Many companies are realizing that while they don't need to go out and spend money on big marketing campaigns, there are other ways to get the word out about their products. Group buying is one of these. The success of Groupon has demonstrated that this is a good way for companies to generate buzz surrounding their business.
Some people think of group buying as another avenue for one company to cut into the market share of another.
A company that is looking to increase their customer base should consider using group buying. Group buying is the process of getting many people together to purchase a product or service at a discount. Group buying can be very beneficial to businesses because it generates word-of-mouth advertising by reaching out to larger numbers of potential customers. Group buying campaigns are also highly economical for the company since they only have to focus on one product or service, rather than marketing campaign for each individual.
In this article, we explore one of the many different ways that a company can use group buying to their advantage. Group buying is a form of commerce in which a large number of people combine their individual orders to collectively purchase items at a reduced rate. Companies often use group buying as a way to promote products or services, increase profits, and gain publicity.
Tuangou is the name given to the phenomena in China, where it first appeared (look it up on Wikipedia if you want to know more). Everyone who signs up will get a daily deal from local companies, which is the core principle. There is only one offer, and the offer does not become active until a certain amount of individuals has accepted it. Once a sufficient number of individuals have signed up for the offer, whether it is for a coupon for a half-price pizza or a one-time payment for a discounted course of hair removal, the offer is activated. The money is then collected by the site and sent to the local business owner. The company then simply goes about the task of honoring the agreements or contacting the new clients directly.
While Groupon continues to be the market leader, Living Social is growing in popularity, and Google is preparing to join the market with Google Offers in the not too distant future. A slew of clones in specialized markets are also available.
What are the benefits of group purchasing for businesses?
Group purchasing can be an excellent resource for businesses. They are able to buy goods in bulk, which saves them money. This way, they are also able to get more variety in their products. Group purchasing also provides both the supplier and the buyer with better bargaining power.
Businesses can save money or gain access to goods and services using group purchasing. There are various ways to group purchase, including an organization of small businesses joining together to negotiate favorable pricing. This may involve a small business joining an organization like the National Association of Purchasing Managers (NAPM) or the International Association for Commercial and Industrial Security (IACIS). NAPM offers members discounts on products, services, and insurance as well as access to educational programs.
Group purchasing is an agreement between a group of stakeholders to get better prices for goods and services than could be obtained if they acted separately. Group purchasing can provide businesses with the opportunity to save money by obtaining better deals on goods and services.
In one day, how would you want to get 50, 100, or 500 new customers? How would you like it if you didn't have to pay anything up front? This is the possibility that group purchasing websites such as Groupon provide. If you own a company such as pizza or dry cleaning, which already gives discounts on a regular basis, this is an excellent method to increase your visibility even more. If you own a firm that is in desperate need of new consumers, group purchasing may be a huge success. It is not uncommon for offers to be purchased by hundreds of individuals at a time.
What is the cost of group purchasing?
It is customary in the group purchasing industry to provide a discount of 70 percent to 95 percent off your normal selling price. The money obtained by the site is then divided between you and the site, with the site receiving between 25 percent and 45 percent of the total money collected. Yes, you may only get 25 percent of the RRP, but keep in mind that this is income, not expense, and consider how much marketing budget would have been required to reach that result.
What kind of firms are most suited for group purchasing?
Local B2C companies will almost certainly find group purchasing to be quite useful, but that does not rule out the possibility of group buying being beneficial to B2B firms as well. There are a plethora of websites available that cater to various populations.
Is it effective in the real world?
Yes, in a nutshell. You may promote your company to thousands of individuals in a single day, and you might possibly get many new clients in that same day. Even if someone does not take advantage of the offer, they will have seen your name and will remember you in the future. The result is immediate brand development effect!
In order to save money, Dinnersmith, a small-town American restaurant, decided to try out Groupon. Their promotion included a cheap dinner at their newly opened restaurant, and they sold 600 meals on the first day the promotion was available.
This is just one example of how group purchasing works. There are many more. To put it simply, it is a method of acquiring hundreds of new clients in a short period of time. If these new customers are handled properly, they will become repeat customers.
What happens next?
You've gained new consumers who have tried your service or goods; now what? How can you transform them into long-term clients? This is where your old-fashioned marketing comes back into the picture. Newsletters, emails, direct mail, and social media activity all contribute to the development of your brand and ensure that your new clients don't lose track of who you are.