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Monday, September 16, 2013

Onions make people cry; not when Groupon sold them for Rs.9 per kg

coup (n)  ~  A brilliantly executed stratagem; a triumph.

Many years ago, one of my friends became a Medical representative for a MNC and was posted to a town near Trichy – Manapparai – a place famous for murukku (snacks) and cattle market. Their company had a strict dress code – he used to describe his ordeal of wearing a tie, travelling in local bus, reaching Manapparai and then travelling in a hired bicycle ….it was not only odd wearing a tie in such a location, but troublesome too on sweltering Sun.  Welcome to the world of marketing.

In the world of marketing, focus groups are seen as an important tool for acquiring feedback regarding new products, as well as various topics. In marketing, focus groups are usually used in the early stages of product or concept development, when organizations are trying to create an overall direction for marketing initiative. Have you ever heard of this Groupon…. !!! …… Groupon (a portmanteau derived from "group coupon") is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, and the first market for Groupon was Chicago, followed soon thereafter by Boston, New York City, and Toronto. According to some reports,  the Groupon business model was a "disaster" and that the firm had become an example of "how fast an Internet darling can fall." it was reported that in its first earnings release as a public company, Groupon reported a 2011 fourth-quarter loss of $9.8 million on an adjusted basis, disappointing investors…

Indians may not know Groupon well but they know this so well and most Indians cannot dine without them.  Onions are daily used in sambar & sabjis -  Onions and their relatives are known botanically as  alliums, a plant genus that has been classified at different times as belonging to the lily family, the amaryllis family, or to a family all its own called Alliaceae. The ripening process starts when the onion bulb proper forms. Bulb formation is determined by day length and varies with the variety of onion.

Onions generally make people cry :    As onions are sliced, cells are broken open. Onion cells have two sections, one with enzymes called alliinases, the other with sulfides (amino acid sulfoxides). The enzymes break down the sulfides and generate sulfenic acids. Sulfenic acid is unstable and decomposes into a volatile gas  which  dissipates through the air and eventually reaches one's eye, where it will react with the water to form a mild solution of sulfuric acid. The sulfuric acid irritates the nerve endings in the eyes, making them sting. The tear glands then produce tears in response to this irritation, to dilute and flush out the irritant.

It was not that property of Onions that made Indians cry …. ~ but it was that of its spiralling increase in prices reaching Rs.80 per kg and more that made middle class cry… it was not restricted to their price, they also pushed up inflation up; the rise for the third month in a row caused deep holes in the pockets of poor Indians.  By some statistics, the % of increase year on year was stated to be 245%. 

At a time when onions became the butt of cartoons, read from Firstpost of the amazing deal that Groupon offered in India.  People keep telling that you can purchase things at unbelievably low prices on the net…. I have never personally experienced that…. It is reported that  Groupon India, home of India’s biggest discounts and best deals online- offered something totally unrealistic and unbelievable.  As you might know Groupon coupons are available in major cities and they provide national deals on online shopping and travel, --- you could be spoilt by choice.  

A peep on to their website revealed that lunched in April 2011, Groupon (formerly Crazeal) claims to feature one daily deal on the best things to do, see, eat, and buy across India. They state that it is not  about being cheap! It’s about presenting their customers with the best quality merchants promoting themselves in a truly crazy fashion! Some call it value for money, some call it a discount, and some call it a bargain! ~ they are not seen on newspapers, only has web presence….

At a time when prices sky-rocketed the e-commerce firm Groupon sought to boost its popularity by offering a mouth-watering deal by pricing it at Rs 9 a kilo. The Groupon ad to herald the new campaign stated: “People haven’t experienced onions in a long, long time. That sweet, pungent aroma of onions being sautéed to a nice golden brown before being added to your mum’s signature curry is no longer familiar. This much-coveted, much-written-about, much-craved-for vegetable is now almost as expensive as caviar, diamonds and Donald Trump’s wig! Men are scrambling to the market to pick the perfect onion ring to please their ladies.”

The weeklong bargain began on 5 September, and offered a kilogram of onions at Rs 9 for 3,000 buyers each day. It  was stated that  Groupon had struck a deal with onion distributors to procure 3,000 kilograms of fresh onions every day for seven days. Wondering how someone could sell at such a lowly – a price at wich goods were selling more than a decade ago ??  ~ and would somebody make a deliberate loss???? 

Sorry, gentlemen, this offer is no longer available !!!!!..............

In a detailed analysis NextBigWhat found that Groupon actually made a killing through their digital marketing campaign, captured thousands of new customers and amplified their customer base at around half the cost of a digital marketing campaign. It took only 44 minutes to sell the first 3,000 kilograms of onions, and the sudden traffic spike subsequently crashed Groupon’s Indian site, according to Al Jazeera America. The day this deal went live, the total Google searches for Groupon jumped by 400 percent in a single day. Within six days, Groupon has 22,727 transactions on their website and since each transaction mandates a registration, they would have generated over than 15,000 new customer registrations. Who says onions only bring tears to the eyes?

That is digital marketing and creative thinking ! ~ it is stated that there are roughly 10 Lac deal based searches in a month on Google.  At the end of the whole sale they would have gained at least  21000 transactions on their website in flat 6 days & since each transaction mandates a registration, they would have generated 21000 new customer registrations, or on an average close to 15750 new customer registrations (assuming 75% as new customers).

So selling at a ridiculously low Rs.9 per kg of something that they do not deal, perhaps has provided them more customers and opened the gateway for more profits; remember that not all success stories can be replicated…. !!!

With regards – S. Sampathkumar

16th Sept. 2013.


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