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50%, 60% and up to 90%?! Shameful! I think Groupon and companies alike are definitely driving our economy down;

  • First of all it is pressuring small companies to sell their products for cheaper than they can even make profit. Some companies are getting floods of customers but the increment of profit gained is very small compared to services provided or products sold. So who’s actually gaining the real profit?!
  • Second, a fake new equilibrium of demand and supply is created by those companies. Now, the equilibrium is mostly based on how much can a Groupon sales associates can pressure a company to sell their product for cheapest possible; not based on an old good rule of how much a customer is willing and able to pay for the supply!! Do you remember things called supply and demand?!
  • Third, if small companies think they can get repeat business from those “deals” customers, think Not! Because those customers will only come when there’s a deal so now what?! A whole new target market that companies don’t need.
  • Fourth, customers are changing their loyalty because if I’m a loyal customer doing the green tea massage for $60 and the person behind me got a coupon for $32 or whatever, and has to be serviced before his/her deal expires, then that venue will lose my trust. What happened to rewarding your loyal customers with a good deal every now and then! Which is better a repeat loyal customer or 3 customers with a coupon when you have one sales person working in a store! Ugh, too much effort and time wasted!  Small companies are manipulated to think that they “have to”  be advertised in such a manner that leads to dire consequences; it slashes their energy , profit, and their target market.
  • Fifth,The truth of the matter is there’s more people on the streets and in local shops but no one is gaining any value; products & services are being cheapened and of less quality which leads to loss of original customers, new customers are not getting the best service or product that companies can offer, consequently leading to loss in revenue and profit. Actually, small companies feel pressured to jump on the wagon of providing their products for less or else?!
  • Furthermore, it is creating a barrier for other small companies to be created and enter the market because they think “if don’t slash their prices on those sites , you don’t make it!” Even Designers and artists are forced to slash prices! And, since when do you go to a museum with a coupon to save $5 knowing it’s a non profit organization?!
  • I think Groupon and other companies are good ideas but not good enough for business or for this kind of economy. In this kind of economy, deal offering sites should help those local businesses by giving back some control. It is great that companies have a place to advertise their business but not at the risk of sinking their ship. Their investment should be of somehow guaranteed returns. It is nice to have a deal but as customers, do we have to make our favorite restaurant overwhelmed with  “pressure” deals that will suck the life out of it?!
  •  Demographics, location and customer relations are important factors for small business to survive and build real customers not only a zip code and an email! What happened to targeting and customization?!
  • Solution: Groupon and other deals oriented sites need to customize user profiles so they can help businesses target their customers better. Furthermore, companies should provide sales but not be pressured all year long, it can be customized deals with certain limits that does not drive them out of business. Go back to basic rules of marketing!

If nothing changes , then it will definitely turn into a huge bubble that bursts in everybody’s face, how about that kind of pressure?

Rania Abdo twitter: @raniaabdo Fb: https://www.facebook.com/wowraniahttp://about.me/raniaabdo