Essays on Business Models and Empirical Analysis of the Online Daily Deal Industry

With the spread of information technology (IT), consumers can easily purchase products and spread opinions about their purchases. Social media has become a force in the marketplace. Not surprisingly, retailers have sought to develop and implement innovative strategies to leverage social media. In the online daily deal industry, coupon offerings are frequently linked with convenient access to social media to “spread the word” and enhance coupon sales. But the online daily deal industry is fairly new and little rigorous analysis has been directed at understanding the causal relationships between deal characteristics and deal outcomes, the causal factors leading to repeat daily deal promotions, or the causal interrelationships among daily deal promotions, social media commentary, and changes in firm ratings. This dissertation investigates all three questions in depth. Throughout, we link our investigations to an overall consideration of the implications for developing an empirically validated business model of the industry. This thesis consists of three separate but related essays and employs a significant data set that we developed by accessing publicly available Groupon sites. At various points, this data set is paired with data we gathered electronically from Yelp and demographic data directly from the 2010 U.S. Census. The first essay focuses on the impacts of the minimum requirements, a unique deal characteristic of Groupon deals, on social media sharing and deal outcomes. The second essay focuses on e-WOM and local competition factors on retailers’ initial and return Groupon promotion decisions. The final essay focuses on the main effect of Groupon promotions on e-WOM, and investigates mediators and moderators of the main effect. Our study contributes to the literature of various areas, including e-WOM, local competition, business customer loyalty, and online daily deals. Our findings provide important implications for retailers and online daily deal platforms