The Long and the Short of Discount Deal Sites These sites will require new strategies to keep the buyers interested in the future

By Mo Hamdouna

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Price is a powerful way to drive sales, but it has its ups and downs. Discount deal sites with the power of social media extend the benefits of pricing by allowing merchants to reach beyond their usual pools of potential consumers and turn newly acquired customers into online advocates for a product or brand.

Discounting Model

Today, we are all too familiar with discount deal sites such as Groupon, Scoopon, and MyDeal. Real bargain hunters would also have these sites saved in their bookmark bar with the constant bombarding of emails sharing daily deals. However, we have also seen these sites taking a few blows over the years from Groupon cutting staff and firing its CEO to the $17.8 million loss of e-commerce company Catch Group who recently sold Scoopon.

But one great insight into discount deal sites is search history, which has slowly declined over five years. Groupon stepped into the cyberspace in 2008 and the first-ever Groupon deal was two-for-one pizzas at a pizzeria located in the same building as Groupon's Chicago office.

This began Groupon's plan to change how people buy and how merchants sell their goods.

Coupons were made cool by the façade of technology and made shareable via social media.

In 2009, AdAge wrote that Groupon had "revived couponing for the Facebook and Twitter generation."

A Wall Street Journal report from the same year suggested that Groupon was a perfect expression of the national climate: "The economic slowdown has helped spur Groupon's rapid growth."

The market's behaviour showed that buyers are increasingly eager to save money using coupons, vouchers or promotional codes. But how are consumers spending more money on their purchases, when they are buying cheaper (discounted) products?

Psychology

The psychology behind discount deal sites is time and what makes consumers buy more and often, is that the product is available at a discount in just a short and limited period of time.

Unfortunately, in 2011 the online deal space was getting jammed with competitors, like Living Social, Amazon.com and Google.

While competition is building, consumers are also questioning the quality of Groupon's offerings. Those who are disgruntled with Groupon often broadcast it on Yelp, a user review website that rates merchants.

There's even a "Yelp Effect," named for the way angry customers drive down the merchants' Yelp ratings proving that discount deal sites aren't a cost-effective marketing model. Furthermore, this type of advertising does not penetrate the target market effectively.

Although discount vouchers are still used by various shops, from food (pizza, restaurants) to holiday booking, discount deal sites tend to specialize today in the niches where the products are purchased and delivered digitally.

In time, these sites will require creativity and imagination in order to develop new strategies that will keep the buyers interested.

However, an app is in the works to redefine the way merchants advertise their brand providing the same advantages that buyers have when using discount vouchers— economic benefits, simplicity, and speed of use but with the power of augmented reality and more!

Zukaz, a location-based, augmented reality mobile application that is free-to-play, allowing merchants to market directly to consumers through real cash vouchers, which can be redeemed in-store or traded on the Zukaz trading exchange.

Zukaz "Hunters" will be able to collect vouchers virtually anywhere and redeem or sell them to make a profit. The inspiration behind Zukaz is "Pokémon Go," the biggest mobile phenomenon in 2016, which blends augmented reality (AR) with real-world scenarios.

According to Matthew Endresz, project owner of Zukaz, "Certain partnerships are in place for Zukaz to scale rapidly and to go global."

With a good amount of people and merchants engaged in the ecosystem, Allan Endresz, advisor of Zukaz believes "it's only getting bigger". What makes Zukaz unique is that merchants won't be charged unless a successful redemption is placed.

Other strategies like incentives, achievements, vouchers, and database acquisition from larger merchants will be carried out to retain customers.
Mo Hamdouna

Creative Director, Mo Works

Mo Hamdouna is the founder and creative director of Mo Works, an Australian company. 

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