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Web Marketing use of Group Coupons and Daily Special Sites

The term social shopping, refers to a group of strangers saving money by collectively buying online. The group coupon has emerged as a new way to aggregate (collect as a whole) buyers — usually in specific cities — by offering a daily deal discount of 50 percent or more by way of a website or e-mail.

The catch: A deal applies only if a minimum number of buyers sign up for it. A group coupon can help small businesses introduce new products or services, attract new customers, fill quiet periods or seasons, or build loyalty with current customers.

The best-known services of this type are Groupon, which filed an initial public offering in June 2011, and LivingSocial, though they have lots of deal-making competitors. You may find that your location and budget and the number of deals you can comfortably accommodate are better suited to a smaller deal provider.

As a merchant, you gain brand awareness, a direct appeal to locally targeted markets, word-of-mouth advertising, and high visibility to a new customer stream. The low-cost offer reduces, in theory, the risk of trying something new. It’s your job to turn these one-time experimenters into loyal repeat customers.

Seller beware! Small businesses with shallow pockets sometimes can’t handle the pressure of serving many customers at a price below cost. Many companies, especially restaurants, now report a loss in revenue whenever existing customers snap up their coupon deals.

Rather than receive the full price for a meal or service, merchants see only 25 percent, turning coupons into an expensive loyalty program for existing clientele. Read a cautionary tale of Posies Café’s experience with Groupon.

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