A Less than Optimistic Observation about Groupon

You may have heard about the sizable bid Google placed for Groupon.

And apparently, for Groupon at least, $6 billion isn’t enough. Your company exit strategy may not call for such a figure to be eclipsed before you decide to sell. Groupon has other ideas however. While outsiders may be critical of Groupon, they should at least be recognized for trusting in their company strategy.

The Groupon model is simple. It requires direct marketing. And therein, according to this article, is the problem. Their marketing strategy may ultimately create a low ceiling for the company. Whether the $6 billion refusal will come back to haunt the company is unclear. But over the years, direct marketing companies have struggled to stay profitable. Their markets tend to dry up, and once-profitable options available to the company don’t have the same sort of returns.

The takeaway here? Companies looking to duplicate Groupon’s success will be hard-pressed. The feat, however, isn’t impossible. Read the full article by Jeff Bussgang for more on the reality facing Groupon.

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