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Thursday, February 9, 2012

Group coupons effective at driving product trial (and loyalty, if you do it right)

Observation:  Results of an IPSOS study were published in a press release this morning, suggesting that deal-of-the-day tactics can lead to new product trial, as well as a degree of loyalty to new companies that a consumer has discovered through the coupon redemption.  To see the story from IPSOS out of Vancouver, BC, click here.

Implications:   I think this report supports the idea that the most important element in determining whether a consumer will return to buy at full price is whether the company, product or service was able to demonstrate important value during the discounted experience.  While some of the group coupon deals I’ve seen look more like free samples than discounts, the daily deal tactic might make sense if the redemption experience leaves the consumer wanting more… and willing to pay for it.

Now that companies and consumers have figured out how to make daily deals work... it will be interesting to see whether the companies built on that premise can make it work.  A story in today's Wall Street Journal indicates that Groupon is not yet taking a profit on the business model... disappointing some investors.  Click here to see that story.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

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