The Takeaway From Groupon's Sacking Of CEO Andrew Mason (part 2)

The Takeaway From Groupon’s Sacking Of CEO Andrew Mason (part 2)

continued from our earlier post.
So what’s next?
Retailwire shows some cautious optimism, saying “With the daily deals marketplace maturing, a shakeout could lead to a less-competitive playing field and more tailored offers from those that survive. It’s unknown whether Groupon and LivingSocial will benefit from their first-mover advantage or if, in the end, more niche, specialized upstarts will be better positioned.”
“More recently, deals are seeing more success when formulated to focus on timing and limiting cost. For restaurants, for instance, many deals now only apply to off-peak days (Sunday through Thursday) or hours (i.e., brunch or late afternoon). Many also have a savings limit (i.e., 50 Percent Off, Maximum Discount – $20.00).”
Harvard Business School asked, “Are Yelp and Groupon helping new restaurants?” “Groupon seems to offer a good marketplace for new restaurants to do promotion deals. With very attractive high discount deals, Groupon tends to motivate its customers to try the deals with very low cost. It makes sense for new restaurants, which want to attract customers as quickly as possible after open, to offer those deals to Groupon. But are the customers attracted by Groupon good customers for the restaurants?”
“Think about who are the people who always use Groupon: people who seek for cheap things rather than people who try new things. The purpose for new restaurants to attract as many customers as possible at the beginning is to build the buzz and build the loyalty after customers’ trial. But Groupon customers only care about the deal, not the restaurant. When they finish a cheap dinner, they are going to seek for another one offered by another new restaurant in Groupon. This makes the promotion spending a waste of money. Meanwhile, it is hard for high-quality new restaurants to distinguish from bad ones, or even a negative impact on them, because they might not be able to offer a deal as cheap as those low-quality restaurants.”
“With that said, there is a business opportunity to build a new website that helps new restaurants to promote. If one can find a way to accumulate many effective reviews very quickly and attract high quality target customers, it will attract high-quality new restaurants and high-quality customers and finally become a platform for all new businesses and people who would like to try new services.”
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