Have the Mobile Coupon Preferences of Millennials Changed?

ABSTRACT

In 2007, the authors delivered a web-based survey to a sampling frame of 18 to 30 year olds. Choice-based conjoint analysis was used to determine their local coupon preferences. The findings indicated that Millennials, in general, were resistant to receiving coupons for local businesses through their cell phones. In this article, the same survey was delivered to a sampling frame of Millennials in 2014. Choice-based conjoint analysis was again used to examine the couponing preferences of Millennials and statistical analysis was conducted to determine if these preferences have significantly changed over the last seven years.     

Consumer Response to Coupon Advertising

Because coupon advertising has both the characteristics of advertising and sales promotion, it may have distinctive effects on consumers that cannot be explained solely by coupons or advertising. Past studies present contradicting results as to the consumers' response to coupon advertising. Our experiment shows that while the coupon may be an incentive for loyal consumers of competing brands, it may be a distractor for brand-loyal consumers in processing the coupon advertising. For multi-brand users, coupons do not appear to have any distinctive effects on processing the coupon advertising. An empirical investigation of an integrated consumer response model to coupon advertising indeed shows that there are various interactive effects between the coupon and the main advertisement. These results may provide guidelines for making targeting and promotion decisions, especially for an internationally well-known brand that is entering a new market where local or other international brands are already serving the customers.     

Omnichannel retailing operations with coupon promotions

This paper explores an omnichannel retail system under which the retailer offers coupons via online channels for market share and profit. It investigates the action mechanism of coupon promotion on omnichannel price and operational decisions by employing a theoretical model. Three coupon distribution modes are investigated; a scenario in which the omnichannel retailer does not offer coupons, offers coupons with a common face value, or offers coupons with a different face value. The results show that the distribution of coupons does not always lead to increased market share. Rather, market volume may be reduced if the competition between different channels is intense. When conducting a coupon promotion, the retailer always charges a higher price, but if the negative effects of coupon promotion for the competitive channel are relatively large, the retailer will reduce their price. Larger cross-selling revenue comes from ‘Buy Online, Pick Up in Store’ channel, indicating a stronger willingness to offer coupons and higher profits for the retailer. If the retailer takes the channel characteristics and consumers' channel preferences into consideration and offers different coupon face values across channels, they will derive higher profits.     

Estimating the effects of higher coupon face values on the timing of redemptions,the mix of coupon redeemers,and purchase quantity

One of the key decisions a manager must make in designing a coupon promotion is to decide on the face value. In this study we examine the effects of higher face values on coupon redemption timing, category purchase timing, the mix of buyers who redeem the coupon, and purchase quantity. Data from a field experiment on coupon face values are used to test the hypotheses. A new method of measuring the effects of a coupon on category purchase timing is proposed. We find that coupons per se tend to advance category purchase timing, but higher face values do not increase the magnitude of this effect. Surprisingly, higher face values appear to increase redemption rates for both the prior nonbuyers and prior buyers of the brand in a similar way. However, higher face values have little effect on the package size purchased, the number of units purchased, or the total quantity (package size times units) purchased.     

Examining the dimensionality of coupon proneness: a random coefficients approach

Many previous studies have sought to measure consumers’ coupon proneness but have tended to assume that this trait is unidimensional in nature, i.e., an individual's coupon proneness is the same for all types of coupons. It is argued in this study that because consumers differ in the products they shop for and in the types of coupons they are exposed to, their coupon proneness is likely to vary across different coupon types, i.e., is likely to be multidimensional. The authors test this proposition using the item response theoretic (IRT) model proposed by Bawa et al. (J. Marketing Res. 34 (1997) 517). In the Bawa et al. study a single coupon proneness parameter was estimated for each individual. The current study extends the IRT model via a random coefficients approach and estimates separate coupon proneness parameters for different coupon types. The results indicate the presence of distinct segments among consumers, with some consumers displaying a generalized coupon proneness tendency across coupon types and others displaying type-specific coupon proneness.     

Category-specific coupon proneness: The impact of individual characteristics and category-specific variables

In seeking to enhance the effectiveness of coupon promotions, researchers have long sought to identify “coupon prone” consumers. Previous measures of coupon proneness have not examined differences in coupon usage across product categories and have ignored the confounding effect of coupon attractiveness. An Item Response Theory (IRT)-based framework overcomes these limitations and yields category-specific estimates of propensity to redeem coupons that are independent of coupon attractiveness. The authors utilize an IRT-based model to estimate consumers’ category-specific propensities to redeem coupons for two product and two service categories, and investigate how coupon proneness varies across consumers and across categories as a function of individual characteristics and category-specific variables.The authors find that category-specific measures of propensity to redeem coupons achieve an average accuracy of 89 percent in predicting redemption intentions. Propensity to redeem coupons is also found to be related to category-specific brand loyalty and perceived coupon availability, as well as to individual characteristics such as general coupon proneness, value consciousness and price consciousness. These findings highlight the importance of studying coupon proneness at the category level and suggest that the IRT-based approach has considerable promise as a methodology for studying coupon usage. Using the approach proposed in this study, marketers can forecast the impact coupons are likely to have in their particular category, rather than relying on general coupon proneness measures to predict coupon redemption rates at the category level. The study's findings can also be used to identify categories and consumer segments where coupon promotions are likely to have a larger impact, and have important implications for managers planning joint couponing strategies.     

The different faces of coupon elasticity

Coupons account for over two-thirds of all consumer promotional efforts initiated by the manufacturers of consumer goods. In this study, the impact of coupons on brand sales is investigated and how that impact decays over the life of the coupon is demonstrated. Specifically, we present an econometric model that can capture coupon effects in terms of equivalent price reduction, account for coupon effects over time, allow inference of coupon effects when retailers decide to double or triple the coupon value, and provide both self-coupon and cross-coupon elasticities at different levels of aggregation. A widely used sales response model is adapted, and an analytical model is proposed to estimate both the self-coupon and cross-coupon (face value) elasticities of sales at the store level. From the store-level elasticity estimates for a given week, the authors analytically derive the coupon elasticities for the chain level by aggregating across stores, and over the life of the coupon by aggregating over time. The proposed sales response model is estimated with the data obtained from three markets for various product categories, and the coupon elasticities are computed. The proposed framework allows one to demonstrate the hypothetical equivalence of a shelf-price reduction for a given coupon face value in each week. Also, the effect of doubling the face value of a coupon results in more than a proportionate increase in elasticity. The authors find that both self and cross-coupon elasticities are much smaller in magnitude than the average self and cross-price elasticity measures reported in the literature.     

Coupon Trading and its Impacts on Consumer Purchase and Firm Profits

When a retailer distributes manufacturer coupons to consumers without perfectly identifying their product valuations, consumers may have incentives to trade coupons. We develop a model to capture the coupon trading phenomenon and compare three scenarios: (I) no coupon, (II) coupon without trading, and (III) coupon with trading. We find that coupon trading can increase the profits of either the retailer or the manufacturers, but not at the same time. The retailer benefits from coupon trading when the coupon market is competitive and consumer hassle cost is low, while the manufacturers benefit from coupon trading when the coupon market is uncompetitive and consumer hassle cost is high. In addition, coupon trading does not always increase total demand. Firms benefit from coupon trading by charging higher prices, which leads to a decreased total demand. As a result, consumers end up with a higher average cost under coupon trading. We also compare coupon trading with improved coupon targeting, and find that coupon trading may allow firms to gain higher profits than improved coupon targeting. Further, we extend the main model to a competitive setting where the products are substitutable, and find that the main results still hold. Finally, we employ numerical analysis to identify the optimal coupon face values in different scenarios, and the results suggest that coupon trading combined with incentive mechanisms may lead to Pareto improvement for the channel as a whole.     

An exploratory investigation into how socioeconomic attributes influence coupons redeeming intentions

In this study, we examine the effects that opportunity cost, income effect, coupon proneness and devaluation effect have on coupon redemption intention. Overall, the results of a survey received from approximately 2250 respondents suggest that prospect of savings and coupon proneness are positively associated, while opportunity cost is inversely associated with coupon redemption intention. The results are consistent across several sub-samples of grocery stores, which further underline the robustness of our hypotheses. Our analyses are more exhaustive than and therefore, contribute to, extant literature on promotions using coupons, because we base our study on behavioral, social and economic factors that influence coupon redemption intentions.     

The Effects of Coupon Promotion on Repeat Visits in Restaurants

Abstract

Will customers' intention to return to a restaurant increase with coupon promotion? To answer this question, this study examines the hypothetical effects of coupon promotion on return visits to restaurants. Based on a literature review, three hypotheses were developed to test the effect of a coupon, its face value, and a patron's prior dining experience on return intention. The authors found that neither coupon use nor coupon face value contributed to explaining respondents' return intentions. However, repeat customers have a greater likelihood of returning to the restaurant than new customers. The study also showed that the quality of food and service were key indicators of return intention.     

Consumer responses to mobile coupons: The roles of shopping motivation and regulatory fit

Retailers increasingly use mobile coupon services to deliver promotional offers to consumers. This paper draws on the theory of regulatory focus to explain mobile coupon redemption. The paper proposes that redemption depends on the extent to which a mobile coupon requires consumers to divert from their focal shopping motivation. Regulatory fit, the perception of receiving an offer that is relevant to consumers' regulatory goals, mediates this divergence effect, but only for utilitarian shoppers. Results from two scenario experiments support the main hypothesis and show that utilitarian shoppers perceive greater regulatory fit when an offer is compatible with their focal shopping motivation. In contrast, hedonic shoppers perceive no difference in regulatory fit when an offer diverts them from their focal shopping motivation. This explains why hedonic shoppers redeem a wider variety of offers than utilitarian shoppers and why utilitarian shoppers require more personalization to generate coupon redemption.     

Coupons and private labels: A cross-category analysis of grocery products

This article examines the influence of coupons on private label shares of grocery products. The impact of national brand and private label coupons, distributed by manufacturers and retailers, is examined. A consumer framework and a typology of coupon effects are developed to explain different types of coupon usage behavior. Aggregate scanner panel data on 480 product categories are used in the analysis. Both the type of coupon and the method of distribution (by manufacturer or by retailer) are found to be important determinants of private label share response. Couponing activities by the national brand manufacturer are negatively related to private label share, thus indicating that they may be effective deterrents of private label penetration. However, couponing activities related to private labels do not help increase private label shares. The surprising finding is that national brand store couponing activity is positively related to private label share.     

Influences on consumer response to direct mail coupons: An integrative review

A substantial and growing body of research on coupons and coupon effectiveness has emerged in the marketing literature. The objective of this paper is to review and consolidate the findings of previous studies to provide a better understanding of the factors that influence consumer response to direct mail coupons. The effects of coupon, brand, product category, and consumer characteristics on redemption behavior and incremental sales are examined, and their implications for the effectiveness of direct mail coupon promotions are discussed. Based on the findings of prior studies, a theoretical model of coupon effects on purchase behavior is proposed. Several key issues that need to be addressed in future research are identified. © 1996 John Wiley & Sons, Inc.     

Price,online coupon,and store service effort decisions under different omnichannel retailing models

This paper explores three omnichannel retailing models—that is, a Buy-Online, Pick-Up In-Store (BOPS) model, a Showroom model, and an Interactive model (a model that combines the characteristics of BOPS and Showroom)—under which the retailer offers coupons online and invests in service efforts offline. For each omnichannel retailing model, three coupon distribution scenarios (i.e. no coupon, coupon with a common value, and coupon with a different value) are discussed to investigate coupon promotion policies and omnichannel operation strategies. Profits in the omnichannel system and under each model are compared by deriving three decision values: price, coupon value, and service effort. The key findings show that the retailer achieves profit improvement when the incremental purchasing reaches a large value. In addition, a great service effort coefficient leads to a high price, service effort, and retailer profit. The service effort and coupon value in the Showroom model are the largest among the three omnichannel models, while its profit is the lowest. Conversely, although the retailer invests less in service effort, and the price and coupon value are not too large in the BOPS model, the retailer still gains the highest profit. Additionally, in the BOPS model, it is profitable for the retailer to distinguish the coupon value for the online-only and BOPS channels when consumers are less sensitive to the online-only channel’s coupon. However, in the Interactive model, the retailer derives increasing profit by providing coupons with a common value for the online-only and BOPS channels.     

The Effects of Impression Management on Coupon Redemption across Cultures

This research examines the effects of impression management on consumers’ coupon redemption and suggests different underlying mechanisms with respect to cultural self‐construal. Four studies show that, when primed with impression management, individualistic (vs. collectivistic) consumers are more likely to redeem coupons, because individualists believe that coupon redemption creates the impression of being smart. On the other hand, collectivistic consumers are less likely to redeem coupons when coupon usage is visible to others, because they believe that coupon redemption gives the impression of being cheap. These findings are explained within the context of cultural self‐construal and regulatory focus theory.     

About the Guest Editors

This study integrates the findings of motivation-based research on coupon redemption. Hypotheses were proposed to test the relationships between various motivational factors and coupon usage. Results demonstrate that individual motivational factors, institutional barriers and interpersonal influences determine a consumer's coupon usage. A model of the system of factors related to coupon usage is proposed. Managerial implications and suggestions for future re- search are provided.     

Do Shoppers Like Electronic Coupons?: A Panel Data Analysis

Past research has yielded valuable insights into the drivers of traditional coupon redemption, but the applicability of these results to electronic coupons remains an open question. We investigate the determinants of electronic coupon redemption, employing a large panel dataset for five product categories (detergent, milk, cookies, shampoo, and orange juice) for the period 2003-2005. Our findings reveal that education and employment positively influence redemption rates and our analysis indicates that these findings are not due to unobserved individual effects. The focus is on comparing coupon-use discrepancies between national and private label brands when the characteristics of coupons are taken into account. A higher face value appears to be a critical element in electronic coupon format, and this gives rise to more purchases for nonperishables (shampoo and detergent). Results also show significant seasonal variations in milk and orange-juice coupon usage. Furthermore, the distance of consumers from the redemption location has a significantly negative effect, whereas the expiration date has no evident effect. The implications for electronic coupon research and practice are discussed.     

Assessing the Influence of Coupon Collecting

This study fds a void in the literature in regards to couponing by investigating the influence of coupon collecting rather than what causes coupon redemption. The study more specifically ex- amines the relationship between coupon collecting and brand aware- ness. Several information processing models are used Lo help explain the potential influence of coupon collecting. The results show nearly Uuee-fourths of respondents mentioned the brand they collected a coupon for as their togof-mind brand for vari- ous product categories. These fmdings suggest that a couponing strate- gy may be used to boost a brand's position in consumer's minds, and be more economical than alternative marketing strategies.     

Digital coupon promotion and platform selection in the presence of delivery effort

In recent years, physical retailers have started selling products to consumers through either third-party or self-operated online platforms. Doing so, they face demand which depends on digital coupon promotions, delivery effort by the platform (i.e., deliver products from retailers to consumers), and channel preference. In this paper, we develop a game-theoretic model to examine the interactions between the physical retailer's distribution channel choices and coupon promotions. In normal operation, retailers prefer to pay lower fees to the third-party platform, but we find, counterintuitively, that when carrying on a digital coupon promotion, the retailer can be better off paying a higher participation fee to the third-party platform. We also identify the conditions under which the retailer prefers the third-party platform over the self-operated platform with and without coupon promotions. Furthermore, we show that digital coupon promotions and delivery effort boost the retailer's profits by price discriminating among consumers with differing purchase utilities.     

Redemption time for coupons with limited duration: role of regulatory focus and product type

Firms spend a lot on coupon promotions and are concerned with their profitability. The characteristics of coupons are associated with success of coupon promotions. This research explores how consumer’s regulatory focus (promotion vs. prevention) and product type (material vs. experience) affect when consumers prefer to redeem coupons (coupon redemption time). Results from two studies show that people’s prevention goal strength is negatively related to redemption time consumers prefer. Besides, a fit between people’s regulatory focus and product type leads to earlier redemption than unfit condition. Specifically, experiential purchases are compatible with promotion-focused consumers and material purchases are compatible with prevention-focused consumers. We discuss the findings in the contexts of coupon research and theory on regulatory focus, and further posit managerial implications for the design of coupon promotions or other marketing activities with limited duration.