Wednesday, September 14, 2011

Saying No to GroupOn

GroupOn is the new darling of deep-discount promotions.  Each day they offer a deep discount on some product or service, like "Get a $20 dinner gift certificate for only $10"; typically the quantities and buying period are limited, so people stampede to redeem the offer.  The merchant gets the proceeds minus a cut taken by GroupOn. GroupOn's reach is so wide that its aggregating power virtually guarantees you'll sell a lot of whatever you're offering.

Altarena, a theater on whose Board I serve, was recently approached by GroupOn asking if we wanted to offer discounted show tickets through their program.

We said no.

We're not averse to discounting; we offer half-price and complimentary tickets through Goldstar.  Why would we turn down GroupOn, whose reach is surely much wider?

But that's the problem.  While there are caveats about offering too many comps or half-price tickets on Goldstar, at least we get customers who are interested in live entertainment, and might therefore become repeat customers. In contrast (and with no disrespect to GroupOn), I suspect most of the customers we’d reach there would just as happily take half-price hot dogs, because GroupOn’s focus is the idea of getting the discount, not the specific product category offered.  In contrast, Goldstar has positioned themselves as offering  bargains for people who want to “go out more”.

It’s already a challenge for small theaters to identify their niche audiences, even from among a group of known theatergoers.

GroupOn may put some butts in seats, but it won't keep them there.

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