Groupon Price Erosion
Image by Intersection Consulting
www.intersectionconsulting.comThe problem with Groupon from a strategic perspective is the ripple effect that results from a promotion model purely focused on price.
As the frequency of Groupons increase price integrity will tend to diminish, resulting in a decline in profitability. There is also the chance that the number of new customers getting exposed to your business declines. With each Groupon you are essentially conditioning your existing customers to only frequent your business when there is a deal.