“The only way for businesses to justify the ‘loss leader’ promotion that Groupon uses to acquire new customers is to hope that the acquired customers return to the business in the future and pay regular, profitable prices,” says Seethu Seetharaman, PhD, the W. Patrick McGinnis Professor of Marketing.
“I doubt very much if this is happening,” he says.While Groupon is popular at the moment, the company’s business model may not be sustainable over the long term, says a marketing expert at Olin Business School, Washington University in St. Louis.
Prepaid and smart cards are contributing to the migration of passengers from the comfort of their cars and onto public transport buses. Well that appears to be the assertion.
The Go-Ahead Group has reported a 7.2 per cent rise in passengers using its deregulated bus services in the first quarter of 2011, hinting that motorists are saying “so long” to the car and “hello” to public transport.
Some of the reasons outlined for the increase in bus use include the introduction of smart card ticketing and successful marketing campaigns aimed at getting passengers to use alternative forms of transport.
I think prepaid is bound to be a contributor. I now use a simplyBus card from Reading Buses and this does make local bus travel easier…as my Oyster card does in London.
But let’s keep our feet on the ground here; basic pricing, timetables, routes and availability of public transport play a huge role in the decisions of passengers. I also think the sky high fuel prices, today £1.42 for a litre of diesel is a major influencer.
If you think that frequent flier programs and other tactics that reward customers for their loyalty to a particular company ensure good deals for consumers, think again. According to Yuk-fai Fong (Assistant Professor of Management and Strategy at the Kellogg School of Management) and Qihong Liu (Assistant Professor of Economics at the University of Oklahoma), consumers may not benefit from programs that reward customer loyalty as much as they would if good old-fashioned competition determined prices.