Understanding the Marketing mysteries behind Groupon Group buying mode

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The craziest Internet company in history.

It took 3 years for Twitter to value $1 billion trillion, even though it took 2 years for the famous Facebook to reach $1 billion trillion, and Groupon, founded in November 2008, used only 1.5, the craziest Internet company in history. April 19, a consortium of Russian investment company DST led the company to invest 135 million of dollars, so that Groupon's valuation reached a record 1.35 billion U.S. dollars.

Groupon's success quickly detonated global group buying website Frenzy, the domestic follow the group to build the site is also endless, from this March 4, the United States Regiment online line, 3 months time, F Regiment, Regiment Treasure, handle, 24 coupons, full, litters, full net, 5151 Group purchase network, etc. have been online. According to Analysys International statistics, the current domestic group buying site has 300 to 400 home.

The main reason Groupon gets such a good valuation is because of its simple business model and very substantial cash flow. Groupon is a time-limited group buying network, choosing a product every day to sell at ultra-low discounts, attracting enough buyers to buy, and then charging a 30%-50% commission on a deal in return. Only the number of group buying reached a certain number, group purchase can be successful, and enjoy discounts. After buying the service online, the customer buys the coupon or SMS to the merchant.

Unlike previous internet darlings, Groupon is a company that has been profitable almost initially. Groupon achieved a break-even in only 7 months, with a profit margin of up to 30% per cent, with a net profit of more than $1 million a week and a forecast of $350 million trillion in annual revenues for 2010.

Unique Network Group buying mode

Of course, being popular with consumers is the root of Groupon's success. With the support of consumers, there is such a bright cash flow to attract such a high investment. Group buying has a long history, in various stores in the holiday promotion activities especially prevalent. Through group buying, consumers can unite, from small single accumulated into large single, thereby increasing the bargaining power with the merchant, in order to get the most favorable price. And businesses can also use this to gather popularity, snatch market share, rapid increase sales. The popularization of the network more convenient to buy, consumers sitting in the office can easily hold a regiment, the initiative to negotiate with manufacturers, and then to obtain greater concessions. Group buying site is such a platform, on the one hand to provide consumers with attractive price discount products, on the other hand, also brings a significant number of users. Groupon is so popular with consumers because it is a step closer to a traditional group-buying site.

First, provide a simpler choice for both sides.

Consumers do not need to find a product or service to meet people to join the team, only to visit Groupon always found enough enthusiasts; without commuting, consumers can complete the purchase with a few clicks of the mouse, without having to bargain with the merchant, Groupon has already done And by virtue of their own professional bargaining capacity and platform advantages, but also for consumers to seek lower price discounts. And businesses do not have to invest heavily in advertising, spending human and material resources to organize buying groups, all they need is to provide the most favorable prices, and other things to Groupon to do. Even if payment is paid, how high the effect of advertising is not necessarily how, it is better to do a discount promotion to consumers real concessions come true. If the sales are big enough and the cost is fully diluted, perhaps a small profit will be made.

Second, it gives consumers a sense of urgency to "cross the village without this shop."

Groupon knows the psychology of consumers. Only one day to provide a product or service, but also to gather enough people to enjoy the given preferential prices. In order not to regret later, or early to do good. Everyone will benefit by order. Even if there is no one, everyone can not enjoy the discounted price. A lot of people have put Groupon on Facebook and Twitter to get enough people to start a relationship and spread it better for Groupon. Seeing others buy people, because of the mentality of the herd, we all have the will to follow. Enterprises often encounter the biggest marketing failure is through the mammoth advertising activities, between consumers have a great sensation, but can not be translated into enough real purchasing power. Groupon solves the problem well and allows manufacturers to quickly recycle money. No wonder that up to 95% of manufacturers are said to be willing to work with Groupon again.

Third, the temptation to resist discounts.

Groupon is very cautious in choosing a specific group purchase product or service, and the products are based on localized group buying in various cities, and are based on services rather than discounted items, including spas, skydiving, and other training courses and golf, skiing, rowing and other activities. Traditional group buying sites offer a very small discount, in most cases only 8, 90 percent, good times 6, 70 percent, while Groupon consumers get incredible concessions, discounts can almost all reach 50 percent or even to 10 percent. These concessions are not something that traditional price killers like Wal-Mart can't do, and even e-commerce companies such as ebay and Amazon can't. On June 26, the home page of Changzhou station, the original price of 1050 Yuan Shanning Yoga Fitness package Even a discount to 18 yuan, a decline of up to 99%.

Ultra-low discounts not only help to prompt consumers to take action on demand, but will also arouse the lack of consumer demand. With such a large price discount, consumers who have not previously bought the demand will not be able to afford to spend, especially for those who seek affordable price-sensitive consumers. This is similar to supermarket shopping. In the face of all the colorful shopping malls, the consumer's desire to buy is quickly aroused, not included in the purchase list can not help but some, even if not ready to buy will not empty-handed. Buy the site's ultra-low discount also has such a temptation to make your heart itch unbearable, the heart is unwilling, finally had to surrender, the next single thing. Satisfy the purchase desire, and pick up the real cheap, both emotional and rational can be accepted, the next nature will come again.

Four, only give consumers a choice every day.

That's the biggest difference between Groupon's group-buying website and e-commerce sites like Taobao. In today's material-rich society, and not necessarily the more the better, many times more choices give consumers more trouble, of course, this and the era of material deprivation has the essence of the difference. Taobao as far as possible to give everyone more choices, so that different consumers can find a suitable product, but also to consumers to bring great difficulty in the selection, and Groupon is the opposite, for you carefully selected a good product, everyone is trustworthy, both for you save the search time and energy, Also for you to reduce the risk of shopping. At the same time, because only one product or service is introduced every day, Groupon can easily accumulate enough purchases, form economies of scale, and get lower prices from businesses to attract more consumers.

Five, every day there is a different feeling of freshness.

The introduction of a daily product, also do not advance notice, consumers never know what tomorrow is what products, can be described as the consumer's appetite, consumers are always on the next product full of curiosity and anticipation, thus bringing play games like fresh and exciting. In order to satisfy this curiosity, consumers can not help to access the website every day to understand the promotional items, pay attention to the latest dynamic activities, and then form a very high web site stickiness. Create suspense, fully mobilize the consumer's curiosity, has been the company's usual marketing strategy. In addition to introducing different products every day, group buying sites can also try other more gimmick promotional methods, such as the original discount on the basis of what the words in the name of the consumer will also receive special offers or gifts, all the day of the birthday of the consumer will also get a birthday gift, etc., further enhance this fresh feeling.

Can followers successfully replicate

Today the group buying site frenzy came in fact a bit accidental. The traditional offline group purchase site to move online, fully draw on the advanced network media and technology, this is nothing new. But Groupon's rapid success has sparked the boom, attracting a lot of followers. In fact, even the birth of Groupon is full of contingency. Groupon initially did not buy a group, but a website called the point, designed to use the concept of time management to get a group of people to do the same thing within a deadline. But they soon found that not many people were involved, so they decided to narrow it down further into "Let's buy something for the time being" and launched Groupon's predecessor,--get Your Groupon Blog, to achieve unexpected success.

Can Groupon's success be replicated? How long will this boom last? Groupon seems easy to replicate because its business model is simple and almost straightforward, as long as you can find a product that is low enough for the consumer to find a sufficient number of consumers. Many of the domestic group purchase site to imitate, and even the design of the page copied, the same as each other. But not really. Group buying site has two successful premise: you must continuously from different businesses to find prices discount so low products, you can attract more consumers to participate in, in turn you must be able to attract enough consumers to go with the business to come to such a low price discount. The former is the brand effect, the latter is the scale effect, the two are indispensable.

Groupon has seized the market opportunity to quickly attract a large number of consumers through a unique group-buying model, raising brand awareness and thus entering a virtuous circle: because there are many consumers who can get the most favorable discounts because the most favorable discounts attract more consumers. As long as these two premises are available, the follower can succeed in this virtuous circle. In comparison, however, it is more important to attract enough consumers because there is an oversupply and the right product is easier to find, as long as you have a purchase demand. As a result, followers who have platform advantages are more likely to succeed. Due to the Matthew effect, the stronger and weaker the weaker, consumers will increasingly gather to the most advanced group buying sites, because they can get the most favorable prices, but also provide the most secure offline services, and most of the followers will be eliminated by the market.

For followers, there are at least two opportunities available: first, local advantage, and market opportunity. That's why Groupon is rushing to spread across the United States quickly. It began operation in China in March 2010, and the group's net G r o u P o n. C N) has also been rapidly covered in 108 one or two-line cities. Local sourcing and service is the foundation of Groupon's success and its biggest limitation. If the focus on a single regional market, play the local advantages, relying on geographical affinity to gather a large number of consumers, the first to establish a brand, the use of good local manufacturers relationship resources, according to local consumer demand to provide marketable differentiated products or services, integration line under the resources, local conditions, plowing, I believe there will Local forums, regional newspapers and magazines and other local media usually have such advantages, even have a strong online resources QQ, Taobao and those who have the most service-type business resources of the public comment network can not match.

4 Marketing opportunities for enterprises

In the face of the upsurge of network buying spree, enterprises and what can be used in marketing opportunities, I believe that every marketing personnel are considering the topic. Capture the emerging new marketing opportunities, often not only to conform to social trends, but also to achieve amazing results. So what can companies do with group buying sites?

First, improve brand awareness. For those who need to improve the popularity of new brands, group buying site is undoubtedly a good platform. The super popularity that Groupon gathers makes every business covet. A special price discount, so that more consumers understand themselves, can be used as an effective complement to other marketing tools. At the Chicago Motor Show in February, 15000 tickets were purchased one day in Groupon, even a hot topic throughout the winter in Chicago.

Second, the new product listing promotion. Whether to attract enough consumers to try, often related to the success or failure of the new product listing. Sometimes, companies in order to obtain first-hand consumer opinion, will be in a small range of products, ask them to pilot, according to their experience of the use of products to make improvements. Because it can enlarge the influence and form the reputation, it has been the third party platform which has been created by hundreds of specialized offering trial service, such as test guest NET, Test Guest Alliance, Test guest Square, trial net and so on. Select group buying site through the promotion of new products, different ways, but can achieve the same effect. A café in Chicago opened a new store offering 20-dollar coupons on Groupon for Half-price Promotions, and 7678 coupons were quickly snapped, attracting more than 7,000 people's attention.

Third, daily product promotion and promotion. Group buying can also be used as a daily network promotional tool. During the off-season or special festivals, manufacturers always carry out product promotion activities to seize market share and boost revenue. If it is extended to the Internet, can be used to buy this form, you can save the human input, also need not worry about the flow of people too big inability to deal with the situation.

The sales model of special products. For some products or services, the scale effect is so obvious that when the purchase volume is high enough, the cost can be reduced to zero, and the group purchase can be the mode of sale entirely. Take management training courses as an example, assuming that the original price of 1000 yuan can attract 50 people, on Groupon 20 percent discount can attract 1000 people to attend lectures, then earn more than 3 times times the profit, the benefit is quite astonishing.

Of course, as with other marketing tools, online group buying has its drawbacks. Group buying sites are usually attracted by price-sensitive consumers, many times they simply choose your product because of attractive price discounts, and their loyalty to the brand is very low, and the next time they have the same offer they will go to other brands. Fortunately, "know its disadvantages, use its benefit", it is our marketing staff on weekdays have already been trained strengths.

"This article comes from Jiansho Qing's blog" Marketing and Life | About marketing that little news "(http://www.marketing-life.cn/?p=3148)"