Introduction
GroupOn is a company that specializes in finding and delivering the best deals for people by providing sales coupons. These coupons allow for people to save up to 70% on various purchases (Khoa 3947). They also help stimulate the economy by allowing companies to sell more through promotions. The majority of sales tickets provided by GroupOn last only for 1-3 days, making the need to purchase more urgent (Khoa 3947). As a result, they improve product rotations and push customers towards purchases. Information technology plays an important role in GroupOn’s competing activities, as it allows gathering data and tailoring their offerings in accordance to market demands. The purpose of this paper is to analyze the use of InfoTech for the company and reflect on its sustainable competitive advantage.
GroupOn and Information Technology
The primary uses of information technology for GroupOn are three – gather customer data to tailor offerings specific to the general as well as specific demand, generating word-of-mouth interactions, and promoting the buzz effect. The latter stands for marketing specific items and services by mentioning it multiple times, helping brand recognition as well as increasing sales (Maass 5). Understanding what customers want and need allows GroupOn to focus on these specific products and providing coupons on what would generate the most sales. Word-of-mouth interactions, especially when utilizing social media allows to gather more data about customers while at the same time increasing the platform’s popularity among peers (Maass 6). Finally, the buzz effect, especially in the Web, makes it desirable for companies to provide GroupOn with exclusive deals and coupons, while also pushing for the company to become the face of sales. To that end, the company engages with Google, Facebook, and other technology giants as a means of guiding and maintaining business.
GroupOn and Sustainable Competitive Advantage
Despite GroupOn’s relatively simple business model, it does not appear to be very sustainable or leading to further strengthening and monopolization of the coupon market. The main reasons for the lack of sustainability are two: the absence of one’s own product, and competition. GroupOn does not sell its own merchandise, but rather makes it easier for companies to sell theirs via coupons (Khoa 3949). This puts the organization in a weak negotiating position against the people who provide sales preferences via coupons. The initiative is always in the hands of the seller, not the coupon provider. Other companies, such as Netflix and LinkedIn have also experienced similar problems at the start, with the former making effort into funding and making their own exclusives to strengthen competitive advantage.
Finally, there is the matter of competition. GroupOn is not a large data collection company, and has to work with services like Google and Facebook to reach out their customers. These technological giants can easily force GroupOn out of business by choosing to perform the same services using their own access to people’s data (Maass 8). In addition, the coupon format of GroupOn can be easily replicated by other entrants to the market – all it needs is a web-page and a connection with customers (Khoa 3950). Companies would have no reason to refuse cooperation with these new groups, which would erode GroupOn’s position.
Conclusions
GroupOn is a company that provides coupons to customers to get better deals. It relies heavily on information technology and close cooperation with goods and service providers. Nevertheless, it remains in a subordinate position to its suppliers, and the ease of entrance into the field makes its competitive advantages moot. It does not have the means to sustain itself in the long run as the leader of this niche market.
Work Cited
Khoa, Bee T. “Electronic loyalty in the relationship between consumer habits, groupon website reputation, and online trust: A case of the groupon transaction.” Journal of Theoretical and Applied Information Technology, vol. 98, no. 24, 2020, pp. 3947-3960.
Maass, Wolfgang, et al. “Data-driven meets theory-driven research in the era of big data: Opportunities and challenges for information systems research.” Journal of the Association for Information Systems, vol. 19, no. 12, 2018, pp. 1-11.