What is the first thing that comes to your mind when you hear the word ‘shopping’? We all lure to buy a huge number of items for us but the only thing which reduces this urge is the sky- high prices of that commodity. However, this consumer behavior is flipped onto the head by the huge discounts offered in recent times by the tycoons of commerce. Discount websites like Groupon, Gilt Groupe, and Slickdeals, which offer significant price cuts to their members through daily, weekly, and monthly “deals,” have become a thriving corner of online commerce.
Richard Hanna, assistant professor of Marketing in the College of Business Administration of Northeastern University, whose research focuses on pricing strategy, promotions, and e-commerce, explained the pros and cons for businesses and consumer. When asked how the firms that sell their wares for a discounted price benefit and whether the innocent consumers really getting a deal, Hanna feels that the primary benefit to these companies is generating awareness for their business. Getting your name out on Groupon can be a major plus for small businesses, especially because of the sheer numbers reaching their listings.
Mainly, it’s low-cost and much affordable marketing in the sense that firms are not spending money other than the forgone profit of the discounted sale. Basically, the allure of a daily deal to businesses is the sheer exposure to a crowd in thousands. Although consumers find it fruitful to avail the local services at a much lower rate, these innocent buyers must be prepared and should be ready with their homework. As always with online product purchases, consumers must watch out for the shipping or other costs including extra taxes to make sure the deal they just received isn’t eliminated by paying a higher delivery cost.
Harminder Singh