These firms complain that discounts purchased on Groupon, for example, are great for attracting large crowds of customers who never materialize on the promise to become regular customers. This type of situations leaves the firm at a loss, having provided goods or service 75% below their retail price and without the returning customers to make up for it. To mitigate this, firms should work with Groupon and the like to find better ways to reinforce policies, such as making a deal available for first time customers only. Or by offering a discount that is only good if a required number of future purchases is pre-bought. Of course, these approaches would likely scare off a number of customers genuinely interested in assessing the quality of a product and service, not wanting further commitment. Psychologically, it might be hard for consumers to become regular customers and have to pay twice for a product or service they’ve already experienced for half the price. The best solution is for firms to offer such a high quality or differentiated product, service, and/or customer experience that costumers will want to come to come back.
4. What will be the long run effect of companies like Groupon? Groupon and similar companies will likely become the standard way coupons and discounts are offered to most consumers. Offering