Groupons Business Model - Case Study Example

In terms of simple economic principles, satisfied customers would lead to greater demand or essentially an increase in demand. However, surveys indicate that retailers operating with Groupon do not plan to issue similar deals for another six months or so once they have allowed one deal package (Sloane, 2012).From Groupon’s perspective, this means one thing only – a noticeable decrease in demand once retailers have used Groupon as a fast marketing tool. Essentially Groupon has the resources to galvanize large numbers of customers since it is connected to those customers.

Retailers working with Groupon utilize this power of Groupon by using flash marketing by allowing deals to take place. Careful buyers will be expecting more deals in order to shop more but retailers will never be ready to sell their goods or services at discounted prices repeatedly. Hence, this would lead to a demand decrease on the part of the retailers for Groupon’s services. This decrease in demand has affected Groupon’s business the most since supply is still available though at unfavorable price levels.