Groupon: A business for times of crisis

I was taking a look at Steven Carpenter’s article “A TC Teardown: What Makes Groupon Tick” and I can infer that Groupon is the perfect Business for times of economical contraction.

Groupon takes advantage of groups and sell discounts and deals of other companies, they offer deals per city and currently the company is in almost every city in the US and serves around 52 markets. Groupon earns a share of their sales and it’s clients attract more customers, more volume, which is translated in an increase in sales. But this are not the only benefits of Groupon you can check this article of Evan Miller and he explains why people love Groupon, you could even finance a small business with coupons. I don’t know how accurate could this be, but at least is a possibility.

Some people question the viability of this business model. But if you take a look to some of the facts I don’t know up to what point is questionable. Groupon was established in November 2008; a couple of months after the financial melt down of Walls Street, not a good scene for a start up. Moreover Groupon has not only survived over the financial crisis, according to Carpenter’s analysis, since November 2009 sales has multiplied by 5. Carpenter analyzes two days, November 6^th 2009 and April 16^th 2010; the volume of customers has increase in 358% and the total volume in coupons sales in 428%. Besides the traffic of users has boosted from 900,000 in November 2009 to 3 million users in April 2010.

Even though “the competition is growing like mushrooms” Groupon had known how to maintain the leadership. Receiving this year buying offer from Google for some billions. To make your own conclusions you can check this article of the Wall Street Journal about “Why Groupon was right to say no to Gloogle?”

So, why is not groupon’s business model viable?

Is it really marketing?

What do you think when you listen the word marketing?? Personally I think of sales, creativity, customers, innovation, competition... a lot of things come to my mind, but I don’t imagine a lab with scientists experimenting with customer's mind, and brain responses from diverse stimulus to create the most sophisticated and persuasive marketing.

In my undergrad I learned that firms usually used some techniques for data collection like focus groups, surveys, interviews, observation... Now is widely known that companies use social networks to collect data, by looking at people’s conversations, interests, age and even marital status. And non conformed with invading people's privacy, now they are trying to get into the people’s mind? That’s cheating!! Then, marketing doesn’t make sense any more... Where is all the creativity?... where is all the fun?. Check out this video you will understand better what I’m talking about. Is this new trend called Neuromarketing.

What will happen with small businesses and young entrepreneurs that doesn’t have the means to compete with all this new and advanced “marketing techniques”? That's not fair competition. I am conscious of the benefits of the evolution of science, but, what is ethical and what is not? If the evolution of science is going to lead us to a world of robots where companies are trying to hypnotize customers with their marketing. I don’t want to be part of this evolution. I believe in creativity, innovation, in making the best product and advertise to communicate the benefits of you product. And let consumers make the decision when they have to decide between your product or your competitor's.