Case Study: Who Needs Advertising?
Executive Summary: Andrew Mason created a multi-billion dollar business by convincing store owners to put their coupons on his site. Groupon is one of the biggest online coupon distributors in the world. The success of his business was so fast the only true competitor he had developed two years later. There were a few issues initially with Groupon, there were no expiration dates, and some companies couldn’t keep up with demand and lost revenue. Even with some of these setbacks this company skyrocketed into the corporate world after multiple acquisitions of different apps and businesses.
1. The Three Most Important Facts An undeniable important fact attributed to this article is the simplicity of Andrew Mason’s product. This is important because of the cost effectiveness. Groupon doesn’t produce any tangible item besides a website or app, instead they sell what others produce. In essence, they just need people that are computer savvy and great salesmen. If they can convince a business owner of the risk and reward, they stand to make a huge profit with little work. A business model like Groupons makes money by receiving a portion of the sales. This is important because they stand to make 25 percent of what the business makes. If the business doesn’t make money then the deal is off and no one loses much money, just time. Most likely the most important fact is the internet aspect of Groupon. Going from online spreading to an app this company spread world-wide. This is important because it’s extremely simple to look up the things you are interested in and start accumulating coupons. In this way it is simplistic; anyone can have it on them and take it anywhere. As we have seen from Amazon, Ebay, or even Craigslist the future of shopping is online.
2. Three Facts That Would Be Good To Know
Can companies keep up with demand?
With the coupons reaching such a vast amount of people we could only imagine businesses would do well. There must be a point where demands aren’t met and business is lost. “Even if you are able to redeem your coupon right away, whether it’s a manicure or a dinner out, Murphy warned the rush of new business can create what he calls the ‘restaurant week’ effect.”(Murphy 2011)
Does the rapid success affect competition?
With so many costumers utilizing the coupons it’s fair to wonder if it takes costumer base away from other small businesses.
Does Groupon plan on making more “in-app” purchases available?
An in-app purchase such as the 30 dollar VIP subscriptions gives customers a 12 hour head start. This seems like over-kill and could lead to more subtle charges. More people are willing to pay for convenience, “Users can make in-app grocery lists and redeem the offers at any grocery store in the U.S. or Canada by simply snapping a picture of their receipt and uploading it to the app. When accounts reach $20, Groupon sends customers a check.” (Alford 2014)
3. Ethical Dilemma The ethical dilemma in the case of Groupon persists within the treatment of the companies that support it. With coupons used by millions of people for local businesses some can’t keep up with demand. If revenue is lost from the sheer amount of people utilizing the coupons the business can only blame themsleves. Groupon still expects some portion of the profit for each coupon transaction. On one hand the companies that support Groupon receive a lot of business, but they are also forced to give up some profit. Unfortunately some businesses can’t keep up and are left to fall to the wayside.
4. Moral Agents, Stakeholders and their Role-related Responsibilities
Moral Agent: Groupon (To share the coupons through Groupon to a mass audience in order to bring clients to the business.)
Moral Agent: The businesses (To share their product and honor their coupons when costumers make a purchase.)
Stakeholder: The businesses (To provide a fair discount and receive a larger consumer base with the…