Should You Run a Groupon Promotion?

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Groupon logo.

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If you’re subscribed to Groupon, or one of the now umpteen other daily e-mail blasts offering discounted products from businesses in your neighborhood, it often feels like just one more thing to clog your inbox. But what if you do decide to take them up on a deal? What if you realize, Hey, I do need $40 worth of cupcakes for half the price? How do these deals actually affect the small businesses on the other side?

Launched in November 2008, Groupon estimates that their annual revenue has reached one billion dollars. Billion! So where does that leave the small business owner? How many of them are satisfied enough with the results to sign up to run another? Groupon tells us that 95 percent of merchants want to do it again. A study out of Rice University tells a different story: it’s more like 58 percent.

“It’s definitely a good way to get your name out there. If you stand behind your product, and can produce enough product, it’s worth it,” said Romel Tovar, the marketing manager of Grandaisy Bakery , which has three locations in New York City. He ran a promotion through Groupon in February of 2010: $15 worth of product for only seven bucks. That works out to a sandwich (on their fabulous bread) or slice of pizza (also baked right there) and a coffee, plus a loaf of bread to take home.

Tovar says they sold about 8,000 of the Groupons; about 6,500 people redeemed them.

Continues at:  Should You Run a Groupon Promotion? : Managing :: American Express OPEN Forum.

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