Group Buying- How successful is it as a Marketing Strategy?

magnet attracting dollarsThe latest concept to have made an entry into the Marketing lexicon is Group Buying. Also known as Collective Buying, it basically means channelizing the power of the masses to get more footfalls for your business by reducing the per unit price of your product/service.

How does it work?

There are 3 parties involved- the Business, the Group Buying Site and the End Customer. Businesses post deals on Group Buying sites. When a minimum number of people sign up for the deal, the deal becomes active. The customer can then use the deal coupon at the merchant outlet to get a discount.

The Group Buying site gets a cut from each deal. The Business gets an assured number of customers. The customer gets a handsome discount. It is a win-win situation for all. Or so it seems.

Marketers are divided in their opinion on using Group Buying sites as a potential marketing tool.

Those who advocate the use of Group Buying site as a promotional strategy believe that:

  • They give instant results on your marketing campaign.
  • The reach of these group buying sites is phenomenal.
  • It helps in creating Brand Awareness and generating footfalls.
  • It can be an extra source of revenue (case in point: giving discount during lean periods of your business)
  • It helps in clearing dead stocks.

Those who think that Group Buying sites are just a marketing fad believe that:

  • Once you advertise on Group Buying site your business gets typecast as a Discount Brand. It is very difficult to come out of that mould later.
  • There are too many of these Group Buying sites currently operating with little or no differentiation. Choosing the right partner is difficult.
  • Currently there are only certain categories of Deals that are popular on these sites- Lifestyle, Food, Health & Beauty,etc. What happens to others who do not fall into either of these categories?
  • It does not make business sense- after the discount to the customer and the cut of the Group Buying site, there is very little left to take home.
  • There are other free or cheaper ways to attract your customers through discounts- Facebook, Twitter and the likes.

Whether it is viable for Businesses in the long run or not that time only can tell but as of now customers are having a gala time using these group buying sites. Their wishlists are extending day by day. What they need now is a little bit of personalization and more focused deals. Hope somebody’s listening!

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *