[clayturk]

The idea that providing a deal or deep discount will somehow reveal your price points, making people demand product at that price is ludicrous.

When a business structures a deal of this nature they are doing so with their bottom line in mind, and should know that whatever money they recoup from selling the deal will at least cover their costs.

The main idea behind running these deals is to get new business in your door while minimizing the cost of advertising and promotion. It is up to the business how they choose to retain this new growth, and most businesses employ great customer service and or a slew of other great products at full price.

As Fred2baro said, this the businesses chance to engage with a customer you would of otherwise had no access to. That in itself seems worth offering something at cost one time to that new customer.

In the case of a restaurant, this is no different then the traditional offering of a "2 for 1" or a "50% off" deal through traditional media. In both of those situations the restaurant is showing their "real" price, as you said, to the would be customer, but with no guarantee of use. This is where the daily deal truly shines, for in order to take advantage of the deal, the would be customer has to put up money, i.e. purchase the deal. Talk about a brilliant incentive to get someone into a business, they are paying the business for the chance to win them as a new customer. As a business owner, I don't understand how this could be a negative.

[stevejobs]

Subsidies like these are inefficient for businesses because they don't discriminate between customers who are new to the business and regular patrons. It doesn't really increase demand so much as pull it forward a la "Cash for Clunkers" meaning you are subsidizing customers who would have bought anyways.

[clayturk]

Really? In what way? There are actually many methods available to track users of said deals and determine who is a repeat and who is a new customer.

You are missing the point of running a daily deal, it is not to increase demand so much as it is to increase exposure. Obviously no business could survive on these deals alone, which is why they are designed to only be for targeted periods of time and to targeted areas. The whole point is to get people in who are already in the market, but are tentative to try something new, or otherwise unknown to them.

Sure someone who buys a massage deal is probably going to buy a massage somewhere, but the beauty of running a deal is you have a better chance to expose that customer to your business instead of where they might have otherwise gone. The same can be said for any business.

Increasing exposure is the point. If this can be accomplished with no money up front(unlike traditional marketing) and with guaranteed usage(unlike print coupons)the business comes out ahead.

[fleitz]

Why not just make the groupon offer profitable and then the issue of discrimination becomes moot. The key to using groupon or any form of marketing is to improve your bottom line. The business needs to be setup in such a way that even if the groupon offer is a loss leader that the traffic generates additional revenue.

[dasil003]

I think this is demonstrably false. The horror stories of businesses not being able to handle the huge flow of customers pretty much prove that many people would not "have bought anyways".

[clayturk]

In the case of certain Deal Providers, the one's who do not give the business much control over the details of their deals, I agree. However, this is not the case with a site called adility.com. They allow the business to control their deals and cut them off when the business so chooses.

You are making the assumption that these businesses only have a set number of regular customers and no idea how to interact with any new customers. Trust that any successful business will know how to and want to grow their business. It is entirely up to them how they handle whatever influx of new business they receive as a result of running a deal.

Additionally, while I agree that there have been a few horror stories, in what way does this prove that the people purchasing these deals "would not have bought anyways"?

The fact of the matter is that the majority of businesses are happy with the end result of running these deals. Most gain a significant number of new customers which more than offset any possible losses they may have had in running the deal in the first place.

The businesses who haven't been happy were either exploited by their lack of research into this growth model, or didn't have control over their particular deal. The latter again being addressed by a few new deal sites out there, adility.com being the first.

[dasil003]

Your response is all over the place and making a lot of assumptions about my beliefs that aren't true. I was only posting a one-off response to unfounded assertion that groupon buyers "would have bought anyway". Don't read too much into it.

[mikeryan]

and should know that whatever money they recoup from selling the deal will at least cover their costs.

I'm not sure if this is possible with Groupon. Between a discount good enough to be accepted and Groupon's cut taken out you'd have to be running an extremely high margin business to still cover costs.

[clayturk]

Which is why WHO you have distribute your deal is so important. If you are a small business, do your research.

Again, I get what you are alluding to, but the fact of the matter is you are only speaking generally, this is possible, and in fact happens every day. Maybe not with Groupon per say, but there are others. If you are a small business, adility.com is your friend.

This model is designed to get mass exposure, but it is ultimately up to the business how massive the outcome will be.