Deep discounting in groups is a marketing mechanic that has been around for a long time (think Home Shopping Network). But it has been on every retailer’s mind since Groupon and other online group discounting sites began popping up.
The basic model is based on volume discounts where the retailer offers dramatically reduced prices for a large number of customers within a given time window.
Deep group discounting is a proven tactic for immediate bumps in cash flow, but it is not without its pitfalls.
What follows is a discussion of these pitfalls, and a case for mobile marketing – direct marketing through the use of mobile devices – as a strategic approach to building loyalty and how it counters the “Groupon Effect.”