The Battle for Social Commerce

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It has been on every newspaper and it is now the topic of many opinion programs on the radio and TV. It is the possible acquisition of GroupOn by the internet giant Google. The speculation about the $5 to $6 billion dollars deal, that would make Google control the group discounts site, has provoked strong effects on the e-business environment.

One of these possible effects is the business move that other giant, such as Amazon.com, has made today after acquiring LivingSocial, the main competitor of GroupOn.  The deal reached $175 million and it materializes the most important competitor that Google will face if it takes on GroupOn.

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LivingSocial, as a Social Commerce e-business, aims to offer group discounts. Basically, it offers a “deeply discounted” deal of the day at local businesses which may be purchased for a voucher to be used in the business location. This voucher may be shared with at least three people to purchase the service, in which case will be free.   

According to some measures, such as the Market Share of visits, LivingSocial is already the closest competitor to GroupOn. The graph below elaborated by Hitwise shows the numbers and tendencies for each company.

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According to Techcrunch, Hitwise looked at 81 group buying sites, showing that GroupOn commands 79% of U.S. visits to the buying category, whereas LivingSocial holds an 8% share.

The acquisition of LivingSocial and the possible deal between Google and GroupOn seems to open a new era for Social Commerce and it could set a trend in this kind of acquisitions.  It will also be really interesting to see the advantages that these will report to their buyers.

 According to representatives of GroupOn, the huge advantage for a search engine like Google will result in not only finding a particular business or store in a determined area after a particular search, but also having direct contact with the business, and more importantly getting potential customers and businesses in touch, since the businesses will be able to attract consumers via any search.  

The interest of these huge e-business enterprises such as Amazon and Google on these Social Commerce sites only highlights their success on what is already an important and innovative way to do business.  It will be really interesting to see what happens after these types of companies take on Social Commerce.

Implications of Neuromarketing… or Should We Say “Neuromining”?

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Neuromarketing seems to be a very redundant definition. All the decisions that people take in their entire lives result from an extremely complex logical process that takes place in our brain, which generates possible options or alternatives that are weighed in order to produce a final decision related to any possible area of our lives. Naturally, it includes our consumer decisions.

The marketing process is obviously highly attracted to these types of decisions. Our unique preferences are determined by these processes previously described, resulting in buying the red car instead of the blue one,  watching the “horror film” in the place of the “action film” on Friday night, or preferring a hamburger franchise over another.

Hence, it is a fact that the marketing process has always tried to access these consumer decisions developed in our minds. The changing factor over time is which ways it has used to do it.

Neuromarketing is explained by Max Sutherland as an “applied extension of neuroscience”, implying the application of scanning technology to the human brain. Sutherland also states that it has evolved from studies of the pupils and tracking of the eyes movements while looking at advertisements, and also from the exploration of left and right brain processes.

Another very powerful tool from which marketing has benefited to gather information and to determine the possible behavior of consumers is data mining. According to Jason Frand, data mining is the “process of analyzing data from different perspectives and summarizing it into useful information… technically, is the process of finding correlations or patterns among dozens of fields in large relational databases”.    

Because of data mining we might find diapers and beers next to each other in a typical supermarket. It results from the analysis of buying patterns that showed that when men bought diapers on Thursdays and Saturdays in the supermarket they also tended to buy beer.  

However, such a powerful and useful analytical resource may also has a very negative side. According to Leigh Goessl, the first issue is related to the invasion of privacy of consumers, creating complete profiles of individuals without their authorization, or even worse, without their awareness. Additionally, consumers may even run the risk of identity theft.

Also, Leigh Goessl states that laws have not been able to keep up with the fast pace of technology. Therefore, the most important limits for the gathering, processing and use of this data are the decisions of managers in every company.

Neuromarketing may sound shocking as we notice how people’s brains are scanned to look for reactions and responses to different ads and products. But, isn’t it just a step ahead in technology to predict consumer’s decisions?.  How far will it keep going to make these predictions?.  Which types of new regulations will it face?.

If we consider data mining as a predecessor of neuromarketing, maybe these questions may be answered by looking at the development of the former to this day.