Confession: I have a daily deal addiction. I get ALL of the emails. They clog my inbox: Groupon, LivingSocial, HomeRun, kgbdeals, Tenka, Lifebooker, Gilt, GiltCity, Yelp deals, MarketShare, RueLaLa, Travelzoo. [If there are any subscriptions that I am missing, please let me know. No, seriously.] Who do I have to thank for making the task of keeping my inbox clean an impossible one?
The first coupon was created in 1894 by Coca-Cola (they’re such marketing innovators!), who had its employees and sales representatives distribute tickets for complimentary soda. Coca-Cola sent free syrup to every soda fountain selling its pop in order to cover the cost of these coupons. This tactic single handedly accounted for Coca Cola being served in every state in the US in just a year’s time. Couponing really took off when Post began distributing coupons for their cereals in 1909.
Fast forward a century and the forms a coupon can take are nearly limitless. Traditional coupons are still distributed (clipped from the Sunday paper, sent out in the ValPak, left in stacks on store counters, redeemable with a rewards card), but the digital space has brought couponing to an entirely new level. A clickable banner offering a discount, an emailed discount (redeemable online or in person), printable discounts, offers to Facebook fans/Twitter followers, promotional codes, QR code discounts, and daily deals all fit under the coupon umbrella.
Groupon, founded in 2008, single handedly changed the terrain of discounted shopping by leveraging collective buying-power in order to obtain a deal for the masses. In 16 short months, Groupon fever swept the nation. Unluckily for them (luckily for me J), the collective buying-power model is easily mimicked and the daily deal space has become extremely congested.
The decision to offer a product or service at a discount can be a precarious one. On the one hand, it encourages price-conscious shoppers to buy a product that they wouldn’t normally buy at regular price. A business can drive traffic during traditionally quiet times. A deep discount can convert a curious shopper into a brand loyalist. A great deal of exposure is gained without having to make a huge marketing investment. But, on the other hand, discounting can be viewed as cheapening the brand. Why should a luxury brand offer its sunglasses on Gilt if they want to be perceived as exclusive and elite? Discounts that don’t create repeat customers are really just lost revenue. In the economic climate that has reigned since 2008, all indications point in favor of offering discounts.