GroupOn principles

Most of us know about Groupon by now. This is a company, that helps companies give Coupons in bulk (Groups) and essentially brokers a deal for the customer to a cheaper deal. Its been there less than two years now and if my memory serves me right, it has shot up from 1 customer to about 20 million customers already.

Groupon does some simple stuff.
1. Geo or location based services
2. Any mom and pop shop can offer a Groupon and get business
3. Volume based
4. People love trying out new things, but they don’t want to spend too much on new things that they’re unsure of
5. Provides additional services such as customer support, additional context, tips etc. For example, I mentioned my location in US. It instantly recognized that Iam an Indian and showed me a Group from an Indian restaurant with a 50% off for dinner. It also gave me context including how long the restaurant has been there, the history of its owners and tips for choosing a menu etc.

So, I, as a customer, not only got a economic deal but also got valuable advise which is emotionally satisfying.

The psychology of the human mind always wants a 'gift'. We have been built up with a tendency to get a gift from childhood. Most salary packages that are readily accepted are those with benefits and perks than those without benefits but have the internal costs factored into the main salary package. A 'deal' is a gift and the human mind says 'I got something free'. Groupon not only emotionally satisfies you with a gift-ing deal but also provides you additional friendly advise that makes you even more secure.

I would love to have similar benefits in my home city - Bangalore.

Justdial.com is my favourite dial up service for anything I want. While it is a great reference service, I do not get anything as a 'deal' as a customer.

Similarly with makemytrip.com or Indian Railways ticketing site or the PVR cinema site.

If I can get a free deal if I refer three other friends (remember Amway and those door to door reps?).

A market place should not only sell something to the customer but also 'unsell' something from the customer. Makes sense?

The margins will come.