Background Note | HBS Case Collection | December 2012

Are Daily Deals Good for Merchants?

by Sunil Gupta, Timothy Keiningham, Ray Weaver and Luke Williams

Abstract

In the relatively short time since Groupon was founded, the response to "daily deals"—services that promote businesses by marketing deeply discounted, pre-paid vouchers to an online subscriber base—has by all accounts been spectacular. Our evaluation of daily deals is a cautionary tale for merchants: a substantial percentage are unlikely to benefit, and might well lose money, by using this type of campaign. But a careful analysis of the right data provides clear indicators of both what types of merchants are likeliest to benefit, and which factors that influence profits should receive the most management attention.

Keywords: marketing; technology; Business Strategy; digital; Marketing Strategy; Web Services Industry;

Citation:

Gupta, Sunil, Timothy Keiningham, Ray Weaver, and Luke Williams. "Are Daily Deals Good for Merchants?" Harvard Business School Background Note 513-059, December 2012.