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.
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.
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?
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.
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?