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Why Groupon Works

// Posted by on 03/03/2013 (2:48 PM)

Why is Groupon so successful? Jonah Lehrer, a writer for Wired, believes that there is no neuroscience behind Groupon’s business model. Another Wired columnist, Steven Levy, refers to the company as an overhyped coupon distributor. The notion… Read more

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Why is Groupon so successful? Jonah Lehrer, a writer for Wired, believes that there is no neuroscience behind Groupon’s business model. Another Wired columnist, Steven Levy, refers to the company as an overhyped coupon distributor. The notion of collecting coupons has existed for decades, but the rise of the Internet has given the consumer a whole new way to forage for discounts. Groupon has sought to target the parts of the brain that worry about price and spending money, rather than targeting parts that respond to sensory stimulation, such as smell. For example, the zoom-in feature allows the shopper to see the product in even greater detail. In an experiment with undergraduate students, their exposure to an item triggered their nucleus accumbens (NAcc). An interest in the item revealed a spike in activity. The price tag of the item activated the prefrontal cortex and the insula. Using these different reactions form the brain, scientists were able to predict the subject’s decision before it was made. The thrill of getting something new often could not compete with spending the money.

 

Groupon (and other online retailers) could focus on stimulating the NAcc or on restricting the prefrontal cortex. The first is achieved through marketing and making the customer feel the need for an item. The second is a delicate process, making sure that the consumer feels like he/she is getting the best deal on an item, or the most benefit for the price. With so many retailers today, most people just open their smartphone and perform a quick Google-search to price compare and make sure it really is a good deal. Groupon competes with those discounts, but also gives the consumer a limited time frame for decision making.

Overall, Groupon has to make up for the lack of tangible contact available with their products. Detailed pictures, elaborate descriptions, and low prices all work to draw the consumer’s attention without activating the “buyer’s remorse” feelings. The company supports local businesses, but has also altered the way we look at list prices. Now because of Groupon, most services are available at a discount as long as you wait long enough. Massages, exercise classes, and salon services are just a few examples of products that appear on a daily basis on Groupon.

I have been a pretty satisfied Groupon user, with only a few complaints about their “fine print” being a little too restrictive. I think I definitely fall victim to the mindset of “it’s such a good deal, how could you not buy it?” While I was in Australia, I wanted to get my SCUBA license so I checked Groupon ¬†Australia to see if there was anything out (because normally it’s about $5-700) and sure enough, within a few days I was able to get a coupon for $100. This example further illustrates my consumer mindset that I can find pretty much anything at a cheaper price than full. Groupon is even able to discount things that never go on sale, such as sunglasses, by offering “$25 for $75″ at a given store (aka Sunglass Hut). Think about how you have been impacted by discount retailers. I’ll be the first to admit I’ve fallen into vicious online spending habits given the convenience and (perceived) great deals.


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A Case for Collaboration?

// Posted by on 03/26/2012 (10:21 PM)

Collaboration can be a powerful tool. However, is it in our nature to collaborate? Forbes says yes, at least for female collaboration. While musing over the general notion of collaboration, I looked back on my personal experiences. Collaboration is arguably… Read more

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Collaboration can be a powerful tool. However, is it in our nature to collaborate? Forbes says yes, at least for female collaboration. While musing over the general notion of collaboration, I looked back on my personal experiences. Collaboration is arguably frowned upon in schools (think doing homework or assignments collaboratively… in most schools this is considered cheating). If individuals are conditioned through education and collaboration is not encouraged, is it possible to expect collaboration through the internet to solve problems? Of course, there are moments—group projects— when collaboration is encouraged in schools. However, most individuals fear group projects because they cannot control every aspect. In group projects, every member should have an equal share in the work. While that’s wonderful theory, anyone who has ever been part of a group project knows that this is rarely the case. There is usually a group “leader” who usurps the power and probably does most of the project allowing the other members to merely write their names on it.

So this morning when I stumbled upon an article on Forbes.com that discussed the rise of social collaboration, I was intrigued. The articled discussed a theory of the owners of HACKEDit.com “that acknowledging a major difference between men and women will make all the difference for the tools of Web 2.0 being built today.” The difference is simple, four words:

Men network, women collaborate.

About 77% of Groupon’s income come from a female consumer base. The company just took their ability to tap into that market a step further through the creation of the Groupon Scheduler, which will allow women to collaborate online directly with the businesses they use. There is no denying that men network and women collaborate. Linkedin has done it’s own research and found that “globally, men are more savvy networkers than women.” Moreover, the Pew Internet Research found that nearly twice as many men use LinkedIn as women (63% vs. 37% respectively).

The article ultimately states that it is surprising that such a “lack of online social collaboration tools being designed for women” exists. I found this whole article rather interesting and surprising, since I do not usually view females as better collaborators than men. I think Jane McGonigal’s TED Talk on Gaming and her I Love Bees article, really challenge the legitimacy of this theory. From McGonigal’s viewpoint it seems that anyone can be an excellent collaborator if provided the right mindset.

What do you think? Are women natural collaborators? Can men be as well? Does Jane McGonigal challenge your initial beliefs?

 


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