Never a Lack of Ideas

This is my second post on Groupon's market segmentation strategy. Read the first one here . One Giant Change Groupon made a big change recently: Within each city it serves, the company is now using customer addresses to offer different "deals of the day" on its website and through its emails. On July 13th, 2010, Groupon sent its Chicagoland customers one of four different emails that each contained a unique deal of the day (three of the emails appear on the right). The deals were for organizations located in Naperville, Long Grove, Gilman, and Chicago. The corresponding side deal of the day and newly-created "deals nearby" in each email comprised the three other deals. I received the offer for the establishment in Naperville because that's where I live. My co-workers received the other offers via email based on where they live. The Importance of This Change This marks a noticeable shift in the way Groupon has done business up to this point and it shows that...

One Great Deal Per Day Groupon has experienced tremendous growth because it offers one fantastic deal and one small "side deal" per day to a group of people in selected cities around the country. Yet, Groupon's existing business model only allows for growth in the form of attracting new customers in existing cities or expanding to new cities to attract new customers. Eventually, Groupon will run out of new cities in which to expand, so it needs to find a new way to grow. The solution? Sub-segmentation and targeted offers. Segmented Markets Aren't Good Enough Groupon currently segments its customers by geographic location. Essentially, the company has two key business principles: Offer one featured deal per day on the website, based on the city in which you live. Encourage customers to sign up to receive one email per day about the deals of the day. Herein lies Groupon's dilemma: The company knows that a certain percentage of its customers will not be interested ...