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.     

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.     

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.     

Coupon characteristics and brand choice

The effects of coupons on brand choice and repurchase behavior were examined in a laboratory panel experiment. Each of the 122 consumers purchased a candy bar on 10 different occasions; on the seventh purchase occasion, each consumer received an announcement of a new candy bar and one of four versions of a coupon. Results showed that whether or not a consumer will use a coupon depends on the size of the coupon offer, how easily the consumer can redeem the offer, how brand loyal the consumer is, and whether or not the consumer is deal prone. We also found, after statistically adjusting for our censored sample, that loyalty and coupon Characteristics influence whether or not a consumer will continue to purchase a formerly discounted brand. Information aggregation theory (Tybout & Scott, 1983) explains better than attribution theory how the coupon affects repurchase decisions.     

Empirical decomposition of customer responses to discount coupons in online FMCG retailing

This study considers the efficacy of ‘general’ discount coupons: i.e. those whose discounts apply storewide. We decompose purchase behavior into three effects: spending, basket size, and inter-purchase time. The effects of dollar-off vs. percentage-off coupons are examined for 3,827 customers who had redeemed both types of coupon framings in an Australian online fast-moving consumer goods (FMCG) retail context. Results from Bayesian simultaneous equation modelling confirm that compared to dollar-off coupons, percentage-off general coupons induce customers to both spend more and shop more items. Moreover, by capturing consumer heterogeneity the customer base can be segmented into several clusters based on their reaction to coupons.     

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.     

Appraisal processes in the enactment of intentions to use coupons

Although much research has been performed on the role of intentions in consumer behavior, relatively little attention has been given to the processes intervening between intentions and behavior. Because coupon usage behavior requires planning and implementation effort with respect to intermediary acts or means, the behavior is considered problematic. This article proposes a model for explaining how consumers enact intentions once they decide to use coupons. Enactment of intentions is hypothesized to be a function of three appraisal processes: self-efficacies, instrumental beliefs, and affect toward intermediate acts or means. These three appraisal processes are hypothesized to combine multiplicatively to influence the target behavior, coupon usage. Also, one's prior history of coupon usage is expected to be an important determinant of coupon usage. Theoretical and practical implications are also discussed.     

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.     

Effects of perceived behavioral control on the consumer usage intention of e‐coupons

To investigate changes that e‐coupons bring to consumers' coupon usage, the authors of this article developed and estimated models of coupon‐usage intention. The models are based on the theory of reasoned action or the theory of planned behavior. Results show that the theory of planned behavior explains e‐coupon usage intention better than the theory of reasoned action. On the other hand, the intention to use traditional coupons is effectively explained by the theory of reasoned action. Both perceived behavioral control and attitude toward Internet searching have significant effects on the intention to use e‐coupons. Also, heavy users of e‐coupons are different from those of traditional coupons. Light users of traditional coupons have relatively high intention to use e‐coupons if they have more access to e‐coupons. On the other hand, heavy users of traditional coupons have relatively low intention to use e‐coupons if they have less access to them. © 2006 Wiley Periodicals, Inc.     

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.     

The effects of mobile promotions on customer purchase dynamics

While mobile promotions have become increasingly popular in recent years, limited research has examined the effects of mobile promotions over time. This research investigates the effects of two popular types of promotional offers, price discount and non-price free sample coupons, on purchase behavior. To this end, we present a dynamic model of customer purchase behavior that incorporates time-varying effects of mobile coupons, enabling us to investigate both the short-term and longer-term effects of mobile promotions. Using transaction and mobile promotion data, we find that both price discount and free sample coupons increase customers' purchase likelihood and expenditures during the coupon redemption period. We also find that free sample coupons have an enduring effect that increases the purchase propensity beyond the promotion period, thereby contributing to incremental purchases over a longer period of time. We demonstrate how our approach can help marketers improve mobile couponing decisions by considering the dynamic effects of mobile promotions that manifest over time.     

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.     

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.     

Money-off coupons and the consumer: are they worth the effort?

Is the use of coupons a worthwhile practice for consumers? What defines a cost-effective money-off coupon user? In this study, the time cost of clipping and organizing grocery coupons is compared to actual savings received. Forty per cent of consumers did not reap savings at least equal to their time cost of coupon clipping. Cost-ineffective consumers are identified and compared to the cost-effective group on several demographic and shopping characteristics. Differences are discussed in relation to consumer economics and super-shopper role models.     

The Impact of Coupons on Service Quality Evaluations,Risk, and Purchase Intentions

Abstract

To attract customers, restaurants will often use coupons. This research examined the impact of a promotional coupon on service quality expectations, perceived purchase risk and purchase intentions. It was found that the use of coupons does increase purchase intentions and reduce perceived purchase risk. However, coupons were found to negatively influence service quality expectations. Implications of these findings for restaurant managers are discussed.     

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.     

Perceived Discrimination, Cashier Metaperceptions, Embarrassment, and Confidence as Influencers of Coupon Use: An Ethnoracial-Socioeconomic Analysis

This research investigates how in-store interactions with cashiers and other retail personnel influence consumers’ use of coupons. To explore this phenomenon, we develop and test a model whereby perceived discrimination and customer metaperceptions of cashier attitudes influence both embarrassment and confidence in using coupons which, in turn, affect the number of coupons redeemed. Importantly, results differ for different ethnoracial-socioeconomic groups and show that perceived discrimination influences some consumers’ coupon use. Moreover, the role of the cashier is crucial in encouraging coupon use among some groups of customers. The managerial implications for supporting coupon use at the point of purchase among diverse consumers are discussed.     

The dark side of up-selling promotions: Evidence from an analysis of cross-brand purchase behavior☆

This research investigates how up- and down-selling promotions affect customers’ cross-brand purchasing and churn behavior at a multi-brand retailer. We employ a hidden Markov model that accounts for the dynamics of customers’ latent brand preferences and attrition and captures the resulting purchase behavior in response to promotional offers. Using data on coupon promotions and purchase transactions from an online retailer, we find that coupons for a higher-end brand increase customers’ likelihood of purchasing the brand. While this suggests that the retailer can increase its short-term revenues by sending coupons for the higher-end brand to customers of the lower-end brand, we find that customers up-sold via coupons are more likely to switch back to the lower-end brand, in comparison to other customers of the higher-end brand, limiting the positive effect of up-selling promotions in the long term. Moreover, lower-end brand customers’ promotion-induced brand switching leads to their increased attrition from the retailer, which negatively affects long-term purchase behavior and revenues. In contrast, when triggered by down-selling coupons, customers’ brand switching does not impact their attrition. Based on these findings, we demonstrate how our model-based approach can assist marketers’ multi-brand couponing decisions.     

Effects of sales promotion type and promotion depth on consumer perceptions: the moderating role of retailer reputation

This study uses a between-subjects experimental design to test the effect of two sales promotion formats (coupon versus markdown) with either high and low face values on consumer attitudes toward the deal, perceived product quality, and purchase intentions. The reputation of the retailer offering the deal is predicted to moderate the relationship between the promotional offer and consumer responses. Consumers perceive product quality to be higher when offered a high value coupon vs. markdown but there is no significant difference in perceived quality across promotion types when the promotion face value is low. When a deep price discount is offered by a retailer with a negative reputation, however, consumers have more favorable attitudes toward the deal and higher purchase intentions when provided with a markdown vs. coupon. Conversely, a high value coupon elicits more favorable evaluations than a markdown when the retailer has a positive reputation. When the value of the promotion is low and the retailer has a positive reputation, consumers have more positive deal attitudes and purchase intentions when offered a markdown vs. coupon. There is no significant difference in the effects of promotion type when the retailer has a negative reputation. The findings therefore establish retailer reputation as an important moderator of sales promotions effectiveness. This research is limited by the use of a single product category and a student sample. Process measures are also needed to validate the proposed theoretical conceptualization. The results provide managers insight into the type and value of the sales promotion to offer based on consumer perceptions of the retailer's reputation in the market.     

The effects of constrained mobile coupons in the mobile channel

Despite the popularity of constrained mobile coupons in recent years, little research has examined their effectiveness. This paper presents a hidden Markov model (HMM) framework to examine the short-term and long-term effectiveness of minimum-threshold coupons (i.e., threshold-constrained coupons) and limited-time, low-price coupons (i.e., time-constrained coupons). We find that both of them boost consumers' purchase probability during the coupon redemption period. Furthermore, minimum-threshold coupons not only increase consumers’ purchase quantity during the redemption period, but also improve the customer-firm relationship beyond the redemption period. By contrast, limited-time, low-price coupons strengthen the customer-firm relationship only for consumers in a higher relationship state but not a lower relationship state. This study can help marketers allocate limited marketing resources effectively, strengthen and manage the relationship between consumers and firms, and increase product sales.