If it sounds too good to be true…

In the process of researching Groupon for this blog, I came across the men and women of new US television series, Extreme Couponing. How could the relatively gentle and innocuous pastime of coupon-clipping be EXTREME, you ask? Well if you had watched the clip above you wouldn’t need me to answer that. In another clip, one woman stocks up on 62 bottles of mustard even though her husband hates it and won’t eat it. Yes, she pays a total of $103.72 for what would have otherwise cost her $1,902.63 but she has spent two hours checking her loot out and countless more days compiling her wad of coupons in the first place. What struck me was her fervour to get every bottle of mustard on the shelf whether she wanted or needed it, or not. The woman just could not pass up a good deal. This indeed reminds me of the two blasted Citydeal.ie emails I receive in my inbox every single day. They are extremely annoying, I usually have no interest in the ‘deal’, and really would rather just unsubscribe. But I can’t. Because what if I miss out on something really good?

During a Recession, many brands and businesses resort in some serious price-discounting out of sheer desperation to keep themselves afloat. However, it is fairly well known and accepted that price related tactics rather than ‘value-added’ ones are just a short-term fix which may result in a cheapened and damaged brand. Furthermore, BOGOFs or coupons may simply attract bargain addicts (like our Extreme Couponing friends) rather than new repeat-buy customers. Should the businesses that utilise the Groupon facility provide their customers with a superior experience, than there is an opportunity to build a loyal customer base. But companies are beginning to wise up to the fact they may be taken advantage of by the Groupon business model and really the only business being rewarded with a loyal legion of customers is Groupon itself.

Groupon’s business model could be seen as flawed as it means the businesses featured take a massive hit to their profit margins. In fact, the merchant gets back just 25% of the RRP, leaving very little to cover the day-to-day costs (Read a horror story from the US here).

An Irish consumer that has now lived through at least one Recession, is a bargain-hunting consumer and we seem to have adopted a mindset of frugality post-Celtic Tiger that looks set to stick around. However, Groupon appears to be on thin ice with regards a backlash from businesses they partner with. Currently, Groupon’s business model does not look to be a sustainable one and until it restructures its payment structure and offers more longer lasting and profitable benefits to its merchants, you would wonder how much life it has left in it. Operating in 500 markets with over 60 million users a backlash, if it comes, would be debilitating. Perhaps CEO Andrew Mason shouldn’t have turned down Google’s $6 billion bid

  • For more on Groupon’s and competitor site’s business models, see here
  • If you want to know more about Groupon addicts’ behaviour, click
  • And for more Extreme Couponing craziness, visit

– Catherine Clifford

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Comments
2 Responses to “If it sounds too good to be true…”
  1. John Gallen says:

    ‘Dot Com Bubble 2: Will Investors Ever Learn?’
    and ‘I Know What You Invested In Last Time’ will be on Venture Capital big screens by the end of 2012!

    I too fail to unsubscribe from these deals – City Deal, Boards Deals, Living Social and Group On… makes me wonder whatever happened to PigsBack?

  2. Rog says:

    Ha ha that coupon lady is a genius. The good news for the companies is that after 150 Butterfly bars I don’t think she’ll be able to fit in the door to scam anymore. The Budweiser temperature gauge App is cool by the way. Good post Catherine thanks. PS Just noticed you got the Gold Medal for your dissertation in DIT [cough ‘nerd’]

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