Group-Buying Site Use for Cause Marketing

Cause marketing and companies can work together to raise money and build awareness through group-buying sites. You’ve probably heard of or even bought a discounted product or service from Groupon or Living Social. They are the two best known names in group buying, which is when a specified number of people agree to purchase a discounted offer.

If the minimum number of purchasers is not met, no one gets the deal. As you can see in the following figure, this small, local restaurant’s offer is basically 50 percent off for everyone who bids on the deal if the minimum number of bids is met. In this case, the minimum of 100 bids was greatly exceeded, and, in fact, at least 797 people are getting the deal.

Businesses love group-buying sites because of the sales promotion and the quantity discounts. Consumers love them because of the deep discounts they get, generally 50 percent or more.

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But group-buying sites aren’t just for products and services. They’ve also been shown to work for causes. In 2010, Groupon teamed up with DonorsChoose.org for a deal and raised $162,000 for classrooms in need.

The nonprofit group used a grant from Pershing Square Foundation to match money that Groupon users spent on charitable gift cards to DonorsChoose.org. If a Groupon user paid $25, the foundation doubled the gift to $50 to fund education projects on the DonorsChoose.org website.

Nearly 1,500 coupons were sold, many of them to people unfamiliar with DonorsChoose.org, according to the organization.

Groupon also worked with National Public Radio in Los Angeles. The station sold $50 memberships at a discounted rate of $25 using Groupon. After the 50 percent cut that Groupon takes — a common percentage for group-buying sites, but it’s sometimes waived for causes — this Groupon deal raised nearly $11,000 dollars.

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Group-buying site Living Social has also raised money for causes, including Donorschoose.org and Global Giving. Through the 12 Days of Giving, which gave 1 percent of every Daily Deal purchased during the 12 days leading up to Christmas, Living Social raised $130,000 for DonorChoose.org and GlobalGiving.

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