Does the business benefit from group buying promotion? New research published

Professor Utpal M. Dholakia, Rice University, the guy who made probably the first academic study about group buying promotion published a new paper – “A STARTUP’S EXPERIENCE WITH RUNNING A GROUPON PROMOTION”. He did this job with Gur Tsabar from Gourmet Prep Meals (GMT), a start-up that participated in the study.

GMT is a start-up business from Texas that sells ready-to-cook food sets online. After couple months of operation GMT launched Groupon promotion and share with researchers all the data from their accounting system to analyze the effect of group buying promotion to GMT business.

Key fundings:

  1. Groupon promotion definitely boosted the revenue;
  2. The overall profit was not affected significantly before the end of promotion, taking in account coupons that were not used the effects is positive;
  3. The margin dropped during the promotion;
  4. Peak loads with most active redemption of coupons were the start and the end of promotion time, heavier at the end, just before coupons expired;
  5. Group buying customers are especially useful for start-ups, since help to test the business model and provide valuable real feedback

Full report is available at Dr. Holakia’s page:

Does your digital marketing campaign work?

There is an old quote (reportedly from John Wanamaker) saying: “I know exactly that half of my advertisement doesn’t work, the problem that I don’t know which half”. That was a real problem which businesses faced in the middle of 20th century. Fortunately now, particularly for digital advertisement, we can answer this vital question and understand which our marketing activity works well, which not so well and which actually is a waste of money.

Strictly Business: ROMI of online advertisement

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