Deals, discounts and artificial intelligence

There’s little more tedious than standing behind a frugal little old lady at the grocery store… There’s little more tedious than standing behind a frugal little old lady at the grocery store — the kind who’s spent the last weekend clipping out an entire envelope full of coupons from The Sunday Times or the Pittsburgh Post-Gazette. She treks off to Shop ’n Save or Giant Eagle only to berate the cashier about the price of tomatoes and fumble through coupons for five minutes just to save 10 cents. Few college kids demonstrate such coupon-clipping cash-skimping.

But now there’s a newspaper coupon section for a generation raised on text messages and broadband access — discount websites. Sites such as LivingSocial and Groupon offer a system that specifically advertises aggregated one-day-only sales. Many of the money-saving sites simply offer deals, but some are designed specifically to get free stuff in the hands of a specific group: one of the most capricious, not to mention cheap, demographics — the college student.

And a lot of students at Pitt take advantage of these sites. Nia Baton-Stawson, a Pitt senior who majors in English, uses discount sites avidly. “As a college student, I really like to save money. But I also like to buy things. I often use RetailMeNot.com, which is great. They send me a coupon, and I look to see what is available…I’m a saver.”

It’s that penny-pinching attitude that has sparked business ideas for enterprising college students, who don’t just use discount sites, but make them.

Nothing draws students faster than the promise of free food, and Greg Woloschyn attempted to help that process with his website, Food-Bot, which he created during his senior year as a computer science major at Carnegie Mellon in 2010.

The 23-year-old’s site is a sort of free food cheat sheet that lists participating universities along with a calendar of on-campus events that feature free food. The site features a blog that asks participants to rank their experiences afterward — on the quantity and quality of the food and on the level of awkwardness that came with crashing the event for its free chow.

For Woloschyn, figuring out where to find free-food events involves some math — and he’s gone as far as developing an algorithm for uncovering them.

“Basically I have a set of emails, and I have a program that goes through those emails,” he said. “I go through and separate two categories: ‘free’ and ‘food.’ Then [the program] counts how many times, for example, the word ‘pizza’ occurs in a set bunch of words.” He said that he eventually trained the program to pick up more and more words. The “Theory” section of his websites provides a more thorough, albeit complicated, explanation of his formulas and the obstacles he faces in free-food finding.

Despite the mass appeal of munchies that cost nothing, Food-Bot was not initially a public resource.

“When I was in college, I used to try to get free food a lot by going to events that had free food,” he said. “I just decided that I could make an email filter that helped me and my friends to find it.”

He acquired a Gmail account to put the plan into action. Only he and some of his friends had the password to the system. But the idea sparked a business plan in his mind. If he and his friends could snag free food a few times a week, wouldn’t other people like to as well?

“After I took an artificial intelligence class [at CMU], I decided that I wanted to improve the email filter on Gmail,” he said. “So I wrote a better program that reproduced the Gmail filter. I made the site officially public in the spring of 2010.”

Woloschyn is not making any money off the site now, though he does see potential for its expansion.

“I have used the college community as a very focused [sample] group. I wanted to see if I could get a user base,” he said.

And that is exactly what he got. With nearly 400 “likes” on Facebook, 12 participating universities and write-ups in the Pittsburgh Post-Gazette and The Washington Post, Food-Bot is expanding. There’s always the idea of broadening the service’s user base to the greater community, providing everyone with the option of crashing public events for free food, and Woloschyn foresees such a step occurring some time in the future.

Like Woloschyn, other college students have discovered means to market twenty somethings’ desire to get goods for low prices.

Penn graduates Stephan Jacob and Cherif Habib created Kembrel, a discount site specifically for college students that partners with brands appealing to the demographic. Through the partnerships and the interest of multiple consumers, Kembrel can provide discounts of up to 70 percent off retail prices. To become a member of the free site, a student must simply sign up with her name, college email and identification of her university.

An independent agency seeking to market products without affiliation might seem like an unlikely business plan, but Jacob said the reasoning is all a matter of scale and exposure.When a company manufactures a product, it does so hoping to profit from filling a certain need or desire of the public. The goods or services it offers are meaningless unless there exists an audience or market for them.

“In our case, there are so many needs that need to be filled by college students,” Jacob said. “We are defined by demographics.” The idea behind Kembrel and similar discount sites is that they offer businesses the valuable ability to stream offers and advertisements to this specific demographic — meanwhile letting college students benefit from the process.

The site features a slew of different brands: Ateliers Arthur, Cosabella, BMC Headwear, Nicholas K, Disney Couture, Dylan George Denim, Matt & Nat, Barnes & Noble, Starbucks, and Lyric Culture to name a few. It’s beocme a middleman between company and consumer, serving up discounts starting at a minimum of 40 percent off retail price.

“We market not just one product, but many different products and many different brands,” Jacob said. “We see ourselves as an aggregator of fashion, food and travel options. We curate what we believe is the best value and we feature them to our members.”

The company, still based on Penn’s campus, employs student ambassadors to visit schools across the country. Their job is to create a buzz about the deals that Kembrel offers. They also use the traveling to do research, tracking the trends and fashions of college students.

“We believe in involving our customers in the business,” Jacob said. “Our models, photographers, site designers are all students. Even students seek out vendors. In fact, we, the staff, were students until a few weeks ago. We listen very carefully. Our buyers make judgment calls.”

Dennis F. Galletta, Pitt professor of business administration and director of the Katz doctoral program noticed that Kembrel tends to seek out special deals, offering primarily coupons and sweepstakes, which benefit the companies doing the offering.

“There are also special deals, so they help firms sell out old inventory too. At the very least, with coupons, the firms can promote their products. It looks like 80 percent of what they are currently offering are sweepstakes/contests. This is mainly an advertising vehicle, if that is typical of the site,” he said.

And though college students generally don’t have a ton of cash at their disposal, the vendors might hope to benefit in the long run as they look for long term buyers on the brink of their lives as consumers.

“College students are tough to market to,” Jacob said. “They are fickle and short-lived. It’s tough to keep up with that. At the same time, [they] are on a budget and are not huge spenders. But they are the most attractive demographic because, although they are currently making zero dollars today, [they’ll be] starting to make money in three years. It is a very attractive potential.”