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Innovation in Integrated Marketing Communication (IMC) - Groupon India
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Innovation in Integrated Marketing Communication (IMC) - Groupon India


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In September 2013, when the onion price was skyrocketed. Groupon came up with an innovative idea to sell onions at Rs. 9/- per kg only. Offer went viral on internet in first few minutes of it's …

In September 2013, when the onion price was skyrocketed. Groupon came up with an innovative idea to sell onions at Rs. 9/- per kg only. Offer went viral on internet in first few minutes of it's launch. Motive behind this campaign was to capture new customers. In calculation part of this document it is shown that how Customer Acquisition Cost (CAC) was drastically reduced and acquired more customer than regular digital marketing campaign.

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  • 1. Name of Student: Mr. Lovekshitij Suryavanshi Course: PGDMM Subject: Integrated Marketing Communication Title: Innovations in IMC – Integrated Marketing Communication Assignment No.2 Roll No.: 34520 Topic: e-Commerce India : Innovation to reduce Customer Acquisition Cost by Groupon India
  • 2. Article: Background: US$ 2.5 Billion group GroupOn Inc acquire (read as in Jan 2011 and a new deal site born in India called Crazeal used to offer best deals on products from local, national and international companies operating in India. GroupOn Inc renamed to in November 2012 and it was the official entry of Groupon in India. Till Sept. 2013 Groupon was facing tough competition from Indian deals site like bagittoday, dealofthedayIndia , freekamaal, dealsdirectory etc. Snapdeal was just moved to seller model from deal of the day business model. Which was big relief for Groupon. But still Groupon was not as popular as it’s competitors among the Indian consumers.
  • 3. Innovation: In September 2013, when the onions was as precious as gold, because of its price. Groupon came up with an innovative idea to sell onions at Rs. 9/- per kg only. In September 2013 the price of onion was Rs.70-80/- per kg. Last time onion sold at Rs. 9/- per kg was in year 1999. It was pre-planned marketing strategy to increase Groupon’s customer base. In this crazy marketing strategy Groupon decided to sell 3000 kg of onions for 7 days at Rs. 9/- per kg. The offer was for first time user only. It means 3000 new users every day, In 7 days 21000 new users for Groupon. The offer goes live on 5th September and within few hours it goes viral on social media and emails. Search of term ‘Groupon’ increased by 400% on google, which was double than expectation of Groupon. Fig: Figure showing spike in search of groupon on google Source: Google Trend In above figure a spike in search of groupon can be seen during offer period. Groupon not only received huge traffic during offer period but also succeed to continue the traffic on after the offer period. As show in figure, increase in traffic can be seen (highlighted as Post - offer) as compare to on-site traffic before this offer (highlighted as Pre - offer). Indian customers always look for great deals. And Rs.9/- offer was like Gold Mine for Indian customers as they were getting almost 88% discount on Onions. With this deal Groupon caught price sensitive Indian customer in their net. Vegetable prices are always point of
  • 4. discussion in India. Groupon came-up with this offer when huge politics was going on vegetable prices. And catches eye ball of all Indian internet users which are target audience for Groupon. Along with this Groupon was covered in almost all national dailies, blogs, News channels and International media. To make this offer huge success, Groupon tied-up with Delhi’s largest onion distributer to ensure supply of 22,500 Kg onions. These onions were packed in air tight Groupon packaging and kept them in storage just to keep quality maintained. Groupon tied with 9 courier companies to distribute these onions in 78 cities in India. On the day 1, as soon as deal was announced without any extra publicity traffic on Groupon was increased. 3000 kg of onions was sold in first 40 minutes. Not only this Groupon site was also crashed as 10,000 customers logged-in at a same time. On 7th day (which was a last day of deal) 3,000 kg of onions was sold in first 7 minutes only.
  • 5. Why Groupon include itself in such loss making practice? In e – commerce every site try to attract customers, so that they can shop on their site. Usually e –commerce sites spend huge on internet marketing to bring the visitors on their site. Internet marketing include google ads(banner and text ads), social media ads, e – mailers etc. To acquire single customer companies spend Rs. 80-100. This is nothing but customer acquisition cost (CAC). So with Rs. 9/- offer Groupon spend zero rupees on CAC and bring the traffic free of cost on site. Financials and Calculations: Note: Prices mentioned here are as per Sept. 2013. Cost of Onion in wholesale market: Rs.3000 - 4000/- per quintal As Groupon bought 21 tons of onions they might have negotiated to Rs. 2000/- per quintal. Viz. Rs. 20/- per kg Total Expenditure on Onions: Rs. 42,00,000/- At Selling Price of Rs. 9/- per kg Groupon had loss of Rs. 231000/- Deal Search on google per month in India: 10 Lacs approx Clicks generates through 10 lacs searches: 50,000 approx (assuming success rate of 5%) Leads generates through these clicks: 5,000 (assuming success rate of 10% as buyer is already on site) Average cost per click (CPC) on google: Rs. 7-8 Conclusion: CAC for groupon is Rs.80/- So for 5,000 new registration Groupon spend: 4 Lacs in 30 days Conclusion: With Rs.9/- offer CAC for Groupon was Rs. 20/- and free media coverage