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PROMOTION PROFITABILITY OF SOCIALPROMOTION MODEL IN MBAKDISKON.

COM CASE

Thesis As a partial fulfillment to achieve a Master Degree

Study Program in Master of Management (Magister Manajemen) Department of Social Sciences

Submitted by MR Anggit Tut Pinilih

to The Graduate Program Gadjah Mada University 2013

Table of Contents CHAPTER 1 ........................................................................................................... 4 RESEARCH BACKGROUND .............................................................................. 4 1. Problem Background ................................................................................. 4 1.1 The Development of Internet Usage in Indonesia ................................ 4

1.2 Problem Formulation ................................................................................ 17 1.3 Research Purpose ...................................................................................... 18 1.4 Research Benefits ...................................................................................... 19 CHAPTER 2 ......................................................................................................... 20 2.1 Marketing and Promotion Concept ............................................................. 20 2.2 Sales Promotion........................................................................................... 21 2.3 Social Promotion ........................................................................................ 21 2.4 Profitable Social Promotion ........................................................................ 23 2.4.1 2.4.2 2.3.3 2.4.3 New Customer Acquisition Efficacy .............................................. 24 Spend Beyond Groupon Value ....................................................... 25 Repurchase in Full Price ................................................................. 25 Effects of employee satisfaction on repeat-full purchase ............... 33

2.5 Operational Definitions ............................................................................... 35 CHAPTER 3 ......................................................................................................... 38 RESEARCH METHOD........................................................................................ 38 3.1 3.2 Object, Time and Place ........................................................................ 38 Population and Sample Selection ........................................................ 38 Population ....................................................................................... 38 Sample Selection............................................................................ 39

3.2.1 3.2.2 3.3

Data Collection Technique .................................................................. 40

3.3.1 Primary Data ......................................................................................... 40 3.3.2 Secondary Data ..................................................................................... 41 3.4 Research Instrument Scale .................................................................. 42

3.4.1 Ten-point scale .................................................................................... 42 3.4.2 Percentage ........................................................................................... 42 3.5 Variable Measurement ........................................................................ 43

3.5.1 Questionnaire development .................................................................. 45 3.6 Data Analysis Technique ..................................................................... 46

3.6.1 Hypothesis Testing ............................................................................... 47 CHAPTER IV ....................................................................................................... 49 RESULT AND DISCUSSION ........................................................................... 49 4.1 General Description of Mbakdiskon .................................................. 49 Mbakdiskons Merchants ............................................................. 51

4.1.1 4.2

Quantitative Analysis ........................................................................... 53 Hypothesis 1 ................................................................................... 53 Hypothesis 3 ................................................................................... 60 Hypothesis 4 ................................................................................... 64

4.2.1 4.2.3 4.2.4 4.3

Discussion .............................................................................................. 66

4.3.1 Profitability of Social Promotions on new customer acquisition efficacy, spend more than coupon value and repeat full price purchasing. 66 4.3.2 New customer acquisition efficacy on Coupon face value, redemption duration, and depth of price discount. .................................. 67 4.5.3 Spend beyond coupon value on Coupon face value, redemption duration, and depth of price discount. ....................................................... 67 4.5.4 Repeat Full Price Purchase on Employee Satisfaction .............. 68

CHAPTER V ....................................................................................................... 69 CONCLUSION, LIMITATIONS, AND SUGGESTION ................................ 69 5.1 Conclusion .................................................................................................. 69 5.2 Research Limitations ................................................................................ 70 5.3 Suggestion .................................................................................................. 71 References ............................................................................................................ 75 List of Tables ....................................................................................................... 80 List of Figures ...................................................................................................... 81

CHAPTER 1

RESEARCH BACKGROUND

1. Problem Background 1.1 The Development of Internet Usage in Indonesia The internet and internet related industry has grown rapidly in the last 10 years in Indonesia. It is supported by the trend of how actually consumers adapt fastly toward internet. The internet industry itslef has shifted Indonesian economy these 2 years. Google captured data statistics that in 2010 internet industry contribution in Indonesia had exceeded its LNG Industry contribution toward countrys GDP

Figure 1.1 Internet Penetration in Indonesia Source : World Bank, 2012

Figure 1.1 shows that the internet user in Indonesia had reached 10% of its population in 2010. Indonesia had grown 4.1 percent compared to the total internet users in Asia. Although internet in Indonesia is considered as one of the slowest in Asia based on Minister of informations statement in May 2012, the internet penetration is high especially in mobile internet. Mobile phone penetration in Indonesia rise to 66%, which is higher than China and India. Penetration toward mobile internet users in Indonesia is also the highest among all BRICI countries. Internet penetration in urban area has reached 40-45%, about 10-15% increase compared to 2011. Markplus research resulted that internet user in Indonesia has reached 55 million people in 2012 ( 42 million peole in 2011) . Internet users are growing from the age-segment of 15-20 years old to 1530 years old. Most of these segments use internet 3 hours per day at the minimum. The use of internet in Indonesia is significantly grown in three field, social media, information and media search, and the new field, which is called e-commerce or online shopping. In social media, it was reported that Indonesia is ranked no 5 for its total twitter user in the world, wtith the total 23,8 million twitter accounts and no 8 for its total Facebook user in the world with the total 26 million facebook accounts. Information search increase 5% from 2011, mostly from picturesearching (76%), music or audio (43%) and video 33(%). The use of internet has started to exceed not only the communication aspect, but also financial transactions. The internet development journey in Indonesia is started from social networking into e-commerce (Frost and Sullivan, 2012). Markplus research also stated that the growth of online shopping or e-

commerce user in Indonesia was increased by 100% in 2011 compared to 2010. At least there are 25% of internet users are using internet and sms banking. Internet banking are dominated by Bank Mandiri and BCA. The trend of increasing use in internet banking can also be seen by users traffic to internet banking website which is www.klikbca.com and www.bankmandiri.co.id which is on rank 15 and 28 according to Alexa.com ( Alexa is a web service to rank websites popularity in certain country ) . E-commerce website such as tokobagus.com, tokopedia.com, livingsocial.co.id, groupon.co.id are also ranked in top 100 popular websites amongst over 100,000 websites in Indonesia measured by Alexa. Until 2012, in Indonesia has reached 2.4 million search using google toward online shopping website per day. Indonesia is no.2 growing numbers after Brazil. The internet penetration and its usage in Indonesia show that consumer lifestyle has shifted from offline to more online lifestyle. The fact is also causing effect on marketing and promotion. Todays marketing environment can be very noisy and consumer tends to avoid traditional advertising for example like consumer switch television channel when the advertisement comes up. For small businesses for example, local restaurants and spa, it is very costly to promote using the traditional marketing tools like TV Ads, Billboards or Radio Ads. Since 2012, all customers were engaged through internet, Internet itself has proven to be an effective and efficient tools for marketing. Effective, because through internet small business promotion

effort is easily measurable. It enables small businesses to build real-time communication with costumer using social media, chat and messenger application etc. It is Efficient because social media is free to use. The budget is also easily arranged and customized to the small business owner capacity. For example, using facebook, despite of its free service using fanpage or group for promotion, small business owner can set its advertisement target specific market segment based on age, location, sex, interest and also set its ads maximum budget per day. According to an article by Hudyana (2011), Marketing Manager of

Indonesian E-commerce, Blibli.com, today the highest population is concentrated in the age segment between 15 19 years old and this age segment group does not watch television anymore. They are spending most of their times to socialize with their friends outside. Therefore television has become less effective promotion tools, but social media and e-commerce has become the solution in selling any brands. For brand marketers, there is no turning back to rely only on traditional media, given that people were increasingly spending their time on the Internet. In Indonesia, there are some cases about how internet marketing can successfully sell some new brands over traditional marketing. Sour Sally is known to be a popular yoghurt chain which popular because of word-of-mouth from female college students in Jakarta through social media. The second brand that has successfully promoted itself through social media is Holycow Steak. Holycow steak was opened at March 2010 and 95% of its customer at the first two months knows about the restaurant from Twitter. Newspaper Kompas noted at July, 22nd

2010 twitter follower (Follower is a term for twitter user) of Holycow was increased by 546 people in just 3 days. Internet has become the new way of marketing, many big brands have shifted their marketing strategy which includes online promotion. Customer power is increasing today because through internet customer can be connected with other customer or to the brand itself without any boundary. In the concept of social shoppers from Marketeers Magazine in June 2011, it was stated that there are many both individuals or community that do both buy and sell transcation on social medias. Anyone can be a Seller and Buyer at once. Marketing activity has not just concentrated toward big brands also small brands even any person for example there are many online shops in facebook. Those new ways of consumer behavior has forced the development of ecommerce in Indonesia. E-commerce has not only become a popular tools for transaction as stated above, but also become popular to help small brands to market its product online. One model of e-commerce that will be discussed in this thesis is a social commerce service which pioneered by Groupon followed by Livingsocial in US. Social commerce or in Marketers Magazine defined as a shopping group which pushes a group of shoppers to buy a product or service together to get the economies of scale or cheaper price. The business model of Groupon is that Groupon sell coupons of merchants with its terms and conditions, retains its percentage of coupon value and passes the rest to the merchant. The service stands between merchants and costumer, merchants got offers and

customers collect as much as people needed to exceed the threshold. If the number of customer is not achieving the threshold, it means the deal is not tipped, then the deal is cancelled. More detail about Groupon model will be discussed in the literature review. Groupon model has known to help introducing new brand or local services/ product to massive ammount of new customer through its deals. Groupon claimed that its service will delivers new customers that have the potential to become regular customers. Compared to traditional marketing, Groupon offers more effective and efficient solution for small businesses. First, to set a deal is free, and merchant can set its own thresholds and they only pay commission whenever the threshold is exceeded. In traditional ads for example like Billboard and TV Ads , small business have to incur high price but there is no guarantee how much customer will come to your restaurant and spa. The groupon model or in the other terms sometimes it is called by group or social shopping site or daily deals site were reported to be the fastest growing company in 2010 (Steiner,2010). In 2010 groupon has gained over 150 million subscribers and have sold over 3 million daily deals. The global daily deals industry ranked Groupon as no.1 service, followed by Livingsocial and Woot. Groupon is operated in about 335 cities in 30 countries including Indonesia where it operates in Jakarta. The model is also being cloned globally with almost 500 clones in China. In Indonesia reported by Techinasia.org (2012) that Groupon now has around 30 active Groupon clones.

In Indonesia, the model was introduced in the late 2010 by Disdus.com and Dealkeren.com and then followed by over 30 Groupon clones. Most of the merchants are coming from restaurant, beauty (spa and salon), health care, sports service industry. The boom is also supported by the growth of its merchants industry in Indonesia. Table 1.1 GDP Based on Industry in Yogyakarta Province (in Billion rupiahs 2004-2011) 2011* Industry 2004 2005 2006 2007 2008 2009 2010* * Agricult ure 329,1 24.6 205,2 Mining 52.0 Assembli ng Oil and Gas Electricit 23,73 y and 0.3 water Construc 151,2 195,1 251,1 304,9 419,7 555,1 660,8 756,5 3.8 4.8 3.8 8.6 0.0 9.0 0.6 26,69 30,35 34,72 40,88 46,68 49,11 55,70 644,3 42.6 94,26 3.4 14.1 760,3 61.3 138,4 40.9 20.8 919,5 39.3 172,0 94.9 09.6 1,068, 653.9 182,3 24.3 34.3 1,376, 441.7 237,7 71.6 60.9 1,477, 541.5 209,8 41.1 36.8 1,595, 779.4 211,1 39.0 43.3 1,803, 486.3 249,4 37.4 364,1 69.3 309,0 433,2 23.4 366,5 541,9 31.5 440,6 716,6 56.2 541,3 857,1 96.8 592,0 985,4 48.8 718,1 1,093, 466.0 886,2

tion Trade, Hotel

47.6

10.6

32.3

96.8

11.9

92.5

90.5

37.3

368,5 and 55.9 Restaura nt Whole 287,5 saler and 53.5 retailers 12,68 Hotel 5.4 Restau rant Transpo rtation 142,2 and 92.0 Commu nication Finance, Real 194,4 Estates 10.9 and Services 68,31 7.0

431,6 20.2

501,5 42.4

592,3 04.1

691,4 87.5

744,5 13.5

882,4 87.2

1,022, 106.7

338,6 67.2

393,0 47.4

468,7 34.3

551,3 43.7

586,1 11.8

703,5 65.8

826,1 83.3

14,14 6.9 78,80 6.1

16,07 4.2 92,42 0.8

17,32 0.4 106,2 49.4

18,90 0.3 121,2 43.5

20,78 1.5 137,6 20.2

23,87 6.6 155,0 44.8

26,30 2.0 169,6 21.4

180,5 84.9

231,5 23.5

264,2 63.3

312,1 90.2

353,7 39.7

423,1 65.3

491,2 40.9

230,5 22.7

269,1 21.4

305,2 13.5

368,1 29.7

405,1 62.0

466,5 63.8

534,9 75.0

b. Private 1). Civil society service 2).

115,7 40.9

141,0 71.4

168,4 59.2

192,8 52.8

224,3 00.6

255,5 35.7

300,5 24.6

351,1 85.1

38,85 2.4

48,67 8.5

58,18 2.9

69,96 8.5

83,83 4.5

97,48 9.3

114,2 37.6

134,7 26.8

7,605. Entertain 2 ment 3). 69,28 Househol 3.3 d 2,295, GDP 826.2 GDP without Oil and Gas 2,083, 077.9

8,739. 4

10,17 2.3

11,29 3.2

13,02 7.7

14,80 6.6

17,34 5.0

20,45 5.7

83,65 3.5

100,1 04.0

111,5 91.1

127,4 38.4

143,2 39.8

168,9 42.0

196,0 02.6

2,774, 281.1

3,339, 216.8

3,950, 893.2

4,948, 688.4

5,606, 203.4

6,436, 270.8

7,427, 086.1

2,458, 234.3

2,967, 040.3

3,534, 406.5

4,427, 633.5

5,141, 414.4

5,936, 237.8

6,794, 373.4

Source : BPS, 2011 In Yogyakarta, there are only one social commerce service which is active since 2011 until 2012. It is named Mbakdiskon.com. Mbakdiskon.com was established in March 2011 in Yogyakarta. In November 2012, it operated in

Yogyakarta, Semarang, and Jakarta area. In November 2012, Mbakdiskon.com had over 8,000 members with over 200 merchants. The research will take Mbakdiskon.com as a research object.

60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 March

Billing Revenue

September

December

January

August

March

June

April

April

November

October

Figure 1.2 Revenue : Billing Mbakdiskon.com (in Rupiah) March 2011 to June 2012 Source: Mbakdiskon sales data, 2012 The graphic shows us total transaction (billing) compared to Mbakdiskon.coms revenue per month from March 2011 until June 2011 in rupiah. Mbakdiskon.coms revenue comes from 20-30% comission for each merchants deals bought by customers. The growing revenue shows the positive trends toward the use of Mbakdiskon.com as a promotion tools for merchant especially in Mbakdiskons area. It is also supported by the graph below. It shows that positive trend is trending to its customers since the user is growing month per month alongside with the total coupon bought. The trend shows that promotion using Mbakdiskon.com in its operating area, Yogyakarta, Semarang, and Jakarta tends to be effective.

February

June

May

July

May

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 July Amount of Coupon Bought Twitter Users Web Users

October

August

September

November

January

April

April

December

Figure 1.1 Twitter, Facebook, Web User, and Total Coupon Bought at Mbakdiskon 2011-2012 Source: Mbakdiskon promotion data, 2012 The research will not go deeper on customers perspective in effectiveness of the Mbakdiskon promotion but the research will go deeper on the merchants side as the supplier of the deals. The research investigates whether promoting business through Mbakdiskon will bring profit in the future to the merchant or not. The supplies of merchant will be critical for social commerce model in terms of maximizing companys value through both number of user base and its main revenue point which is deals commission In this research, Mbakdiskon.com revenue is still growing, and the company has the vision to expand the service to other cities in Indonesia. Thus, the research is required to support the companys expansion strategy in maintaining the long term relationship for merchant supplies

February

March

March

June

June

May

May

and building new relationship with new merchants in new targetted operating areas. Prior research had been done in United States in 2010 to 2011 by Dholakia (2011) , taking over 150 merchants of Groupon.com as samples. This research would adapt the prior research model to Indonesian market especially in Mbakdiskon.com business scope in the targeted time period which is in between 2011 to 2013.

Coupon Face Value

H2
New Customer Acquisition Efficacy

H1

Depth of Price Discount

Spend beyond coupon value


Offer Redemption Duration

Profitable Promotion

H3

H4
Employee Satisfaction

Repeat full price purchase

Figure 1.4 Conceptual Model of Social Promotion Profitability in Prior Research (Dholakia, 2011) Prior research is investigating the promotion profitability of Groupon,com for its merchant using Figure 1.4 model. The tree profitability drivers which are new customer acquisition efficacy, spend beyond coupon value and repeat full

price purchase play central roles in the prior research model. And in the prior research model, the three profitability drivers are in turn , affected by features of the promotional offer including the coupon face value, depth of price discount, and the duration of the redemption period. Prior research also emphasizes on the important purpose of price promotions which is to initiate long-term profitable relationship with new customer. A Key metric to evaluate promotions success in the prior research is the degree to which coupon user return and purchase from business again at full price. Prior research hypothesize that the degree to which employee of the business are satisfied with the promotion will positively influence the longer term behavior of Groupon user. To test the hypothesis, prior research estimated a combination of linear and logistic regression using Mplus 6.0 path analysis. From hypothesis 1, it resulted that simplye getting new customer to purchase the coupon even when they do not spend beyond the coupon value on the occassion of redemption is sufficient to have a profitable promotion and the result also supported that firm that gain long-term customer from Groupon promotion is reported to be profitable. From Hypothesis 2, it resulted it may be better served offering a coupon with a higher face value but lower depth of price discount to garner a profitable promotion. From Hypothesis 3 , it resulted shorter term of redemption period is necessary to have a profitable promotion. From Hypothesis 4 it resulted that it is strongly being supported that employee satisfaction will lead to customer satisfaction in which may convert those customer to be a repeat long-term customer.

This research will adapt the model, but use different method of analysis in which for each hypothesis will be tested separately whether using linear or logistic regression in SPSS because of Mplus software limitation 1.2 Problem Formulation Social promotion model is a new model of marketing adapted by local businesses in global market pioneered by Groupon in US Market. Although news articles stated that the model is booming but prior researches had the evidence that the model is not necessarily profitable for some business. Therefore , the research will propose some problem formulations which concern about the profitability of social promotions to local business in Mbakdiskon.coms case in Yogyakarta as deep as the. Local business will refer to businesses from various industries that has been into merchant partnership program with Mbakdiskon.com since March 2011 until December 2012. The researcher addresses the problem formulation as : 1. Is social promotion model at Mbakdiskon.com profitable for merchant ? How is the profitability of social promotion model at Mbakdiskon.com merchant? 2. Do the increase of promotion profitability key drivers will affect the promotion profitability? 3. Do the increase of coupon face value, depth of price discount, and redemption duration will affect the new customer acquisition efficacy?

4. Do the increase of coupon face value, depth of price discount, and redemption duration will affect the percentage of customer who spend beyond coupon value? 5. Do the increase of employee satisfaction will increase the percentage of customer who repurchase at full price? 1.3 Research Purpose The research is proposed to some research purposes which are : 1. To identify whether social promotion model is profitable to

Mbakdiskon.com merchant and to describe the profitability of social promotion model. 2. To identify the key drivers of promotion profitability in Mbakdiskon.com which consists of acquiring new customer efficacy, spending more than coupon value, and repeating in full price purchase. 3. To identify the social promotion characteristics that affects the new customer acquisition efficacy. 4. To identify the social promotion characteristics that affects customer to spend more than coupon value. 5. To identify whether employee satisfaction during the Mbakdiskon promotion affects repeat full price purchasing at the second visit by customers.

1.4 Research Benefits 1. To provide market insights on merchant profit and benefits in running Mbakdiskon social promotions. 2. To provide basic information for the company the formulate future merchant partnership strategy in order to support the expansion plan to other cities in more beneficial way.

CHAPTER 2 LITERATURE REVIEW

2.1 Marketing and Promotion Concept Companys orientation toward marketplace has evolved time to time. The oldest concept started with production concept, then it evolved to selling concept. The selling concept holds the business and the consumer, if left alone, wont buy enough companys products. The organization must therefore undertake an aggresive selling and promotion concept. Sergio Zyman expresses that the purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit ( Kottler and Keller, 2009). The following concept emerge is the marketing concept itself where Theodore Levitt from Harvard drew a contrast perspective on the difference between selling and marketing concept. Selling focuses on the needs of seller while marketing on the needs of buyer. The job is not to find the right customer for your product but to find the rights product for your customer. In the company the job of marketing is to integrate marketing activities. Mc Carty classifies marketing activites integrated in marketing mix tools. Marketing mix tools consisted of 4Ps, which are product, price, place and promotion. Product will considered activities related to product variety, quality, design, feature, brand name, packaging, size, service, warranty, and return. Price will considered activities related to pricelist, discount, allowance, payment period, credit term. Promotion will consists marketing activities related to sales

promotion, advertisement, sales force, public promotion and direct marketing. Place will consists of channel, coverage, assortment, location, inventory and transportation. The following section will discuss promotion related to sales promotion and consumer purchase behavior deeper, responding to those activities that will define profitability of daily deals models for merchant. 2.2 Sales Promotion The purpose of promotion strategy is to manage the organizations communication initiatives, coordination and advertisement integration, personal selling, sales promotion, interactive/internet marketing, direct marketing, and public relation to communicate with buyers and others who influence purchase decision ( Cravens and Piercy, 2009). Sales promotion consists of various promotional efforts which are trade shows, contests, samples, point of purchase displays, product placements, trade incentives and coupons. Sales promotions can be used to target buyers, respond to special occasions, and create incentive to purchases. Coupon is one of sales promotion tools to create incentive to purchase. 2.3 Social Promotion One of the popular sales promotional tools today is called social promotions sites, which is done online (e.g, Fowler 2011; Lyons 2010; Underwood model is introduced firstly by the largest player in the market , Groupon, known to have more than 300 markets in 35 countries in February 2011 (Dholakia, 2011).

The model is that social promotion site is cooperating in small-medium sized local business to offer consumer significant discount deals such as $49 worth of sushi for $20 or $175 worth of spa for $59. When purchasing the deal, consumer pay for the product upfront and then have a stipulated amount of time, up to a year to redeem it at its business (Dholakia, 2011). The promotion is valid when the deal is tipped which require a certain minimum number of customers purchasing the deal, pre-specified by the business running the promotion. The system stimulates the viral promotion in facebook updates, twitter tweets, and text messages as consumer encourages friends, family members, and acquaintances within their social network to tip the deal. Social promotions ussually offers big discount at reguler price providing customer with low-risk opportunities for customer to try new product or service. Social promotions usually has a short time frame, from a single day to a single week. The short time frame creates sense of urgency to purchase the offer and makes the anticipation waiting for the next offer as an exciting daily ritual for customers. Urban dictionary has coined the phrase of groupon anxiety to refer the preoccupation and feeling of anxiousness and not being able to sleep knowing that a new Groupon will be released after 1.am. Besides , supported by the prior research, the social promotion is favorable for new small and medium sized business because price promotion can draw new customers to business ( e.g, Walterns and Mackenzie 2008).

2.4 Profitable Social Promotion Based on prior research, profitability of social promotion will use key metrics that the firms employ to evaluate a social promotion success. Prior research indicates the key metrics relevant in determining price promotions profitability including 1) its efficacy to bring in new customers to the firms , 2) the degree in which the customers redeem the buying promotion beyond its face value ( Aydin and Zilla 2008), and 3) the degree in which redeemers make repeat purchases at full price in the future. Each one will be described in detail in the following section. From prior research, the New customer acquisition efficacy and repuchase in full price show significant result while the spend beyond face value was not show significant result ( Dholakia, 2011). From prior research sampling, it is found that 66% of respondent states that it is profitable to run social promotion, and about 32% report that it is unprofitable. For the unprofitable business only 25% reported redeemers purchase product or services beyond face value and less than 15% came back a second time to purchase in full price. Only around 8% of the firms would run another promotion. In prior research regarding the industry, it shows a relatively low percentage of deal users spending beyond its value (35%), and return at full price purchase (19%), the research define both not only as profitability key metrics of daily deal promotion but also stated that these two points are the weakness of the model. Restaurants appeared particularly susceptible to negative outcomes. 42% restaurant in the sample reported unprofitable promotions. On the profitable

samples, the firms show doubled number of redeemers buying beyond social promotion value (50% vs 25%) and a greater percentage repurchasing at second time (31% vs 13%) when it is compared to the business which express unprofitable social promotions. In prior research it is also stated that spa and salons are the most beneficiary business regarding the social promotions. 82% of spa and salon business respondents stated that its profitable to run a social promotions. Another prior research also founds that daily deal profitability is affected by the age of the business ( older, or more established business had greater incidence of profitable deals) and neither spending levels of customers nor size of business impacted deal profitability. 2.4.1 New Customer Acquisition Efficacy

The main purpose of price promotions is to encourage trial of new product or of an existing product to new customer ( Dholakia, 2011). Short term or one time discount in price promotion can reduce customer risk and make the product trial more attractive to new customer ( Blattberg ad Neslin 1990; Lewis 2006). In groupon promotion video in their website, it was stated that bringing new customer is a primary goal for social promotion site. H1A : New customer acquisition efficacy has significant effect on profitability of social promotion

2.4.2

Spend Beyond Groupon Value

Second key metric used to evaluate promotion profitability is how the promotion can generate spending among users beyond its value at the occassion of redemption. For example, when a user redeem a $ 10 worth of food for $5 , user also buy drink for $15. Furthermore, a distinct and explicitly acknowledged function of many social promotions is to serve a loss leader with the goal of getting customers in the door and have them spend beyond face value ( e.g., Gerstner and Hess, 1990). H1B : Spend more than coupon value has significant effect on profitability of social promotion 5.3.3 Repurchase in Full Price

The third key metric focuses on the long-term behavior after the occassion of the social promotion. A social promotion succeeds when it entices new customers to try a particular offering through a compelling offer and they like it so much that they buy it repeatedly, and becoming firms relational customers (Dholakia, 2006). The long term expectation of repurchase in price in the future justifies the loss that is incurred by the business on the occassion when people redeeem the coupon ( e.g. Reichhel, 2001; Scott 1976). Prior research examines one case in a firm that run social promotions for certain period, findings states that social promotion accelerates the purchase rate of full price customer. Compared to the rate of purchase during the period before the social promotion, the purchase rate of full-price paying customers (some of which

were those who first came to the firm because of social promotion) was more than three times higher during social promotions and was sufficient to push the profit per transcation into positive territory throughout time period (Dholakia, 201). In specific case study on merchant experience toward social promotion, the research founds that social promotion had a significant exposure value , amounting to lift of 140% of baseline sales over the duration of promotion (Dholakia, 2010). From prior research, though majority of the social promotions merchant seems to be satisfied and intend to run another promotion an industry in which two in five customers are hesitant after first purchase, and where the customer base is relatively limited pool of small businesses with strongly interconnected social networks that could quickly spread news of dissatisfactory results may need to modify the overall strategy. H1C : Repurchase at second visit in full price has significant effect on profitability of social promotion Hypothesis 1: (A) New customer acquisition efficacy, (B) spend more than coupon value, (C) Repeat full price purchase will each have positive impact on the social promotion profitability

New Customer Acquisition Efficacy

H1 A B
Profitable Promotion

Spend beyond coupon value

Repeat full price purchase

Figure 2.1 Hypothesis 1 : New customer acquisition efficacy, spend more than coupon value, repeat in full price purchase will affect the promotion profitability Source : Adopted from prior Research ( Dholakia, 2011) 2.4 Social Promotion Characteristics and Social Promotion Profitability In prior research, the three profitability drivers are affected by social promotion characteristics which are the face value, depth of price discount offered, and the duration of the redemption period.

2.4.1 Face Value Face value described as the total value of the product that can be purchased through the offer ( Dholakia, 2011). A higher face value provides a greater amount of saving in dollar terms for customer. For example, within the same percentage of discount a social promotion with a face value $50 will yield bigger amount of dollar discount than a social promotion with a face value of $20. Higher face value provides important utilitarian benefits to consumers in the form of increased perceptions of savings ( Chandon et al. 2006) and reduced financial risk to purchase (e.g. Conchar et al 2004). Because of this attractiveness, a higher face value is expected to bring more new customer tested in the prior research. Higher face value coupon also is more likely to be redeemed than those having lower face values. (e.g Bawa and Shoemaker 1987; Reibstein and Traver 1982). Prior research also supported that higher face value will garner profitable social promotion by bringing new customers to the business ( Dholakia, 2011). H2A : Higher face value of the coupon the higher the new customer acquisition efficacy The higher the face value the more likely to approach the amount the customer normally spends during a store visit, consequently costumer will less likely to spend beyond face value at redemption occassion. Prior retail research also supports that consumers are good at adjusting their spending to account for a coupons use ( Hess and Getner 1993) ; using a coupon does not necessarily increase the customer overall spending at the store during the visit ( Russel and

Petersen , 2000). Prior research support the result that face value is a negative predictor ( Dholakia, 2011). H3A : Higher face value of the coupon the lower the customer spend more than coupon value 2.4.2 Offer Redemption Duration Redemption duration described as how long the consumer has to redeem the purchashed social promotion before it expires. Offer redemption is also another important decision variable for the firm and in the case of social promotion sites , firm has considerable latitude in choosing the duration ( Dholakia, 2011). Just like depth of discount, the redemption duration has different implications depending whether consumer behavior is considered or not. A longer redemption duration can be unfavorable for the form because it may leave outstanding unredeemed coupon as potential liability that must be honored ( at least at the value the customer has paid) as and when customers choose to redeem them ( Inman and Mc Alister 1994; Kile 2007) and also potentially affect full-price sales adversely during this time (Krishna and Zhang, 1999). From the customer standpoints, a longer duration for redemption is likely to act as a risk-mitigating mechanism and increase the promotions attractiveness to new customers. According to Krishna and Zhang, for firms that relatively have low market shares in the category ( which is likely to be the case for most small and medium-sized firms running the social promotions) using a longer redemption duration can relax redemption pressure and even attract customers who may

otherwise prefer other brand in the marketplace. Prior research by Dholakia (2011) shows that offer redemption duration has supported the new customer acquisition efficacy for the firm. H2B : Higher redemption duration of the coupon the higher the new customer acquisition efficacy Furthermore in the case of a social promotion with longer redemption period more consumers are likely to redeem it at a timepoint which is distant from the time of purchase; consequently the pain of paying fo the social promotion is likely to have diminished ( Gourville and Soman, 1998), the research expect more redeemers to spend more than coupon value when the offer has longer duration. H3B: Higher redemption duration of the coupon the the customer spend more than coupon value. 2.4.3 Depth of Price Discount Another important characteristics is percentage discount offered or ussually refered as the depth of price discount ( Alba et al 1999; Raghubir and Corfman 1999). From the firm standpoint, greater amount of discount or the deeper is the discount is not necessarily better because the firm will lose money on the promotion ( e.g, Porter 2011). If the effect of the discount dept on consumers behaviors are considered explicitly the net effect could be different (Dholakia, 2011).

From the customer standpoint, prior research on pricing has shown that the deep discount reduces price expectations ( Kalwani and Kim, 1992) and reference price (Greenleaf, 1995) directly affect the social promotions appeal for the customers. The effect is even more pronounced to new customers because of the significant diminishing level of risk upon receiving a deeper discount to try the product (Lewis, 2006), making them more willing to purchase the social promotion and engage in trial. Latest research done by Dholakia (2011) shows different result which supports lower depth of discount will support new customer acquisition efficacy. H2C : Higher depth of price discount the higher the new customer acquisition efficacy Receiving a deeper discount lowers the price perceptions of consumers regarding the product being purchased ( Alba et al. 1999) and unlike the face value this will encourage spending beyond face value itself ( e.g. Hardie, 1996). In a nutshell, consumers may feel that because they are getting such a good deal it is acceptable to spend more that they normally would ( Dholakia,2011). In summary, depth of price discount can be seen as eroding profitability in firm standspoints but by attracting new customers and getting users of the promotion to spend beyond its face value the deep discount can be contributory to the profitable social promotion ( Dholakia, 2011). H3C : Higher depth of price discount the higher the the customer spend more than coupon value.

Hypothesis 2: (A) Coupon face value, (B) The depth of price discount, and (C) offer redemption duration will each impact new customer acquisition efficacy for the business positively.

Coupon Face Value

H2

A
Depth of Price Discount

New Customer Acquisition Efficacy

Redemption Duration

Figure 2.2 Hypothesis 2 : Coupon face value, depth of price discount, and redemption duration will influence customer to new customer acquisition efficacy. Source : Adopted from prior Research ( Dholakia, 2011) Hypothesis 3: (A) Coupon face value will impact the customer spending more than coupon value negatively, (B) The depth of price discount, and (C) offer redemption duration will each impact the customer spending more than coupon value for the business positively

Coupon Face Value

H3 A B

Depth of Price Discount

Spend more than coupon value

Redemption Duration

Figure 2.3 Hypothesis 3 : Coupon face value, depth of price discount, and redemption duration will influence customer to spend more than coupon value

Source : Adopted from prior Research ( Dholakia, 2011)

2.4.3

Effects of employee satisfaction on repeat-full purchase

The next important issue toward firms that applying social promotion is the sustainability of the promotion itself, how a frim can develop a long-term relational customers after the occassion of the promotion ( Dholakia, 2006). To that end, as discussed earlier, a key metric to evaluate promotions success is the degree to which coupon users return and purchase again from the business in full price. Prior research has proven that although social promotions characteristics can bring new customers to the business and influence their behavior on the

occassion when the promotion is used, how their employees view them and treat them wll influence whether longer-term benefits accrue to business (Dholakia, 2011). Business in which the social promotion does not cannibalize sales to existing customers may be the ones most likely to benefit from it because of its significant impact of effectiveness in reaching new customers (Dholakia,2011). Prior organizational research indicates that employee attitudes and behaviors can significantly influence business outcomes. Koys (2001) found that employee satisfaction at time period 1 has significant effect on customer satisfaction at time period 2. Schneider, White and Paul (1998) found that employee perception of a climate of service lead to subsequent customer perception on higher service quality. Within these findings we hypothesize that the degree to which employee of the business are satisfied with the promotion will positively influence long term behavior of social promotion users. Prior research argued that satisfaction of employees during the occassion of the redemption period may require some preparation to transform new customers to relational customers over the long-term. Such preparation may entail advance notice regarding heavier burden of work, training and even additional compensation for the longer hours and potentially lower gratuities the employee might earn. In prior research , it resulted that it is important of getting employee buy-in for the promotion in order to convert social promotion customers into repeat long-term customers. Prior research also founded that unprofitable business stated that the social promotion user did not come back to repurchase at full price but only come-back whenever there is another promotion and user did not make

employees make money because the social promotion customers did not tip as most cutomers do. Hypothesis 4: The satisfaction of the businesss employees with the social promotion will impact the repeat purchase of coupon redeemers at full price purchase positively.

H4
Employee Satisfaction Repeat Full Price Purchase

Figure 2.4 Hypothesis 4 : Employee Satisfaction will Influence The Customer to Repeat Purchase at Full Price Source : Adopted from prior Research ( Dholakia, 2011) 2.5 Operational Definitions To avoid any misinterpretation, several operational definitions used in the research would be defined below. 1. Promotion profitability

Promotion profitability is defined as social promotions success key metrics for business that run the social promotion (Dholakia,2011) 2. New customer acquisition efficacy The capacity of the social promotion to reduce risk and make products trial more attractive to novice customer ( Blattberg and Neslin 1990; Lewis 2006). 3. Spend more than coupon value Ability to generate spending among users beyond its face value (Dholakia,2011). 4. Repeat full price purchase Long term behavior of customer in which repeatly buying the product and become firm relationals customer ( Dholakia, 2006). 5. Coupon face value Total value of product can be purchased through the offer. 6. Depth of price discount Percentage of discount offered by the business in social promotions. 7. Redemption Duration How long the customers has to redeem the purchased coupon before its expired. 8. Employee satisfaction Employee satisfaction with the promotions 9. Business

Firms, or companies that is targeted or has become Mbakdiskons merchant 10. Costumers The buyer of the business products 11. Merchant Business that has become an affiliate partners of mbakdiskon that supplies deal periodically. 12. Coupon redeemers People who buy the coupon and redeem the coupon at merchant

CHAPTER 3

RESEARCH METHOD

This chapter explains how this research is conducted to measure the profitability of social promotion in the case of Mbakdiskon.com toward its merchants. The chapter would give details about how the writer selects the sample and collects data, instrument, validity and reliability measurement. 3.1 Object, Time and Place The object of the research are business that has experienced promotion using social promotions of Mbakdiskon.com. The research will take place in DI Yogyakarta provice as the operation area of Mbakdiskon.com , its businesses as merchant partners and its users and will take time from March 2011 to December 2012. 3.2 Population and Sample Selection 3.2.1 Population

According to Cooper and Schindler (2011), a population is the elements about which we wish to make some inferences. Population is the amount of elements that are going to be explained in this research. The population of the research covers all of merchant of Mbakdiskon.com which reach to 109 businesses at the time the writer conduct the research.

Adopted from prior research, business that is included in our research are the merchants of Mbakdiskon, which have the experience about promoting their business through Mbakdiskon during the research period. 3.2.2 Sample Selection

Cooper and Schindler (2011) define sample as a group of cases, participants, events, or records consisting of a portion of the target population that is carefully selected to represent that population. Samples are taken from the business that has been a merchant partner of Mbakdiskon.com from the timeframe selected and also for the long run of the business because at the time the research is being conducted the numbers of merchant is keep growing. Sample size is calculated by using Taro Yamane formula. By using Yamanes Formula, the sample size should be 53 to get more reliable data. The Yamanes Formula is shown below:

n: sample size N: total of population d: precision which is 0.10

3.3 Data Collection Technique Research design is the plan and structure of investigation so conceived as to obtain answers to research questions (Cooper and Schindler, 2011). This research is adopting the method of prior research conducted by Dholakia (2011). To explore the research questions of this research, the writer uses two types of information sources. They are primary data and secondary data. 3.3.1 Primary Data According to Cooper and Schindler (2011), primary data are original works of research or raw data without interpretations or pronouncements that represent an official opinion or position.. The research collected official opinions from the business in which according to the prior research (Dholakia,2011) it can be officially delivered best by business owners or their sales managers and general managers who is registered and reported the profitability of using Mbakdiskon during their operation to the business. The primary data of this research is collected through survey method and will be administered by interview. The questionnaires are interviewed by the researcher toward Mbakdiskons merchants. Questions on the questionnaire are adopted from the previous research, The questionnaire consists of questions that concern on: 1) The profitability of promoting in Mbakdiskon.com

2)

The scale of new customer acquisition efficacy which is being brought by

promoting in Mbakdiskon. 3) The percentage of customers who spend more than coupon value at the

time of redemption 4) The percentage of customers who repeat at full price purchase at the

second visit after the time of redemption. 5) The scale of employee satisfactions during the time of redemption.

3.3.2 Secondary Data Secondary data are the results of studies done by others and for different purposes than the one for which the data being reviewed (Cooper and Schindler, 2011). Secondary data use primarily in the research is related to the social promotions data that all the 109 merchants have ever placed in Mbakdiskon.com website. The data is taken directly from the internal management data. The researcher has the access and permission to the internal management to use the data in purpose for the research. Internally, sales analysis summaries and investor annual reports would be example of secondary data according to Cooper and Schindler (2011) therefore internal promotions data is a secondary data. Secondary data is used to find profitability drivers of social promotions which consist of: 1) Coupon face value 2) Depth of price discount

3) Coupon redemption duration All the terms above has been explained clearly in the operational definition in previous chapter. Other secondary data which is used is taken from academic journal and books to support literature review and theoretical justifications of the research methods. 3.4 Research Instrument Scale In collecting the primary data, the research will use rating scale type of response. The rating scale of this research will use ten-point scale, percentage, and yes or no questions. The research instrument is adopted from the prior research. 3.4.1 Ten-point scale Ten point scale is used in investigating determinants of social promotions profitability in new customer acquisition efficacy and employees satisfaction. The respondent are asked to answer whether each statement that expresses either favorable or unfavorable attitudes towards the object is effective or not. Each response is given numerical score to reflect its degree of attitudinal favorableness. The ten point scale is range from not at all effective to extremely effective. 3.4.2 Percentage Respondents are asked to give percentage minimum 0% to maximum 100% in investigating determinants of social promotions profitability in spending more than coupon value and purchase at second time in full price. 3.3.4 Yes or No Questions / Simple Category Scale

Respondent are asked to answer yes or no question in investigating determinants of profitability of social promotions in Mbakdiskon which are whether it is profitable or not? Whether the business will run another social promotions or not? Whether the business will recommend Mbakdiskon to another business or not? 3.5 Variable Measurement This research is categorized as a causal study. The essential element of causation is that A produces B or A forces B to occur (Cooper and Schindler, 2011). Described in the prior research by Dholakia in 2011, four hypothesis tested in the research have impact relationship for example, new customer acquisition efficacy, spending beyond coupon value and repeat full price purchase will each have a positive impact on the groupon promotions profitability. There is at least one independent variable and one dependent variable in a causal relationship. Independent variable is the variable manipulated by the researcher, thereby causing an effect or change on the dependent variable. Meanwhile, dependent variable is the variable measure or predicted by the researcher; expected to be affected by a manipulation of the independent variable (Cooper and Schindler, 2011). Thus, the independent variables and dependent variable for this research are:

Table 1 Dependent and Independent Variable Hypothesis H1 Dependent Variable Profitability Promotions of Social Independent Variable A. New Customer

Acquisition Efficacy B. Spend beyond

coupon value C. repeat purchase H2 New Customer Acquisition Efficacy A. Coupon face value B. Depth Discount C. Redemption Duration H3 Spend beyond coupon value A. Coupon face value B. Depth Discount C. Redemption Duration H4 Repeat Full Price Purchase Employee Satisfaction of Price of Price full-price

3.5.1 Questionnaire development In the development of the questionnaires used to measure each variable, the research adopts the instrument that is used in prior research. Profitability of social promotion In the questionnaire the writer asks whether social promotions at Mbakdiskon is profitable or not for the business using yes or no question. New Customer Acquisition Efficacy In the questionnaire the writer asks the respondent to define how effective the social promotions of Mbakdiskon was in bringing new customer in 10 point scale question from not at all effective to extremely effective. Spend beyond coupon value In the questionnaire the writer asks the respondent to define what percentage of these customers spent more than coupon face value. Repeat full price In the questionnaire the writer asks the respondent to define what percentage of these customers came back to the business at second time and purchased its products and services at full price. Employee Satisfaction

In the questionnaire the writer asks the respondent to define how satisfied their employees were with the social promotions of Mbakdiskon using 10 point scale question from not at all satisfied to extremely satisfied Repeat Promotion In the questionnaire the writer asks about whether the respondent would like to run another promotion in the future or not. Recommendation In the questionnaire the writer asks about whether the respondent would like to run another promotion in the future or not. 3.6 Data Analysis Technique The data obtained in this research is analyzed using quantitative method. In business research, quantitative methodologies usually measure consumer behavior, knowledge, opinion, and attitudes (Cooper and Schindler, 2011). Quantitative research attempts precise measurement of something. It involves gathering data that is absolute, such as numerical data, so that it can be examined in as unbiased a manner as possible. Quantitative data often consist of participant responses that are coded, categorized, and reduced to numbers so that these data may be manipulated for statistical analysis (Cooper and Schindler, 2011).

3.6.1 Hypothesis Testing Hypothesis testing is used to determine the accuracy of the hypothesis formulated prior to the collection of the sample. The variable to be tested in the research are mix of continuous (face value, price discount depth, redemption duration, employee satisfaction, new customer acquisition efficacy, spend beyond coupon value, and repeat full-price purchase) and categorical (promotion profitability, repeat promotion, and recommendation) variable. Therefore the combination of linear and logistic regression is being used to test the hypothesis. SPSS 13.0 program is used to develop the analysis. The combination of both linear and logistic regression is described in the next Table.. Table 2 Hypothesis Testing Hypothesis Dependent Variable H1 Profitability Social Promotions of A. New Customer Acquisition Efficacy B. Spend beyond coupon value Logistic regression Independent Variable Regression used

C. repeat fullprice purchase H2 New Customer A. Coupon value B. Depth of Price Discount C. Redemption Duration H3 Spend beyond A. Coupon value B. Depth of Price Discount C. Redemption Duration H4 Repeat Full Price Employee Satisfaction Purchase H5 A. Repeat Profitability of Social Logistic promo tion B. Recom menda tion Promotions Regression Linear Regression face Linear Regression face Linear Regression

Acquisition Efficacy

coupon value

CHAPTER IV RESULT AND DISCUSSION

In this chapter, the results of the statistical analysis are presented. The data are the information collected from the respondents through questionnaire. The statistical analyses are conducted to gain information about the respondents. The general description of the research object is also shown in this chapter.

4.1 General Description of Mbakdiskon Mbakdiskon is the pioneer of social commerce business in Yogyakarta launched in March 2011. In 2013. The business model is taking form of the business model of Groupon.com in America which has been discussed further in literature review. Through the business model canvas point of view, Mbakdiskon serves multi-sided platform customers which are businesses merchant, buyer or user. Toward business, Mbakdiskon offers a zero risk and high impact marketing strategy. Comparing to the traditional marketing approach, the marketing model of mbakdiskon offers more effective and efficient result. In traditional marketing approach business often must paid a lot of money for placing an advertisement in advance without knowing the impact in numbers on how much the audience that has watched the advertisement will visit the business and purchase the business product. When a business is making a social promotion through Mbakdiskon, business wont be incurred for advance payment for the promotion. The business

provider just place a deal and let Mbakdiskon do the coupon selling. Even business can set a threshold in how much the coupon must be sold by Mbakdiskon to activate the discount. Business only pays commission when Mbakdiskon is able to sell the coupons within the amount of the threshold or it is usually termed as when the deal is tipped. As in the user or customer point of views Mbakdiskon is a social commerce or social promotion websites that offers deals and discount three times a week. It is different from the membercard discount system which offers small discount that can be use each time. Mbakdiskon offers a limited time deals with big discounts and with minimum numbers of buyers. The marketing model has naturally brought what so called e-WOM or online world-of-mouth marketing which especially can be seen in social media. Back to the business side, the WOM effect of Mbakdiskon representing the high impact marketing the model can stimulate. As explained before traditional marketing is inefficient in terms of targeting the precise sales, it is also known to be ineffective to deliver a marketing message today. People are switching the channel when advertisement is showing on television. People start to believe more on their peer group than the traditional advertisement. Through Mbakdiskon model limited time deal with big discount and minimum number of buyers, customers are actively share the news socially through online or offline means, and automatically business get the high WOM impact from the business. It is can be observed through the high traffic activity in Mbakdiskon social media which is twitter ( with 13,000 followers) and facebook (with 5,000 fans)

4.1.1

Mbakdiskons Merchants The business that place a deal at Mbakdiskon is called merchant , as

defined at operational definitions previously. The merchant of mbakdiskon is various from several industries but Mbakdiskons merchant is serving only services not goods at the time the research is being conducted although starting from June 2013 Mbakdiskon is also targeting goods vendor as their deal supplies. Mbakdiskon.com internal management has classified it into six big categories of services that targettede as its merchants which are: 1) Culinary Services The categories are including caf, restaurants, bakery, coffee shop, etc. 2) Spa and Salon 3) Health Services The categories are including fitness center, swimming pool, yoga, dance, taebo, aerobic and health dance classes 4) Entertainment Services The categories are including events, cinemas, etc. 5) Education Services 6) Photography Services The categories are including language courses, and any other courses. Total number of active merchants are 109 businesses from across industries, 19 are from Spa and Salon, 65 Culinary Services, 7 Health services, 4 Entertainment services, 8 Photography services and 6 Education services. The research is done to all the population which is all active merchants of mbakdiskon.

4.1.1.2 Merchants Deals at Mbakdiskon Merchant deals at mbakdiskon.com are a limited time deal with big discount and require certain no. of buyers to be activated. In mbakdiskon there is a limit on the depth of price discount it should be more than 30%. Each deals will be placed vary in time from 1 week to 1 month depends on the deals quality. Deals quality defines by Mbakdiskon on how potential the deals would brought no. of sales to Mbakdiskon or how potential the deals would leverage the brand image of Mbakdiskon and brought more user. User in mbakdiskon itself usually measured by no. of active buyers, no. of subscribers, no. of followers and no. of fans which measured periodically by the internal management. Below are the process of merchant in making deal transactions in Mbakdiskon. a) Contact / Being contacted by Mbakdiskon marketing b) Negotiation process c) Compose deal details d) Send materials to marketing e) Marketing compose deals on website f) Promotion will promote the deals to users. g) At the end of the deals, Finance will make a recapitulation report on sales and reported to Marketing h) Marketing will report the sales to merchant. i) Finance will send the money to merchant can be both by bank transfer or cash.

4.2 Quantitative Analysis The quantitative analysis used in the research are logistic regression to test hypothesis 1, and linear regression to test hypothesis 1,2,3. The result can be seen below. 4.2.1 Hypothesis 1

The dependent variable on tested in hypothesis 1 is profitability of social promotions and the independent variables are new customer. Hypothesis 1 is tested using logistic regression because the variables used are mix of categorical and continuous variables. The result of the logistic regression is shown below: Table 3 Variables in the Equation1 Independent Variables B S.E Wald df Sig. Exp(B) 95.0% C.I. for EXP (B) Lower New Customer Acquisition (A) Spend more than coupon value (B) Repeat purchase in 0,176 0,079 4,979 1 0,026 1,192 1,022 1,392 0,067 0,088 0,592 1 0,4421 1,070 0,901 1,207 0,356 0.902 0.156 1 0.693 1,427 0,244 Upper 8,354

full price (C) Constant 6,585 Source: Primary Data 2013, analyzed. The logistic regression model used is logit model. In applications such as these, it is standard to use 95% for the condence coefcient. 4.2.1.1 Hypothesis 1 A The hypothesis can be formulated as followed: Ho1A: 1 = 0 New customer acquisition efficacy (X1A) has no signifcant effect on profitability of social promotions (Y). Ha1A: 1 > 0 New customer acquisition efficacy (X1A) has significant effect on profitability of social promotions (Y). Below are the criteria to accept or to reject the null hypothesis (Ho1): If probability value (p) < , Ho1A is rejected and Ha1A is accepted. If probability value (p) , Ho1A is accepted and Ha1A is rejected. = 5%. Results revealed that p value is , it means that new customer acquisition efficacy has no significant effect on profitability of social promotions. New customer acquisition efficacy has resulted as a positive predictor of profitability of social promotions but has no significant effect on promotion 5,007 1,730 1 0,188 0,001

profitability. Therefore within 95% of confidence, Ho1A is accepted and Ha1A is rejected. The odd ratio (OR) interpretations of H1A is known by adding 1 unit of new customer acquisition efficacy, the profitability of the business that run promotion in Mbakdiskon will increase 1.427 times. 4.2.1.2 Hypothesis 1 B The hypothesis can be formulated as followed: Ho1B : Spending more than coupon value (X1B) has no effect on profitability of social promotions (Y). Ha1B :Spending more than coupon value (X1B) has significant effect on profitability of social promotions (Y). Below are the criteria to accept or to reject the null hypothesis (Ho2): If probability value (p) < , Ho1B is rejected and Ha1A is accepted. If probability value (p) , Ho1B is accepted and Ha1A is rejected. Results revealed that p value is , it means that spending more than coupon value has no effect on profitability of social promotion. Spend more than coupon value has resulted as positive predictor but has no significant effect of profitability of social promotions. Therefore within 95% Ho1B is accepted and Ha1B is rejected.

The odd ratio (OR) interpretations of H1B is known by adding 1 unit of spend more than coupon value, the profitability of the business that run promotion in Mbakdiskon will increase 1.070 times. 4.2.1.3 Hypothesis 1 C The hypothesis can be formulated as followed: Ho1C : Repeating full price purchase (X1B) has no effect on profitability of social promotions (Y). Ha1C : Repeating full price purchase (X1B) has

significant effect on profitability of social promotions (Y). Below are the criteria to accept or to reject the null hypothesis (Ho2): If probability value (p) < , Ho1B is rejected and Ha1A is accepted. If probability value (p) , Ho1B is accepted and Ha1A is rejected. Results revealed that p value is < , it means that repeating full price purchase has significant effect on profitability of social promotion. Repeating full price purchase has resulted as positive predictor of profitability and has significant effect of social promotions profitability. Therefore within 95% Ho1B is rejected and Ha1A is accepted. The odd ratio (OR) interpretations of H1B is by adding 1 unit of spend more than coupon value, the profitability of the business that run promotion in Mbakdiskon will increase 1.192 times.

4.2.2

Hypothesis 2

Hypothesis 2 is tested using linear regression. The result of the equation shows below : Table 4 Variables in the Equation 2 Independent Variables Unstandardized Coefficient B Std. Error Constant Face Value Coupon Redemption Duration Depth of Price Discount Source : Primary Data 2013, analyzed. Dependent variable for hypothesis 2 is new customer acquisition. 4.2.2.1 Hypothesis 2A The linear regression equation for hypothesis 2A is: Y2 = 5,958 + 2.35-E006X2A The hypothesis can be formulated as followed: 0,026 0,010 0,233 2,504 0.014 5,958 2.35E006 -0,002 0,007 0,031 0,337 0,737 0.495 0.000 0.239 12,041 2.573 0.000 0.011 Standardized Coefficient Beta t Sig.

Ho2A: 2A = 0 Face value coupon (X2A) has no effect on New customer acquisition efficacy (Y). Ha2A : 2 > 0 Face value coupon (X2A) has significant effect on efficacy (Y). Below are the criteria to accept or to reject the null hypothesis (Ho2A): If the regression coefficient (2A) has probability value (p) < , Ho2A is rejected and Ha2A is accepted. If the regression coefficient (2A) has probability value (p) , Ho2A is accepted and Ha2A is rejected. Based on the analysis, the 2A is found positive as much as 0.239. It means that face value of coupon is positive predictor on new customer acquisition efficacy. Moreover, the effect face value coupon on new customer acquisition efficacy is proved to be significant with the t = 2.573 and p = 0.011 which is less than (0.05). Therefore, Ha2A is accepted which means that the higher face value coupon, the higher the new customer acquisition efficacy business will have. 4.2.2.2 Hypothesis 2B The linear regression equation for hypothesis 2B is: Y2 = 5,958 + -0,002X2B The hypothesis can be formulated as followed: Ho2B: 2B = 0 Redemption Duration (X2B) has no New customer acquisition New customer acquisition

effect on efficacy (Y2).

Ha2B : 2 > 0 Redemption

Duration

(X2B)

has

significant effect on acquisition efficacy (Y2).

New customer

Below are the criteria to accept or to reject the null hypothesis (Ho2B): If the regression coefficient (2B) has probability value (p) < , Ho2B is rejected and Ha2B is accepted. If the regression coefficient (2B) has probability value (p) , Ho2B is accepted and Ha2B is rejected. Based on the analysis, the 2B is found positive as much as 0.031. It means that face value coupon is a positive predictor on new customer acquisition efficacy. Moreover, the effect face value coupon on new customer acquisition efficacy is proved to be not significant with the t = 0.037 and p = 0.737 which is more than (0.05). Therefore, Ho2B is accepted and Ha2B is rejected which means that the higher redemption duration of the coupon it will not give significant impact to the new customer acquisition efficacy business will have. 4.2.2.3 Hypothesis 2C The linear regression equation for hypothesis 2B is: Y2 = 5,958 + 0,026X2C The hypothesis can be formulated as followed: Ho2C: 2C = 0 Depth of price discount (X2C) has no effect on efficacy (Y2). New customer acquisition

Ha2C : 2C > 0 Depth of price discount (X2C) has significant effect on acquisition efficacy (Y2). Below are the criteria to accept or to reject the null hypothesis (Ho2C): If the regression coefficient (2C) has probability value (p) < , Ho2C is rejected and Ha2C is accepted. If the regression coefficient (2C) has probability value (p) , Ho2C is accepted and Ha2C is rejected. Based on the analysis, the 2C is found positive as much as 0.233. It means depth of price discount is a positive predictor of new customer acquisition efficacy. Moreover, the effect depth of price discount on new customer acquisition efficacy is proved to be significant with the t = 2,504 and p = 0.014 which is more than (0.05). Therefore, Ho2C is rejected and Ha2C is accepted which means that the higher the depth of price discount the higher the new customer acquisition efficacy business will have. 4.2.3 Hypothesis 3 New customer

Hypothesis 3 is tested using linear regression. The result of the equation shows below :

Table 5 Variables in the Equation 3 Independent Variables Unstandardized Coefficient B Std. Error Constant Face Value Coupon (A) Redemption Duration (B) Depth of Price Discount ( C) Source : Primary Data 2013, analyzed. Dependent variable for hypothesis 3 is spend more than coupon value. 4.2.3.1 Hypothesis 3A The linear regression equation for hypothesis 3A is: Y3 = 6.167+ 1.46E-005X3A The hypothesis can be formulated as followed: Ho3A: 3A = 0 Face value coupon (X3A) has no effect spend more than coupon value (Y3). Ha3A : 3A > 0 Face value coupon (X3A) has significant effect spend more than coupon value (Y3). 0.505 0.156 0.303 3.231 0.002 6.167 1.46E005 0,002 0,099 0,002 0.024 0.981 7.494 0.000 0.099 0.823 1.054 0.412 0.294 Standardized Coefficient Beta t Sig.

Below are the criteria to accept or to reject the null hypothesis (Ho3A): If the regression coefficient (3A) has probability value (p) < , Ho3A is rejected and Ha3A is accepted. If the regression coefficient (3A) has probability value (p) , Ho3A is accepted and Ha3A is rejected. Based on the analysis, the 3A is found positive as much as 0.099. It means that there face value coupon is a positive predictor of spend more than coupon value. Moreover, the effect face value coupon on spend more than coupon value is proved to be not significant with the t = 1.054 and p = 0.294 which is more than (0.05). Therefore, Ho3A is accepted and Ha3A is rejected which means that the higher face value coupon it will not take significant impact for the business to get user that spends more than coupon value. 4.2.3.2 Hypothesis 3B The linear regression equation for hypothesis 3B is: Y3 = 6.167 + 0,002X3B The hypothesis can be formulated as followed: Ho3B: 3B = 0 Redemption Duration (X3B) has no

effect on spend more than coupon value (Y3). Ha3B : 3B> 0 Redemption Duration (X3B) has

significant effect on on spend more than coupon value ( (Y3). Below are the criteria to accept or to reject the null hypothesis (Ho3B):

If the regression coefficient (3B) has probability value (p) < , Ho3B is rejected and Ha3B is accepted. If the regression coefficient (3B) has probability value (p) , Ho3B is accepted and Ha3B is rejected. Based on the analysis, the 3B is found positive as much as 0.002. It means that there redemption duration is a positive predictor of spend more than coupon value.. Moreover, the effect redemption duration on spend more than coupon value is proved to be not significant with the t = 0.024 and p = 0.981 which is more than (0.05). Therefore, Ho3B is accepted and Ha3B is rejected which means that the higher redemption duration of the coupon it will not give significant impact to the spend more than coupon value . 4.2.3.3 Hypothesis 3C The linear regression equation for hypothesis 3C is: Y2 = 5,958 + 0,026X3C The hypothesis can be formulated as followed: Ho3C: 3C = 0 Depth of price discount (X3C) has no effect on efficacy (Y3). Ha3C : 3C > 0 Depth of price discount (X3C) has significant effect on acquisition efficacy (Y3). Below are the criteria to accept or to reject the null hypothesis (Ho3C): New customer New customer acquisition

If the regression coefficient (3C) has probability value (p) < , Ho3C is rejected and Ha3C is accepted. If the regression coefficient (3C) has probability value (p) , Ho3C is accepted and Ha3C is rejected. Based on the analysis, the 3C is found positive as much as 0.303. It means that depth of price discount is a positive predictor of new customer acquisition efficacy. Moreover, the effect depth of price discount on new customer acquisition efficacy is proved to be significant with the t = 3.231 and p = 0.02 which is more than (0.05). Therefore, Ho3C is rejected and Ha3C is accepted which means that the higher the depth of price discount the higher the new customer acquisition efficacy business will have. 4.2.4 Hypothesis 4

Hypothesis 4 is tested using linear regression. The result of the equation shows below : Table 6 Variables in Equation 4 Independent Variables Unstandardized Coefficient B Std. Error Constant Employee -5.179 7.999 4.737 0.651 0.766 -1.093 12.286 0.277 0.000 Standardized Coefficient Beta t Sig.

Satisfaction Source : Primary Data 2013, analyzed. Dependent variable for hypothesis 4 is repeat full price. The linear regression equation for hypothesis 4 is: Y4 = -5.179+ 7.999X4 The hypothesis can be formulated as followed: Ho4 : 4 = 0 Employee satisfaction (X4) has no effect to repeat purchase at full price (Y4). Ha4 : 4 > 0 Employee satisfaction (X4) has significant effect to repeat purchase at full price (Y4). Below are the criteria to accept or to reject the null hypothesis (Ho4): If the regression coefficient (4) has probability value (p) < , Ho4 is rejected and Ha4 is accepted. If the regression coefficient (4) has probability value (p) , Ho4 is accepted and Ha4 is rejected. Based on the analysis, the 4 is found positive as much as 0.099. It means that there is positive effect of employee satisfaction on repeat purchase at full price by coupon redeemers. Moreover, the effect face value coupon on spend more than coupon value is proved to be not significant with the t = 1.054 and p = 0.294 which is more than (0.05). Therefore, Ho4 is rejected and Ha4 is accepted. To get your customer repeat purchase to your product in full price after they use their

coupon, businesses must focus on how to retain their employee satisfaction during the social promotions. 4.3 Discussion 4.3.1 Profitability of Social Promotions on new customer acquisition efficacy, spend more than coupon value and repeat full price purchasing. Hypothesis 1 is tested using logistic regression of promotion profitability toward new customer acquisition efficacy (A), spend more than coupon value (B) and repeat purchase at full price (C). The result reveals that amongst three, only repeat purchase at full price purchase ( p <0.05) is a significant predictor of profitable social promotions. However the two other predictors which are new customer acquisition efficacy and spending more than coupon value are not. Thus H1C is supported by the data but H1A and H1B does not receive support. In mbakdiskons case, it seems to be seen that businesses that run social promotions or place a deal at mbakdiskon will have a profitable promotion when they have high percentage of returning customers who will purchase their product in full price other than getting new customer base or at the occasion of redemption they will spend more than the coupon value. Compared to prior research discussion (Dholakia,2011) , there are some differences in the result of hypothesis testing. In prior research (Dholakia, 2011) , H1A and H1C does receive support from the data while only H1B does not. Prior research samples are taking from businesss that have run social promotions at Groupon.com in several cities in US. It appears that for those businesss, getting new customer to purchase the coupon and receive

exposure in a new customer base seems to be sufficient to have a profitable social promotion. For mbakdiskon merchants, it seems to be important when composing and placing a deal in Mbakdiskon.com to focus on the goal to receive higher percentage of returning customers and consider drivers that will support the goal. 4.3.2 New customer acquisition efficacy on Coupon face value, redemption duration, and depth of price discount. Hypothesis 2 was tested using linear regression of new customer acquisition efficacy regressed on Mbakdiskon coupon face value, depth of price discount, and redemption duration. Results revealed that coupon face value ( = .239 , p <.05) and depth of price discount ( = .233 p <.05) were significant predictors while redemption duration is not emerge as significant predictor. The result provide support to H2A and H2B but H2C does not receive support. Compared to prior research result, coupon face value and redemption duration is resulted as significant predictors while depth of price discount is not. The result offer practical guidance to the business when composing a deal in Mbakdiskon. The result of the research is suggesting that business must offer a coupon with higher face value and higher depth of discount to garner new customer acquisition in order to make a profitable promotion. 4.5.3 Spend beyond coupon value on Coupon face value, redemption duration, and depth of price discount. Hypothesis 3 was tested using linear regression of the percentage of user buying beyond the coupon value on same three predictors as Hypothesis 2. Result revealed that in this case depth of price discount is a significant predictor ( =

.303, p <.05) and both coupon face value and redemption duration are not a significant predictor. H3C receive support from the data while H3A and H3B are not being supported. Compared to prior research (Dholakia, 2011), coupon face value is resulted as negative predictor while depth of price discount is a positive predictor. In prior research (Dholakia, 2011) H3A and H3B receive support from the data while H3C is not supported since redemption duration is not significant. In this research the managerial implications for the result is that to get user to spend beyond coupon value higher depth of discount must be applied when placing a deal in mbakdiskon. 4.5.4 Repeat Full Price Purchase on Employee Satisfaction Hypothesis 4 was tested with linear regression of repeating full price purchase on employee satisfaction. Result revealed a significant coefficient ( = .766, p <.05). The result shows clear managerial implications which is to maintain the employee satisfaction in order to engage long-term and repeat-buying costumer for the long term.

CHAPTER V CONCLUSION, LIMITATIONS, AND SUGGESTION

5.1 Conclusion Based on the research described in the previous chapter, there are several conclusions that can be taken 1. New customer acquisition efficacy has no significant effect on profitability of social promotions. To some extent, geting new customer base is not significant to make the promotion profitable for the business. 2. Spending beyond coupon value has no significant effect on profitability of social promotions. Getting the coupon redeemers to spend beyond the value of the coupon they redeem at the occasion of redemption is not significantly bringing the social promotion profitable. 3. Repeating full price purchase has significant effect on profitability of social promotions. It means the higher the coupon redeemers who come at second time to repeat purchase the business product at full price, the more profitable the social promotions of the business. 4. Coupon face value has significant effect on new customer acquisition efficacy. The higher the coupon face value the more new customer can be acquired through the social promotions at Mbakdiskon.

5. Redemption duration has no significant effect on new customer acquisition efficacy. So the longer the redemption duration not necessarily significant in getting the business new customer base when placing a deal or social promotion at Mbakdiskon. 6. Depth of price discount has significant effect on new customer acquisition efficacy. The higher the depth of discount the more new customer can be acquired through the social promotions at Mbakdiskon. 7. Coupon face value has no significant effect on enforcing the coupon redeemers to spend more than coupon value. 8. Redemption duration has no significant effect on enforcing the coupon redeemers to spend more than coupon value. 9. Depth of price discount has significant effect on enforcing the coupon redeemers to spend more than coupon value. The higher the depth of discount the more the coupon redeemers will spend more than the coupon value. 10. Employee satisfaction has significant effect on enforcing coupon redeemers to come at second time and repurchase the same product in full price. 5.2 Research Limitations 1. The research instrument is adopted from the prior research instrument and for each variable is only measured by one measurement question in the survey. There are two types of questions within the scale type that normally its validity and reliability needs to be tested.

2. Though nonresponse bias is not occurred since the research can gather 100% response from the population, response-based error in which the participant fails to give correct answer may occur. When choosing the participant, the researcher try to minimize error by only meeting the uniquely qualified participant that provide desired information, in this case they are the business owner itself, general managers, or marketing managers. Some small and medium enterprises that are included in the population sometimes do not have a written record or report on some data the researcher asked for example, percentage of returning coupon redeemers that repurchase in full price. For some business such as spa, salon, education, and health industry they record the coupon redeemers as their new members and they give them member card that the coupon redeemers can use in the next visit for extra benefit. From those businesses, the participant can give us more appropriate answer. Since most industries in the populations are in culinary industry and they do not usually record the second time visit for each coupon redeemers, there is a possibility of response-based error in the research. 5.3 Suggestion 1. For businesses that will do a social promotion in Mbakdiskon, to make a profitable promotions it is suggested that the promotions must result in repeat purchasing at second time visit by customers in full price. And to get a repeat purchasing at second time visit by customers in full price, the research suggest the business to keep their employee

satisfied. The higher the employee satisfaction, the more the customer will come to the business for full price purchase, the more the business will enjoy profitable promotions. Because in Mbakdiskon, most industries that involve as merchants are from service business, and in service business costumer consume the product in all the buying process. And all the buying process in service business is delivered mostly by the employee, even in the culinary business. One sample case that has been known in the case of Mbakdiskon delivered by the internal management is that there is one merchant which is a Italian restaurant with a good quality of taste is not enjoying profitable promotions because at the occasion of redemption their employee dont serve the coupon redeemers in the pleasant way. For example, the coupon redeemers get smaller portion than regular buyers though is not stated in their terms and condition, or the coupon redeemers must wait for more than 30 minutes to get the food. Mbakdiskon has collected many complains because of these cases, and after two months the restaurant closed and change the brand which indicates the unprofitable promotion. The case shows us though the quality of the food is good known, but if the employee services failed it will still cause unprofitable promotion. Therefore we suggest that at redemption occasion, the business owners or marketing managers or general managers must make a clear brief to their employees about the program and the goal why the business must do the program and how

the employees must do to serve well to the coupon redeemers. Additionally it is better if the business even set the same or higher incentive based to the employees that relates to the coupon redeemers satisfaction at the occasion of redemption. 2. The second suggestion is still related to the previous suggestion. To get the profitable social promotion business must enforce the repeat full price purchase from the coupon redeemers. We suggest that businesses must also add incentives to keep the coupon redeemers connected to the business and come back at second time other than the employee satisfaction. It has been done by some businesses in spa and salon industries by giving the coupon redeemers a member card and give extra discount or freebies for them when they repurchase at second visit and showing the member card. 3. To mbakdiskon.com the sustainability of social promotions can be an issue because from the research from 15% of total population stated that they have unprofitable promotions and most of them are from culinary services. Meanwhile from 108 businesses, culinary services are around 60% of all populations. Looking at the prior research, most of culinary services stated they dont want to run another social promotions again because instead of experiencing profit they experience loss from operation since in US Groupon case they must incur 50% discount and from the revenue share to US Groupon is 50 : 50 so in conclusion it only remains 25% of selling price ( in food

business, there are some variable cost of serve they must cover compared to other services business and according to prior research averagely is 50%) to cover the cost of operation while because of the popularity of US Groupon sometimes the coupon sold reach the number of 3,000-5,000 pcs in which it requires the full capacity of the business to serve. Mbakdiskon case is different, the minimal discount is 30% and sometimes business can even switch into voucher model if they cannot give more depth of discount. But within the natural of culinary services anxiety in doing the social promotions model, Mbakdiskon must be aware of the situations in the future because most deal supplies in the pipeline came from culinary services. 4. To mbakdiskon.com, the research can be used by the sales and marketing management to compose an approaching strategy to help businesses in composing a deal in Mbakdiskon and suggest them some points in after sales management, also in creating characteristics of deal (face value, redemption duration, and depth of price discount). 5. To the next researcher, further research can be done by making specific for each industries related because for each industry profitability and cost structure can be different and therefore the response of coupon redeemers can be differed and the profitability drivers that significant can also be differed. The next researcher could also create a prescription deal that is profitable for each industry in composing the coupon face value, depth of price discount, and

redemption duration. This kind of research will be very useful for the internal management of Mbakdiskon. References Assail, Henry. (1998). Consumer Behavior and Marketing Strategies. Ohio: South-Western College. Alba, Joseph W., Carl F. Mela, Terence A. Shimp, and Joel E. Urbany (1999), The Effect of Discount Frequency and Depth of Consumer Price Judgments, Journal of Consumer Research , 26(2), 99-114. Alves Armando (2010), Consumers get together: from Group Buying to Collaborative Consumption, A Source of Inspiration, Available online at: http://www.asourceofinspiration.com/2010/07/15/consumers-get-togetherfrom-group- buying-to-collaborative-consumption/ Aydin, Goker and Serhan Ziya (2008), Pricing Promotional Products Under Upselling, Manufacturing & Service Operations Management ,10(3), 360-376. Blattberg, Robert C., and Scott A. Neslin (1990), Sales Promotions: Concepts, Methods and Strategies . Englewood Cliffs, NJ: Prentice Hall. . Dholakia, Utpal M. (2006), How Customer Self-Determination Influences Relational Marketing Outcomes: Evidence from Longitudinal Field Studies, Journal of Marketing Research , 43(1), 109-120.

Dholakia, Utpal M., Barbara E. Kahn, Randy Reeves, Aric Rindfleisch, David Stewart and Earl Taylor (2010), Consumer Behavior in a Multichannel, Multimedia Environment, Journal of Interactive Marketing , 24, 86-95. Farmer, Liz (2010), Groupons coupons causing businesses boons, The Daily Record , August 22, 2010. Fowler, Geoffrey A. (2011), LivingSocial Gets Boost from Amazon, Wall Street Journal , January 20, B8. Greenleaf, Eric A. (1995), The Impact of Reference Price Effects on the Profitability of Price Promotions, Marketing Science , 14(1), 82-104. Hardie, Bruce (1996), Who Benefits from Price Promotions? Business Strategy Review , 7(4), 41-49. Hess, James D. and Eitan Gerstner (1993), Double Couponing: Pricing and Consumer Perspectives, Marketing Letters , 4(2), 153-163. \ Horne, David R. (2007), Gift Cards: Disclosure One Step Removed, Journal of Consumer Affairs , 41(2), 341-350. Inman, J. Jeffrey and Leigh McAlister (1994), Do Coupon Expiration Dates Affect Consumer Behavior? Journal of Marketing Research , 31(3), 423 428.

Koys, Daniel J. (2001), The Effects of Employee Satisfaction, Organizational Citizenship Behavior, and Turnover on Organizational Effectiveness: A Unit-level, Longitudinal Study, Personnel Psychology , 54(1), 101-114. Krishna, Aradhna and Z. John Zhang (1999), Short- or Long-Duration Coupons: The Effect of the Expiration Date on the Profitability of Coupon Promotions, Management Science , 45(8), 1041-1056. Lewis, Michael (2006), Customer Acquisition Promotions and Customer Asset Value, Journal of Marketing Research , 43(May), 195-203. Mela, Carl F., Sunil Gupta and Donald R. Lehmann (1997), The Long-Term Impact of Promotion and Advertising on Consumer Brand Choice, Journal of Marketing Research , 34(May), 248-261. Pauwels, Koen, Dominique M. Hanssens, and S. Siddharth (2002), The longterm effects of price promotions on category incidence, brand choice, and purchase quantity, Journal of Marketing Research , 39(4), 421-439. Payne, Adrian and Pennie Frow (2005), A Strategic Framework for Customer Relationship Marketing, Journal of Marketing , 69(October), 167-176. Porter, Jane (2011), Rebuilding Sales After Deep Discounts, Entrepreneur Magazine, February 28. Available online at:

http://www.entrepreneur.com/article/218197.

Raghubir, Priya and Kim Corfman (1999), When do Price Promotions Affect Pretrial Brand Evaluations? Journal of Marketing Research , 36(2), 211222. Raghubir, Priya, J. Jeffrey Inman, and Hans Grande (2004), The Three Faces of Price Promotions, California Management Review , 46(Summer), 23-42. Reibstein, David J. and Phillis A. Traver (1982), Factors Affecting Coupon Redemption Rates, Journal of Marketing , 46(Fall), 102-113. Reichheld, Frederick (2001), The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value . Boston: Harvard Business School Press. Schneider, Benjamin, Susan S. White and Michelle C. Paul (1998), Linking Service Climate and Customer Perception of Service Quality: Test of a Causal Model, Journal of Applied Psychology , 83, 150-163. Scott, Carol A. (1976), The Effects of Trial and Incentives on Repeat Purchase Behaviors, Journal of Marketing Research , 13(3), 263-269. Sherr, Ian (2010), Online Coupons Get Smarter Groupon, Rivals Add Personalized Bargains Staff as Some Merchants Gripe, Wall Street Journal , August 25, B4. Steiner, Christopher (2010), Meet the Fastest Growing Company Ever, Forbes , August 30, 2010,

Sutherland, Brooke (2010), Its a half-price kind of world: Millions of bargain hunters flock to online coupon sites like Groupon.com for deep discounts in everything from haircuts to meals, McClatchy-Tribune Business News , August 7. Underwood, Ryan (2010), Going Global: Groupon Versus the World, Inc. Magazine , 32(8), 116-118. Walters, Rockney G. and Scott B. MacKenzie (1988), A Structural Equations Analysis o the Impact of Price Promotions on Store Performance, Journal of Marketing Research , 25(1), 51-63 Wilkerson, April (2010), Courting with coupons: Online business helps Oklahoma retailers attract customers, Journal Record , August 3

List of Tables Table 1 .................................................................................................................. 87 Table 2 .................................................................................................................. 10 Table 3 .................................................................................................................. 44 Table 4 .................................................................................................................. 47 Table 5 .................................................................................................................. 53 Table 6 .................................................................................................................. 57 Table 7 .................................................................................................................. 61 Table 8 .................................................................................................................. 64

List of Figures Figure 1 .................................................................. Error! Bookmark not defined. Figure 2 ................................................................................................................. 13 Figure 3 ................................................................................................................. 14 Figure 4 ................................................................................................................. 27 Figure 5 ................................................................................................................. 32 Figure 6 ................................................................................................................. 33 Figure 7 ................................................................................................................. 35

Logistic Regression

Om nibus Tes ts of Mode l Coe fficients Step 1 Step Bloc k Model Chi-s quare 86.167 86.167 86.167 df 3 3 3 Sig. .000 .000 .000

Model Sum m ary Step 1 -2 Log Cox & Snell likelihood R Square a 11.155 .550 Nagelkerke R Square .926

a. Es timation terminated at iteration number 9 bec aus e parameter es timates c hanged by less than .001.

Hos me r and Lem e show Te st Step 1 Chi-s quare .436 df 6 Sig. .999

a Clas sification Table

Predicted Prof itable Step 1 Obs erved Prof itable Overall Perc entage a. The cut value is .500
Variables in the Equation 95.0% C.I.for EXP(B) Low er Upper .244 8.354 .901 1.270 1.022 1.392

0 0 1 17 1

1 1 89

Percentage Correc t 94.4 98.9 98.1

Step a 1

New CostumerAC SpendMore RepeatFullPrice Constant

B .356 .067 .176 -6.585

S.E. .902 .088 .079 5.007

Wald .156 .592 4.979 1.730

df 1 1 1 1

Sig. .693 .442 .026 .188

Exp(B) 1.427 1.070 1.192 .001

a. Variable(s) entered on step 1: New CostumerAC, SpendMore, RepeatFullPrice.

Linear Regression 1
Variables Enter ed/Re m ovebd Model 1 Variables Entered Depth of Price Disc ount, Face Value Coupon , Redemptioa n Duration Variables Remov ed Method

Enter

a. All requested variables entered. b. Dependent Variable: New Costumer AC

Model Sum m ary Model 1 R .343 a R Square .118 Adjusted R Square .092 Std. Error of the Estimate 1.200

a. Predictors: (Constant), Depth of Price Dis count, Fac e Value Coupon , Redemption Duration

ANOVAb Model 1 Sum of Squares 19.990 149.677 169.667 df 3 104 107 Mean Square 6.663 1.439 F 4.630 Sig. .004 a

Regression Residual Total

a. Predictors: (Constant), Depth of Price Dis count, Face Value Coupon , Redemption Duration b. Dependent Variable: New Cos tumer AC
a Coe fficients

Model 1

(Cons tant) Face Value Coupon Redemption Duration Depth of Price Discount

Unstandardiz ed Coef f icients B Std. Error 5.958 .495 2.35E-006 .000 -.002 .007 .026 .010

Standardized Coef f icients Beta .239 -.031 .233

t 12.041 2.573 -.337 2.504

Sig. .000 .011 .737 .014

a. Dependent Variable: New Cos tumer AC

Linear Regression 2
Variables Enter ed/Re m ovebd Model 1 Variables Entered Depth of Price Disc ount, Face Value Coupon , Redemptioa n Duration Variables Remov ed Method

Enter

a. All requested variables entered. b. Dependent Variable: Spend More

Model Sum m ary Model 1 R .326 a R Square .106 Adjusted R Square .080 Std. Error of the Estimate 18.1702%

a. Predictors: (Constant), Depth of Price Dis count, Fac e Value Coupon , Redemption Duration

ANOVAb Model 1 Sum of Squares 4083.046 34336.167 38419.213 df 3 104 107 Mean Square 1361.015 330.155 F 4.122 Sig. .008 a

Regression Residual Total

a. Predictors: (Constant), Depth of Price Dis count, Face Value Coupon , Redemption Duration b. Dependent Variable: Spend More
a Coe fficients

Model 1

Unstandardiz ed Coef f icients B Std. Error (Cons tant) 6.167 7.494 Face V alue Coupon 1.46E-005 .000 Redemption Duration .002 .099 Depth of Price Dis count .505 .156

Standardized Coef f icients Beta .099 .002 .303

t .823 1.054 .024 3.231

Sig. .412 .294 .981 .002

a. Dependent Variable: Spend More

Linear Regression 3
Variables Enter ed/Re m ovebd Model 1 Variables Entered Employee Satis f actio a n Variables Remov ed . Method Enter

a. All requested variables entered. b. Dependent Variable: Repeat Full Pric e


Model Sum m ary Model 1 R .766 a R Square .587 Adjusted R Square .584 Std. Error of the Estimate 16.2133%

a. Predictors: (Constant), Employ ee Satis f action

ANOVAb Model 1 Sum of Squares 39682.371 27864.296 67546.667 df 1 106 107 Mean Square 39682.371 262.871 F 150.958 Sig. .000 a

Regression Residual Total

a. Predictors: (Constant), Employ ee Satis faction b. Dependent Variable: Repeat Full Price
a Coe fficients

Model 1

(Cons tant) Employ ee Satis f action

Unstandardiz ed Coef f icients B Std. Error -5.179 4.737 7.999 .651

Standardized Coef f icients Beta .766

t -1.093 12.286

Sig. .277 .000

a. Dependent Variable: Repeat Full Price

Table 7 List of Groupon Clones in Indonesia no Website Name URL http://www.fanesia.com http://www.disdus.com http://superbestdeal.com/ http://voucher.ogahrugi.com http://www.dealkeren.com http://evoucher.co.id/ http://www.valadoo.com http://www.lapar.com http://www.grupay.com/ http://www.loveindonesia.com/lovecoupon/ http://www.fashionprivate.com/ http://www.hemat.com http://www.groupon.biz/id_ID/lp/006/index_006.php http://www.belibareng.com/ http://kukuloba.com/

1 Fanesia 2 Disdus 3 Super Best Deal 4 OgahRugi (don't want to lose) 5 DealKeren.com 6 EVoucher 7 Valadoo 8 Lapar (Hungry) 9 Grupay 10 LoveIndonesia 11 FashionPrivate 12 Hemat 13 groupon.biz 14 BeliBareng (Buy together) 15 Kukuloba DiskonKolektif (Collective 16 Discount) 17 SuperDeal 18 Kriux (crunch sound)

http://diskonkolektif.com/ http://superdeal.id.88db.com http://kriux.com/

19 BeliPromo (Buy promo) Lakuu.net (giLAKUUpon/crazy for 20 coupon) 21 xxx 22 Maiplay 23 Mall Voucher 24 Groupon.co.id 25 IndoGroupon 26 Bom Diskon (Discount Bomb) 27 AkuPlusKamu (Me plus you) 28 DiskopTop 29 Pesta Deal (Deal Party) 30 Sosialitas (socialite) 31 FreeVou 32 Outlet 33 GrupBuys Nawartrus 34 Dskon 35 Detik Deals 36 Mbak Diskon (Miss Discount) 37 Kuponesia 38 Kriskros 39 DealGoing

http://www.belipromo.co.id

http://www.lakuu.net

maiplay.com http://www.mallvoucher.com http://www.groupon.co.id http://www.indogroupon.com/ http://www.bomdis.com/ http://www.akupluskamu.com http://www.diskontop.com http://pestadeal.com/ http://sosialitas.com/ http://www.freevou.com/ http://www.outlet.co.id/ http://grupbuys.nawartrus.com/ http://www.dskon.com http://www.detikdeal.com http://www.mbakdiskon.com http://www.kuponesia.com/ http://kriskros.com/ http://id.dealgoing.com/

40 MurahRek 41 Voucher Bali 42 Angetan 43 Diskoncom

http://www.murahrek.com/ http://voucherbali.com/ http://angetan.com/ http://www.diskon.com/

Source: TechinAsia.org, 2012