Marketing Magazine: Collective Buying Power-The New Consumer Politics (Cover Story) [Nov 2011]

8/3/2019 Marketing Magazine: Collective Buying Power-The New Consumer Politics (Cover Story) [Nov 2011]

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marketingNOvember201126 NOvemb

At rst I was uncertain aboutinterviewing a chief executive ofceryounger than I, 28 years of age infact;Joel Neoh of Groupon Malaysia. I was onthe proverbial edge of things frankly, as Idid not know what to expect.

If rst impressions count for anything,Joel was wearing a baseball cap with

a button badge that claimed My disdainfor authority. Still uncertain on how tocourse, I let the evening take over;a good idea in retrospect. As the meetingwent underway the usual rigid interviewturned into an interesting conversation,over good lunch.

Joel, some might remember him asthe winner of entrepreneurial realityshow The Firm Malaysia, is the founderof Youth Asia. A platform for the youththat spearheads business projects for theyouth using the collective power of peopleand social networking as their tools.

As he began talking about GrouponMalaysia, it dawned on me, that this isone entrepreneurial role-model youngMalaysians should know about andacquaint themselves with. This youth

oriented fellow has taken two things hebelieves, youth and entrepreneurship andfused them into Groupon Malaysia.

What is Groupon?

Malaysians this year have experiencedan uptrend of a new sensation, theGroupon sensation. Listed as the fastest

growing company by Forbes in 2010,Groupon has been climbing the Malaysiane-commerce ladder in leaps and bounds.

On the wings of the relatively newmarketing business model of group-buying, Groupon Malaysia has beenmaking itself heard and noticed. Moreoften than not I have been invited over by

my friends and colleagues to sign-up for adeal at Groupon Malaysia. A trip or a dayat the spa, or the new Android tablet thatwas going for RM499 instead of the usualRM1260; these are but few of the manyexamples of what Groupon Malaysa hasto offer.

Some of these discount marvels willleave you astounded at the magic ofgroup-buying. The sheer size of price cutsis enough to leave you wanting. Wantingto know how this magic works.

Group Buying

Group buying, also known ascollective buying or deal commerce, offersproducts and services at signicantlydiscounted prices if a minimum number

of buyers purchase it.As a business model it is a simpleconcept where companies like GrouponMalaysia act as proxy to negotiate dealswith local merchants. Upon agreeing todeliver a minimum number of customersthey exact large discounts from thesesellers. The merchants sustain pricecuts, but are assured of a large group of

Buying en-masse is a rapidly emerging trend in thMalaysian consumer landscape. Marriam Nazir tal

Joel Neoh of Groupon Malaysia to catch up onto this c

hullabaloo in consumerism.

CCtv Byg Pr:

th Cr Pt

customers, as well as exbusiness.

The concept is said tin China where Tungubuying that was organizfriends, neighbours or eInternet forums that webuying the same item. O

group buying began to tmarket as it evolved intosophisticated business myears have seen group-blike Groupon Malaysia;player in online shoppinTypically, these websiteof the day, with the deala set number of people athe product or service. Bsimply print off a vouchdiscount at the retailer.

... originated inwhere Tunggroup-buying obetween friendneighbours or

strangers on Inforums that weinterested in busame item...

Joel Neoh, CEO, Groupon Malaysia

By Marriam Nazir


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coverstory

This is the business model, in brevity,that has brought Groupon Malaysia tothese pages today and to the forefront ofthe Malaysian consumer landscape.

The Groupon Story

Groupon is a play on the wordcoupon, which usually indicates somemanner of discount. Groupon is, couponsfor a group. Joel, initially a mechanicalengineering graduate, foundedGroupsmore also a group-buying websitein September, 2010. Groupon.com one ofthe group-buying giants from the UnitedStates expressed interest by the end of

the same year and subsequently acquiredGroupsmore. Thus, Groupon Malaysiawas born.

By the end of its rst year in businessGroupon Malaysia looks set to welcomeits millionth member, with a current totalof 920,000 members. In addition, it hassold half a million discount vouchers andclocked RM55.5 million in savings.

Upon wrapping up lunch, Joelinvited me over to the Groupon Malaysiapremises, to better understand thephilosophy, the idea and the backbone ofthis curiously vibrant set up

I could conjecture that I was probablythe oldest person inside those ofce walls;and I am not very old, thank you verymuch. The headquarters were essentiallya place for a think-tank made up of the

young and bold. I was surprised to onend that Joels ofce spaces comprised ofthe allotted space on the long work thatdecked the halls of the ofces; shared bythe rest of his colleagues. Bean bags, tabletennis and sauna-style rooms to come upwith ideas or have meetings were thereas if the most natural elements of thework space. I left the premises feeling

that Groupon Malaysia and a prot oriented orgmost importantly becomto be a culture. Yes, a cuthe young hang out, bracharge and break boundreactionary business anstructure to bring their tamazing experiences at a

What, pray tell, is the

As a relatively new cobuying has witnessed itsnaysayers. The skepticsto state that sales promobuying are not very diffeto this debate lies in tech

The technical differpromotions and group-bredeems the latter and s

Firstly, sales promoarrangements. A particuproducts are put on proGroup-buying on the otcapped affair. It can the

on the power and reach to elicit word-of-mouth spreads unfettered and bcovering incalculable ad

Sales promotions arwith a certain foresight aand there is always a poinvolved. Simply put, prdo not entail pre-sale of

Business

ame

would

wok wi

goupon

aain!

Business

PC ame

would

ecommend

goupon!

Ae ou

saisfed

wi ou

goupon

expeience

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b e

goupon

team?

(ae 1

o 5)

te

goupon

pocess was

eas

goupon

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pomoion

ou

goupon

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successul

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makein

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you

eedback

on goupon

TheCobbler

PteLtd

AgreeJoanne Ng Agree5 Agree Newspaper,

Magazines,TV,

Radio,Online

Agree bigger

database.

Rainforest

Spa

AgreeAngie Chia Agree5 Agree Newspaper,

Magazines,TV,

Radio,Online

Agree A good reach-

outtonewand

largerclientele

network.

Q-Family AgreeChia Chai Wei Agree5 Agree Online

Advertisement

Agree Groupon gave

usverygood

response

MAYASpeed

WellnessStudio

AgreeVictoria Ng Agree5 Agree Radio & OnlineAgree Quality

merchantsthatareup

topar

LovingHut

Cafe

AgreeJovinia Solibun Agree5 Agree Newspaper,

Magazines,TV,

Radio,Online

Agree We are very

satisedwith

thepresent

process.

Grand

Millennium

KualaLumpur

AgreeAdhiyanto

Goen

Agree5 Agree Newspaper,

Magazines.

Agree Reservation

systemthat

helpmanage

booking.

Traditional organizational structures is what we try to avoid here at Groupon Malaysia: Joel Neoh, CEO

Merchant Survey and Feedback (Selected):

Diverse Consumer Groups

Ummu Ammarah

Sushi heaven!!..tanx Groupon

for Sushi Q deal, I should buy

more voucher. the salmon was

supernice, like it melted in my

mouth^_^

Jan Vier

thanks for groupon to get

discount at HOLIDAY VILLACherating,it is very warm happy

family to enjoy walking at the

sea side,collecting coral and

tasty food at the sea side cafe...

hmmmm.love it so much

Norfazila Omar

longest slide in d verld!!

thanks to groupon!

Ashley Hye Min Tan

With Groupon is possible for you

to get double dose of Caramel

Macchiato at Austin Chase by

paying the price of one!!!!!

Oh!!! really double the joy!!!!

Roselyn Khan

@ Plasterfunhouse

Turned out to be a great

place for a date. We laughed,

munched on the mufns,

slurped the chocolate drink and

painted while enjoying each

others company. Will denitely

go again someday :)

Chooi Leang

Wakeboarding through

Groupsmore voucher. Awesome

experience.

Wan Jamalia

Our Groupon Moment!!

with Wan White, Wan Jamalia

Wan Zawavi, Izyan Zawavi,

Syahirah Zawavi, Wan Syazwani

Wan Zawawi, Tok Janggut, Wan

Mohd Aq, Siti Baya Berahan,

Wan Mohd Khumaini and Wan

Izyan.

Karen Da Costa

No regrets of buying the groupon

vouchers. Had a very nicedessert treat at La Glace with

my 3 boys. We really enjoyed it.

The italian frozen yogurt was

really yummylicious and the

doughnuts, out of this world.

... Groupon Malaysialooks set to welcome itsmillionth member, witha current total of 920,000members. In addition,it has sold half a milliondiscount vouchers and

clocked RM55.5 millionin savings...


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coverstory

services. Customers may or may notbuy the product or service under thepromotion. Group-buying once againenjoys an edge. Group-bought discountdeals are pre-sold, even before thecustomers have a chance to avail them.An added silver lining to this is thatsellers have the chance to prepare for thediscount deal they plan to offer in the

near future; like selecting appropriatedeals, preparing the staff and otherlogistics.

In addition to the aforementionedpotential of risk, the budget allotted andinvested in promotional sales does nothelp matters. Group-buying in contrast,does not need an investment to get itrunning. In fact group buying guaranteesthe seller certain revenue from the sales.

Group buying, unlike promotionalsales, is not conned by a store or thewalls of the merchants shop. Wordof mouth and viral marketing are thevehicles that further this business model;giving the brands and sellers the luxury ofuninhibited marketing.

Group Buying Advertising (GBA) isprobably one of the rst few organized

and structured conduits of effectiveword-of-mouth marketing. One could sayit goes a step beyond. It is one of the bestexamples of fusion between social mediaand advertising.

Group-buying has yet to peak, and itis still far from it. It has the potential togo further in this realm of marketing.

The Groupon Process

Groupon Malaysia, typical of group-buying business model, offers dailydeals and new and upcoming discounts.Their website and newsletter update thecustomers on what is new and interestingin the market.

If a deal or discount appeals to thecustomer, they simply purchase thevoucher. That is all they have to do untilthat particular deal has reached a certainminimum number of purchases. The dealthen activates, allowing the customers toavail and enjoy it.

If a deal does not reach the minimumnumber required, then the customersmoney is refunded within fourteen work-days. Currently the deals can be boughtwith credit cards and online-banking, the

customer can rest assured that sensitivedigital information never reachesGroupon or any of its employees. It isin fact transferred to a secure electronicvault. The company is looking intoimplementing other methods of payment-debit cards-to provide easier access.

The Promise and The Experience

According to the companys Website,Groupon Malaysia lets you see your cityin a new light as it brings to you new anddiverse deals everyday with discounts.One can now enjoy restaurants, leisureactivities, spa and beauty treatments,sports, travel and more.

Browsing through this list of dealsand offers I found that I did so with ahanging-jaw more often than not. I couldchoose from a vast range of products andservices, from Android tablets to gourmetdinners, spa experiences to beauty salonsand not have to pay much for it.

Groupon promises the customersan experience and follows a strictprotocol to adhere to the promise.

Every potential deal goes throughrigorous testing and investigation. It isrst offered to a public discussion boardvia social networking sites. The publicsfeedback, whether positive or negativedetermines if the deals will be offered ornot.

If a customer does not enjoy anexperience or product brought to themby Groupon, the companys policy, TheGroupon Promise, guarantees a refundof the purchase; based on the companysphilosophy that it rather contain thegrievance sooner than later, while theissue is still limited to a single or a fewcustomers.

Additionally, every business or brandfeatured goes through a vetting processwhere writers, researchers, fact checkers,

and editors scour and research online andofine media for an objective consensusabout the business respectability andintegrity.

And nally, each deal Groupon putsup, it offers the ne print informationupfront. The bigger and more establishedthe company, the more likely it is tohave introduced frustrating policies

for the customers. In the interest oftransparency, Groupon informs thecustomer of the unnecessary details thatare really actually fodder for an informeddecision on the customers part. Thene print entails information like expirydates, hidden costs, terms and conditionsif any, services offered in addition to thepurchase, etc.

Some of the brands, local andinternational, that the customers havehad chance to avail from at GrouponMalaysia are, The Manhattan FishMarket, OBriens, Tony Romas,Photobook International, Firey, TheDanna Hotel, Langkawi, Evergreen LaurelHotel, Renaissance Kuala Lumpur Hoteland the list continues.

Surveys and feedback from merchantsand buyers have returned with an up to100% success rate: whereby customerssatised with their experience, would useit again, recommend it to their friendsand could see themselves moving towardsthis trend of group-buying.

The Future

The turbulence in the worldeconomy over the last few years andwith the increasing importance of socialnetworking and media in our lives,group buying is currently at the edge ofa monumental and historical change inthe market scene. Its potential remainsto be seen and traversed, researched andexplored.

It could achieve phenomenalconsumer appreciation and loyalty andapart from becoming a trend couldachieve the heights of established ways ofpurchasing and buying certain productsand services. It could also become partof the established protocol for merchantsto advertise and market their deals andgoods; especially small and mediumbusiness owners.

According to Alexa Ranking, Groupon

Malaysia is the highest ranked group-buying company in Malaysia.

Groupon is a rising phenomenon notonly because it is new and different, butbecause it delivers and has staying powerin the Malaysian consumer scene.

... Groupon is aphenomenon nbecause it is ndifferent, but bdelivers and hpower in the Mconsumer scen

oue keen o e in ouc wi Joel o exploe possiblepanesip oppouniies wi goupon, ed be deliedo connec a [email protected]

Documents

Marketing Magazine: Collective Buying Power-The New Consumer Politics (Cover Story) [Nov 2011]