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The Daily Deals Dilemma: How to Differentiate Your Business (In Any Industry)

Can you believe that Groupon has only existed since 2008? In recent years, the daily deals market has exploded with other companies trying to get a taste of Groupon’s rapid success. In 2010, daily deals aggregator Yipit tracked 30 companies in the daily deals market; as of September 2011, that number is now closing in on a whopping 700 websites.

Clearly, not all of these companies can be successful. Even big names like Facebook have dropped out of the daily deals space in recent weeks. So how do the companies that do succeed differentiate themselves and attract customers? How does any business stand out in a sea of competitors?

Not every marketing strategy is appropriate in every situation, but here are a few that have worked in the daily deals industry and might work for your company, too:

Be the Market Leader.

Groupon

Groupon

Easier said than done, right? Groupon is the clear market leader in the daily deals space, in large part because it had first-mover advantage—that is, it was the first noteworthy business to enter the market. Groupon was not the first-ever daily deals company (Woot advertised daily deals as early as 2004), but it was the first significant entrant in the space, allowing Groupon to take a large share of the market before too many competitors arrived.

Takeaway: Entering a market early can be risky, but if you can successfully build your brand and your customer base before your competitors do, you’ll be reaping big rewards.

Challenge the Market Leader.

LivingSocial

LivingSocial

Groupon may be the market leader, but other daily deals companies are putting up a fight. LivingSocial is Groupon’s biggest competitor, showing an estimated 20 percent market share in August 2011 compared to Groupon’s 53 percent. Established companies are entering the daily deals market as well, in the hopes that their existing brand equity and resources will draw in consumers.

To pull customers away from the competition, all businesses must find new ways to add value to their products. Google is working on integrating its daily deals service (called Google Offers) with other segments of its brand, such as Google+, Google Shopper, and Google Maps. In addition to the usual local deals, LivingSocial has advertised national deals this year for half off at Whole Foods and Amazon. And DealGooder breaks the mold by giving 50 percent of its daily deals profits to charity. Of course, Groupon is constantly adding value to its products, too—LivingSocial, for instance, isn’t the only company to have offered national deals.

Takeaway: If you want more market share, always be looking for ways to better satisfy your customers. Pay attention to what choices your competitors are making. What works? What doesn’t? How can YOU do it better?

Go Niche.

Thwipster

Thwipster

You don’t have to be the market leader or a challenger to the market leader to succeed. Instead, target a niche market within the larger industry. Focus your efforts on one key demographic rather than every demographic possible.

The daily deals space is teeming with niche-market companies. Thwipster focuses on geek-centric items only, usually featuring comics and collectibles. LeatherADay sells, you guessed it, all leather items. Bookperk offers book bundles, author meet-and-greets, autographed copies, and other book-related deals. DoggyLoot caters to dog owners. The list goes on and on.

Niche can also mean a geographical niche. While most daily deals sites target multiple locations as they grow, companies like Explore Houston Deals, Half Price San Diego, and Denver Daily Deals focus exclusively on one city.

Takeaway: Instead of stretching your resources across the entire market, hone in on one subset of consumers. Using your strengths in a narrow focus can often be just as lucrative as going for a broader audience.

Circumvent the Competition.

Yipit

Yipit

If the space is already overwhelmed with competitors, consider offering something different but related to the actual product. In the daily deals space, Yipit does not provide its own daily deals, but rather aggregates all the deals offered by other companies. DealsGoRound takes a different approach, only selling deals that someone has already bought but no longer wants to use.

Takeaway: If you notice a need unaddressed by the competition, see if you can shape that need into a product or service that does not directly threaten the other players in your market.

Have you used any of these marketing strategies at your company? Can you think of examples in other industries where these strategies have worked—or haven’t worked? What daily deals companies do you follow (if any), and how have they attracted your business?

Images are low-res screenshots from the following fan sites: Groupon, LivingSocial, Thwipster, and Yipit.


Rachel Hamsmith

When not writing for the blog, Rachel is a data entry specialist at QLP. She spends most of her free time consuming a variety of geeky TV shows, movies, and books, as well as funny cat videos and other Internet oddities. Otherwise, she moonlights as an editor for a literary magazine and tries to spend as much quality time as she can with friends and family. You can also connect with Rachel on Google+.

Comments

  1. Jen

    I follow Woot, Groupon, and Haute Look regularly. However I rarely purchase anything from them unless it’s an unbelievable deal. I recently bought a Dyson vacuum off of Woot for $179 refurbished. The same vacuum on other deal sites were still selling it for $250 refurbished and $500 new! I think I made a great purchase.

    Great Post Rachel!

    • Rachel

      I hadn’t heard of Haute Look–that one looks pretty cool! And how awesome about the Dyson vacuum … as you mention, those things are crazy expensive, so it looks like you got a pretty amazing deal there. :)

      And I’m like you: I subscribe to a couple daily deals sites (Groupon and Thwipster, specifically), but I rarely buy anything. I tend to be a window shopper most of the time :D

      Thanks, Jen!

  2. Mandy Kilinskis

    Everyone pause for shock.

    I’ve only purchased one daily deal ever.

    Seriously. Even though there are lots of sites and products, I tend to tell myself that if I wasn’t going to buy it anyway, I still don’t need it at half price. I don’t cruise the websites and the single daily deal that I bought was sent to me via another coworker. I think I’m just too afraid of the slippery slope of deal buying. However, now that you introduced me to Twipster…I think I know where all of my money is going.

    All in all, great post! There are some fantastic takeaways here than any company can learn from!

    • Rachel

      You’re not alone–I think I’ve only ever bought two daily deals. I’ve seen some really cool stuff on Thwipster, though, so maybe that will change soon. :) If I were more into comics (I mostly look at Thwipster’s collectibles, especially some Doctor Who stuff they’ve had recently), I’d probably be out of a lot of money at this point! But Thwipster does a great job of targeting the geek niche, so their company attracted me right away, even if just to look. They strike me as a really successful example of a niche marketer.

      • Rachel

        Indeed it is! I’m surprised more daily deals sites don’t do rewards programs. Thanks for the link!

  3. Juliette

    Awesome post!

    I keep an eye on Groupon and Living Social and I’ve purchased from both of them a few times. :) I do follow a couple of “daily t-shirt” sites that mainly focus on geeky t-shirt art: RIPT apparel and TeeFury. Both are pretty fun to check out each morning. And I’m not ashamed to say I own several shirts from both sites (hey, $10 a shirt for awesome geeky art is a good deal to me)

    I’d never heard of Twipster but I’m gonna have to add that to my list of sites to check in the morning! I love the deals on there. :)

    • Rachel

      Those T-shirt sites look awesome! Cheap, geeky clothing? Count me in. I may have to sign up for those :) Thanks for the tips!

  4. Jill Tooley

    I’ve purchased dozens of things from Woot, several coupons from Groupon, and I also follow Living Social and Thwipster every day. It’s mind-boggling that there are so many of these sites now! When my brother first told me about Woot (about 5 years ago) I thought it was the coolest idea ever. Groupon must have sneaked into the mix shortly after that, which is weird to think about. I didn’t hear of them until last year!

    AWESOME takeaways here, Rachel. My favorite is from the niche section: “Instead of stretching your resources across the entire market, hone in on one subset of consumers. Using your strengths in a narrow focus can often be just as lucrative as going for a broader audience.”

    How right you are! Often it’s better to focus on a more concentrated audience. Customers will get a better experience that way! :)

    • Rachel

      It really is crazy how many of these sites there are now! I think a lot of companies assume that since it’s an internet industry, the barriers to entry are low enough that anyone can enter the space and make money. But when you’ve got to form relationships with the businesses actually offering the coupons, market your site, etc., it’s not so easy. :)

      Glad you liked the takeaways! And yeah, if you focus on a narrower market, you’re better able to address niche-specific needs, making the customer experience even better.

  5. Jill Tooley

    Oh, and by the way – thanks for the tip on BookPerk! I’m officially signed up and ready to receive their updates as well! :D

  6. amy

    This is such an informative post Rachel! Wow, I had no idea this many sites existed :O

    To help myself save money I don’t follow daily deal sites, except for http://fab.com/sale/ which I recently discovered. I haven’t bought anything from them, but I’ve “friended” a lot of the companies on facebook and follow them on Twitter. One day when I’m done saving money I’ll go crazy, but until then I won’t tempt myself by signing up LOL.

    • Rachel

      Ooh, Fab looks neat! This blog post is dangerous, I’m finding so many new sites to follow, haha. :) Good point about following companies on Facebook and Twitter–that’s definitely another way to find deals, even if not specifically from a daily deals site.

      And I totally understand avoiding the temptations of daily deals sites! It takes me a while to make purchasing decisions, so I haven’t bought many yet, but a lot of the deals can still be pretty tempting. :)

  7. Eric

    Great post, Rachel! Now…a Dyson for less than $200? Definitely taking note of that. Those things are the Ferraris of vacuum cleaners (Thanks for that tip, Jen!). Not unlike Mandy……I’ve only bought one Groupon in my lifetime. I have to say – especially in this economy – they’re a really nice way to get out to do things you’d otherwise be unable to afford. Maybe the competition will make for even more and better deals…here’s hoping!

  8. Amanda

    Nice post Rachel. Your explanations and tips were spot on.

    I’ve never bought anything from these kinds of sites (I know, big surprise there, lol). But after reading this post I did sign up for Groupon and Living Social–they have some really sweet stuff on there….so we’ll see. =)

  9. Joseph Giorgi

    I’ve only bought two coupons so far from daily deals sites. Like Amy, I try to avoid frequenting them too often, as I’d be way too tempted to make purchases I’d probably regret later.

    Stellar post though, Rachel! Your takeaways are spot-on, and there’s a whole lot of great information here. Seriously — there’s 300 of these sites now?! That’s just mind-boggling! Thank God sites like Yipit are around to keep tabs on them all. :)

  10. Bret Bonnet

    I’m a fan of Guilty City – they always have premium group buys, you know, something better than one gallon of butter for 50% which is usually what the likes of Groupon and/or Living Social offer.

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