Social coupons as a marketing strategy: a multifaceted perspective

Abstract

Social coupons are fast emerging as a popular marketing tool for businesses, an attractive shopping tool for consumers using them and a profitable business model for the social coupon service providers. But does the popularity of social coupons extend into providing short- and long-term profitability and new customers for the businesses? Through an analytical model, this paper answers the following questions: (1) Are social coupons profitable for businesses? (2) Can businesses influence social coupon profitability? (3) How can businesses recover the shortfall in profits from the coupon launch? (4) How long will it take for businesses to recover the shortfall in profits from the coupon launch? Using data from three different businesses, we find that social coupons in their current form are not ideally suited to ensure customer acquisition and yield profits for the businesses. Additionally, we discuss possible areas where social coupons might work. Several research questions for future testing are offered to explore this new area of marketing.