SUMMARY
Groupon is an online group buying company, which offers subscribers different online group discount in every single day. The revenue and the number of subscribers are continuously increasing since 2008 and have now expanded into many countries. The report identified three issues: merchants are expecting large exposure rate by using Groupon as an advertising platform, but they did not realize that the brand image of merchants might be cheapened due to massive price reduction. Besides, maintaining the product quality of the merchants’ service can directly affect the customer's’ satisfaction and loyalty. Furthermore, it is hard to control the opinions of customers that they shared online. It is important for merchants to evaluate the companies to do business with and the marketing tactics that choose to use effectively. Therefore, it is better for merchants to having a backup plan to encounter successful marketing tactics; attracting the right customers; getting return customers and protecting themselves by setting agreement with Groupon are the key marketing lessons suggested to business partners that needed to take into consideration before partnering with Groupon.

INTRODUCTION
Groupon is a popular group buying website that offers daily deal products and services to consumers. It has experienced fast growth, and has spread its market all over the world. It is considered as an intermediary executing coordination between different kinds of consumers, the subscribers and the merchants, in the online buying activities.

The objective of this report is to investigate the effect of current Groupon’s marketing strategy on its customers. First, the current issues faced by Groupon that has caused the downtrend of consumers and profitability will be analyzed and evaluated. Second, cases of the adverse influence on Groupon will be illustrated by applying e-marketing theory, customer satisfaction, brand image, brand loyalty as well as eWOM. Key marketing lessons will be demonstrated at the end of this report. In this report, we are going to focus on the two types of customers of Groupon, the subscribers and the merchants.

The report structure will be as follow: Firstly, background information of Groupon and the market facts will be given at the start of the report. Following by some literature review of brand image, customer satisfaction and loyalty, coupon promotion and electronic word of mouth. Then the issues of Groupon’s subscribers and merchants will be identified and it will be illustrated based on e-marketing theory. Last but not least, the important marketing lessons of this study will be given at the end of this report.

BACKGROUND
Groupon is an American based group buying company which established in November 2008 (Groupon Inc., 2012). The name “Groupon” is a mixture of “group” and “coupon”. It is a deal-of-the-day website that offers users online group discount per day on each of the market served (Groupon Inc, 2012). Groupon has become a leader of the group buying companies,which has a significant effect on the e-marketing field. Groupon is arming to target its customers with over 50% discount or more to make them try out the product or service that offer with great quality (Weiss, 2010). It tried to make its customers checking on the deals every day and getting them share the deals via social networking sites such as Facebook and Twitter. Furthermroe, Groupon has been growing rapidly since its start in 2008 and it had grew to 150,000 subscribers by the end of June 2009. Groupon had 115.72 million subscribers in 2011, compared to 150,000 by the end of 2009 which increased approximately 30,000 in two years. Groupon now serves more than 150 markets and 100 markets in North America and in Europe respectively, Asia and South America and has amassed 35 million registered users. (Groupon Inc, 2012). In the second quarter of 2011, Groupon generated 392.6 million U.S. dollars of revenue from 32.5 million