoming a loyal customer. The potential for long periods of thin margins or a case of increased demand leading to decreased quality, damages brand equity. A partnership with Groupon can, in fact, cost a business more than it will return.

With metrics being difficult to obtain due to inefficient tracking methods for a user or repeat users, companies must consider the impact of this growing “grouponomy” on brand perception and the bottom line.  In the end, businesses are looking for the best possible deal.

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