Case Study: To Savor or to Groupon

Coupons have become a commonly used tool in revenue management, yet many businesses continue to overlook the importance of consumer experience, redemption behavior, and the strategic differences between discount types. Mr. Chang can issue coupons to not only promote sales or prevent excess capacity but also to increase awareness of his restaurant's location. For small businesses, especially restaurants, digital coupon apps and mobile targeting technologies have lowered the cost of reaching new customers while enabling firms to tailor incentives based on location, timing, and consumer search behavior (Lee et al., 2021).  Most studies on discount effects discuss temporary discounts but ignore consumers' experiences and other discount types (Liu et al., 2021). Exclusive price promotions targeting specific customers are usually preferred over inclusive offers, and personalized coupons have also been shown to have better customer retention and increased redemption rates (Shao et al., 2025). Hence, I would also recommend Mr. Chang focus on experimenting with coupon offers to see which type of discounts perform the best. Coupons also facilitate price discrimination and engender market segmentation that firms deploy to compete for price-sensitive consumers (Xia et al., 2021). Promoting coupons through phone apps has the potential to benefit both advertisers and consumers. However, businesses should not flood consumers with mobile coupons. In this case study I will discuss some of the best options Mr. Chang has in regard to using Groupon or Savor for his restaurant.

Should Mr. Chang proceed with the Groupon daily deal?

The analysis does a great job in calculating the gross amount per coupon. However, this alone would not be enough for deciding whether the daily deal is profitable or the best strategic decision.  The analysis misses several critical operational and revenue-management elements such as capacity, redemption timing, and restaurants' image on perceived reputation. The Groupon daily deal seems to not allow the restaurant to control when coupon customers redeem their meals, and this can affect high-margin walk-ins and regular customers that are willing to pay full price. Additionally, the analysis did not include displacement costs, but proper revenue management requires evaluating whether discounted demand fills unused capacity or cannibalizes full-price demand.  Some consumers might form discount expectations after getting frequent discounts and then start to purchase discounted products only (Liu et al., 2021).  Groupon can bring in bargain-demanding customers, and these customers usually do not convert to high-value return customers.  Furthermore, a high-end restaurant offering a discount coupon might experience brand erosion and the perception of lower exclusivity from regular customers. The bottom line would then be no, the analysis did not include all the essential revenue-management considerations.  Despite showing a $5 per table profit, the displacement cost and perceived image of a discounted restaurant can make the daily deal risky for a high-end restaurant, and I believe that he should not proceed with the daily deal.

Does the ability to limit the number of discounted tables through Savored create advantages?

Yes, I believe that this is the core revenue-management advantage because Savored allows Mr. Chang to manage inventory and better predict reservation flow. As a revenue management tool, coupons are used to bring in customers with low purchase intentions. The type of the incentive, such as percent-off or dollar-off, can have a large influence on coupon redemption rates, usually more so than the face value of the coupons themselves (Shao et al., 2025). After Mr. Chang has experimented with coupon types, he should then invest in marketing special discounts to targeted customers and control how many customers receive discounts as well as the time and days in order to be able to fill unused seats during slow periods without pushing out full-price walk-in customers.  The ability to limit the number of discounted tables is a major advantage because it reduces cannibalization, eliminates displacement risk, and ensures discounts are applied only to low-demand periods.

Would you prefer Savored or the daily deal? Why?

I would prefer Savored because Savored allows Mr. Chang to select the quantity and time of tables to discount, which is essential for proper revenue management.  Using Savored can also help lower the possibility of discounted customers pushing out customers that are willing to pay full price. Finally, Savored seems to be beneficial in regard to allowing discounts only when demand is less than capacity, so the marginal revenue contribution would always be positive while also having predictable reservations instead of having unpredictable coupon use surges.  Having plenty of available discounts may reduce brand reputation, weaken the consumer-business relationship, waste marketing resources, and increase marketing costs (Zhang et al., 2025). So being able to control the number of discounts available and the time they are available can help the restaurant maintain its brand image.

Conclusion

After analyzing the case study, I believe that Groupon’s daily deal may sacrifice management over the timing of coupon redemption, risks in pushing out full-price customers, and also risks the restaurant’s premium brand image.  On the other hand, Savored allows for revenue management by allowing the restaurant to manage when and how many discounted tables are available, lowering the possibility of cannibalization and ensuring discounts are used only to capture otherwise unsold capacity. The bottom line is that Savored offers a more strategic method for revenue management, which makes it the better option for sustaining both profitability and brand reputation.

References:

Lee, & Choeh. (2021). Motivations for Obtaining and Redeeming Coupons from a Coupon App: Customer Value Perspective. Journal of Theoretical and Applied Electronic Commerce Research, 16(2), 22-33. https://doi.org/10.4067/S0718-18762021000200103

Liu, Lobschat, Verhoef, & Zhao. (2021). The effect of permanent product discounts and order coupons on purchase incidence, purchase quantity, and spending. Journal of Retailing, 97(3), 377-393. https://doi.org/10.1016/j.jretai.2020.11.007

Shao, Jing, & Li. (2025). The impacts of coupon and discount on exposure and various stages of conversion funnel: An empirical investigation of the online food delivery service. Revue Canadienne Des Sciences de l’administration = Canadian Journal of Administrative Sciences., 42(1), 160–180. https://doi.org/10.1002/cjas.1764

Xia, Li., Cheng, & Shen. (2021). Competition Strategies for Location-Based Mobile Coupon Promotion. Journal of Theoretical and Applied Electronic Commerce Research, 16(7), 3248. https://doi.org/10.3390/jtaer16070176 

Zhang, Zhou, Zhu, & Qin. (2025). The Effects of Mobile Coupons on Consumer Buying Behavior: A Dynamic Perspective Based on Hidden Markov Model. Journal of Consumer Behaviour., 24(5), 2372–2383. https://doi.org/10.1002/cb.70012