Groupon

Groupon is a website that offers a variety of discounted goods, events and holidays to customers, specifically tailored to where the person lives.  The company combines a number of persuasive techniques to encourage customers to purchase their vouchers.  Groupon places a restricted time on their offers and states that there is a limited number available.  Giving customers only a short period of time to make a decision is a clever technique as it forces them to make a decision quickly and pressures them with the fact that if they do not act now, they will miss out on the product.  Scarcity is also an effective tactic as studies have shown that we tend to equate rarity with high value, and it creates feelings of uniqueness and self-worth (Fromkin, 1970).  In a study conducted by Worchel, Lee and Adewole (1975), participants rated cookies as being more attractive when there were only two cookies left in a jar, as opposed to when there were ten. Participants rated the cookies as even more attractive when they originally saw ten cookies and then these were taken away and replaced with only two, as they viewed them as more scarce and seeing cookies being taken away made them value them more.  This shows how customers who use Groupon will see the limited time and number of goods available as pressure to act fast, buy impulsively and not miss out on what may be a great deal. 

Groupon also uses the technique low-balling as when you first look at an offer, it appears very cheap and they show the percentage you are saving with your deal.  However, often afterwards you are asked if you would like to add on something with your booking, such as a massage or dinner reservation when booking a hotel or even just adding on postage and packaging.  These surpluses often come at a higher price but people are inclined to agree as they have already committed to the offer.  This has been proven to be affected in a study conducted by Cialdini, Cacioppo, Bassett and Miller (1978) as it was found that once students agreed to participant in psychology experiment, they were significantly more likely to then agree to arriving at 7am than participants who were told from the start that the experiment would be at 7am.

Another affective tactic Groupon uses is the bandwagon technique by stating how many other members of Groupon have already purchased the voucher a person is looking at.  Studies show that people are more likely to engage in a behaviour if they believe other people are also taking part and are therefore part of a social norm.  Milgram, Bickman and Berkowitz (1969) conducted an experiment where confederates looked up at a building on a busy street and found that the number of passersby conforming increased with the number of confederates but at a decreasing rate.  This shows how people are more likely to purchase a Groupon voucher if they believe many other people have already agreed to.

Cialdini, R. B., Cacioppo, J. T., Bassett, R., & Miller, J. A.(1978). Low-ball procedure for producing compliance: Commitment, then cost. Journal of Personality and Social Psychology, 36, 463-476.

Fromkin, H. L. (1970). Effects of experimentally aroused feelings of undistinctiveness upon evaluation of scarce and novel experiences. Journal of Personality and Social Psychology, 16, 321-329.

Milgram, S., Bickman, L., & Berkowitz, L. (1969). Note on the drawing power of crowds of different size. Journal of Personality and Social Psychology; Journal of Personality and Social Psychology, 13(2), 79.

Worchel, S., Lee, J., & Adewole, A. (1975). Effects of supply and demand on ratings of object value. Journal of Personality and Social Psychology, 32, 906-914.