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1. What is Groupon
2. Using Porter’s Five forces as a framework, describe the competitive environment
of the collective buying industry, pre-Groupon and post-Groupon
3. What is the viability of Groupon? Will this business survive in the long run, or will
it fade away?
1. What is Groupon
Andrew Mason launched his first new venture “The Point" in 2003 in partnership with Eric
Lefkofsky. The Point offered ideas to companies and/or people where they could start a
campaign for a cause, any particular cause. This offered the ability for any person or group
of persons to form a group with people who had similar agendas, passions or interests. The
Point allowed you to connect with individuals whom were not only in your local city but
anywhere around the United States. Although it was a brilliant idea, mega investor Lykoski
was unable to fulfill for one reason, he wasn’t able to make any money. However, this now
gave Mason a great new platform to set up and launch his new venture, Groupon.
After failing with the initial launch of The Point, CEO Andrew Mason launched Groupon,
which was intended to be a Third Party Service Company. Financially supported by Eric
Lefkofsky, who owned Innerworking, Groupon was developed to offer the deal of the day
based on your location which allows you to see activities at a discounted price in your
local area. Groupon (developed from “group coupon") has revolutionized the couponing
market. Mason who completed his degree in Chicago chose to set up his segment market
in Chicago and Groupon was launched in 2008 with a target market of Chicago and was
quickly followed up by other bigger cities in the United States. The concept is simple, the
user signs by providing vital information like email address, city, and state. Via email or
through their application that can be installed into any device, local deals are made
available to you based on your demographics, offering popular deals and visibility to
events, places that the user may not have known existed.
After his attention launch, Mason was trying to figure out what would help him sell his
new Groupon. He tried to find things that would help his product stand out and create a
buzz in the market place. On its own, the buzz was created by the users once consumers
began to use the service simply because it offered new deals and it allowed the user to
