Groupon Essay

Groupon is an online service that delivers coupons to consumers through a middleman service that deals directly with local businesses. They offer deals approved directly by the business and split the profits from said deals evenly. An example to illustrate would be buying a bowling pass for $20. Split 50/50, Groupon and the bowling alley would each receive $10. The service is offered for all kinds of businesses and isn’t limited to services and is applied to goods that are being sold at a discounted rate as well. Groupon has experienced remarkable success in the United States but has not succeeded in developing a strong international presence, especially in Asia. Groupon has experienced many roadblocks in Asian countries and has had to stop

In general, it is hard for foreign companies to establish themselves in the Asian market, especially in China, because of the strong cultural background. It will not work out well for a foreign company to adapt its marketing model to the Chinese market. Marketing models such as direct marketing of the brand, which works well in the American market, is likely to fail in the Chinese market. Although Groupon has spent millions into marketing its brand on the Chinese market, the Chinese customers were not ready to see the brand’s products being better as the one of its competitors. Chinese customers are less likely to be loyal to any brand due to their low levels of indulgence. For a Chinese customer what counts the most for a purchase decision is the price and Groupon has failed to recognize that. In America and Europe, Groupon was able to simply rest on the laurels of it’s brand name and influence. They were not able to adjust to the demands of the Chinese and wasted money in an attempt to persuade customers to think in a way that they had no idea how to. This low indulgence also made the negotiations with potential suppliers for the deals difficult. They first insisted on having 50-50 split of profits with the vendors, without knowing that the Chinese vendors have so much power in the

Their advisors and partners on the ground in China, Tencent, attempted to advise them against many of their cultural faux pas but to no avail They failed because they mistakenly assumed similarities to their way of doing business in the United States. Unlike people from Asia, Americans want to implement a business decision as fast as possible. While the US-managers of Groupon pushed to enter the market, the managers of Tencent proposed to wait for the right moment. The tensions led to the shut-down of the jointly run website by the managers of Tencent. The problems were also caused by the different temporal orientation of the managers. In general, Western cultures are short-term oriented while Eastern cultures tend to be more long-term oriented. The US-managers were obsessed of making high profits in a short amount of time, while their Chinese partners urged them to first take steps that support long-term oriented goals like the focus on the company´s strategic