Could Groupon Help Ireland Out of the Recession?

When businesses have too much supply or perishable products, they often turn to the likes of Groupon or Facebook deals to stimulate demand. The deal generally works on the basis that the customer can get an extreme deal, on something they would not otherwise be buying. The business pay Groupon / Face book a large chunk of the realisable amount so the business only generally gets about 25% of the regular selling price. Saying that Starbucks and other big firms have been able to use this model to stimulate demand and make money on the back end. So could we as a country do the same???

The answer is surprisingly yes in my opinion. So lets assume the country is a private company with a mission to create jobs and make profit – big stretch I know but bear with me. As a marketeer here’s how I’d structure the deal for maximum effect.

The Irish Gov own 25+% of former state airline Aerlingus and the Majority of our hotels have less than 50% occupancy due to the government incentives to create them. Now the Irish Government is effectively broke at the moment, so assuming it was a business with cashflow problems, part of the remit would be not to spend any cash. Impossible you may say? Not really, I’ve done it many times! The government has other assets it can barter with.

Remember the remit create jobs and bring money into the country. To incentivise the airlines and hotels to come into the scheme and give free seats and rooms – the government can barter PRSI credits which is a tax on jobs. In other words the airline and hotels can reduce their outgoing expenses in exchange for using a perishable good that would otherwise not be sold. So for no upfront costs they could get airline seats and places for the tourists to stay, these tourists then spend lots of money while in the country, called the back end potential. Which eventually makes its way to the government in VAT and income taxes. The tourist sector will need to hire more staff to cater and entertain the visitors to the country so more jobs are created. Hotel owners fill their rooms without any upfront investment either, sell the residents food and beverage; all while increasing staff numbers and decreasing PRSI costs.

The beauty of this model, is that is sustainable. Groupon and Facebook deals are geographical target-able. Every week they could target a town or state in a different country. We could turn them off for St. Patrick’s day when demand is high and ramp them up to all of the USA for the quiet January period.

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