Case study: Groupon and General Mills Expected benefits • By pooling users together and having them commit to the deal, Groupon negotiates better discounts with local businesses • Local businesses are assured of the breakeven even before launching the discount • Local business can manage inventory better during the scheme duration
Groupon • Groupon is website that features one dealper-day across multiple cities in the U.S. Users of the websites can subscribe for taking the deal. Once a predetermined number of users prescribe for the deal it gets activated and the users are notified accordingly • On April 21, 2011 General Mills offered 12 products in Minneapolis and San Francisco such as Fiber One bars, Cinnamon Toast Crunch and Kix cereals for $20, a discount of more than 50 percent of the value of the package, through Groupon Expected benefits
Indication of success
Implications to CP Firms • Unique way to promote and encourage sampling of new and existing products • Allows for experimentation with direct-to-consumer shipping model for consumer product companies
Implications to CP Firms
Indication of Success • As of October 2010, Groupon served more than 150 markets in North America and 100 markets in Europe, Asia and South America and has 35 million registered users • The General Mills offer was sold out on the day of release. The company had 5,000 total packages for sale under this promotion
General Mills used Groupon as sampling exercise, where customers can try a dozen of its products. According to Karl Schmidt director of product marketing at General Mills "Our goal is to get trial and penetration of our products, and get repeat purchases off that trial”
Sources: <http://www.appappeal.com/app/groupon/>, accessed May 20, 2011 <http://www.groupon.com/>, accessed May 20, 2011 Ziobro, Paul, “ Mills Offers Groupon Deal In Two Cities” The Wall Street Journal , April 21, 2011, <http://online.wsj.com/article/BT-CO-20110421713306.html>
26