Factors affecting coupon redemption rates

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Existing Customer You may already have access to this article. Please Log in to check access Email or Username: Remember me Forgotten your password? Recommendation Recommend to your librarian that your institution purchase access to this publication. Buy this item: Rent this from Deepdyve. Article Options and Tools. Focusing on the behavioral issues in consumer response, previous work has conceptualized why consumers use coupons Schindler , Beem and Shaffer and how coupons achieve results Ward and Davis a, Raju and Hastak , Rothchild and Gaidis , and Strang and Gardner In all of this work, there is little indication of how consumers actually integrate coupons into shopping patterns -the process by which the coupons received annually by each household are converted into 63 redemptions average redemption rate is 4.

Such basic data as the "where, when and how" of coupon use in shopping can be key in designing coupon programs that achieve their intended results. Paradoxically, the last decade has seen two conflicting trends: Interest in economy is seen in self-reported data Opinion Research , in the spread of coupon usage to a larger percentage of the population Bowman and, until recently, in an increase in the average number of coupons redeemed PMAA Yet a consumer who uses coupons should incur more total shopping time than one who does not.

The major cost elements of coupon usage include the time and effort to clip coupons, to maintain a coupon collection, to use this collection in planning shopping and in in-store decisions, and to wait an additional few moments for check-out.

Balancing these costs, coupons offer a price reduction. To some extent there are separate segments involved in the time-buying and economizing trends.

There is a slight tendency for nonworking consumers to become more involved with coupons Strang and for workers to be more concerned with time-buying Anderson However, these statistical correlations are very weak; many consumers must be balancing dual interests. Some observers of the coupon dilemma conclude that consumers have been entrapped and are trading their labor for negligible benefits - a dead-weight economic loss Uhl Yet another interpretation is possible. A plausible hypothesis is that consumers allocate their resources of time, energy and money Downs through following logical strategies in which coupon use is made "convenient" - either through selecting redemption occasions which incur minimal time and energy costs or through selecting redemptions which offer abnormal savings to pay for these costs.

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Evidence for selectivity is that consumers may specialize in using coupons only in particular product categories Henderson Within a category, consumers may adopt further approaches to maximize coupon savings while minimizing time and effort. In this way, consumers who use coupons may actually spend no additional time shopping than those who do not. In contrast to shopping behavior research which measures total shopping time for example, Arndt and Gronmo , this research focuses on the coupon redemption occasion as the unit of analysis.

The implicit time-money-effort trade-off of such occasions car be examined. The literature on coupon redemption has focused on predicting aggregate redemption rates - an important calculation in budgeting and evaluating coupon programs - Reibstein and Traver , Ward and Davis b.

These studies have shown that redemption rates vary by brand, category, media used and other factors. The relevant factors in determining overall redemption rates are shown in Table 1, categorized into four groups: In modeling coupon redemption on a disaggregated basis, both the dependent and independent variables need to be adapted. The dependent variable - coupon redemption - actually includes a three stage decision process - collection, intention, and redemption. In the collection stage the consumer makes the decision to clip an available coupon and to save it for future use.

The intention stage takes place before a store visit and involves either the explicit decision to use a particular coupon or the preparatory work taking the coupon to the store that will make the later redemption possible. The redemption stage is the submission of the coupon at check out. While the redemption decision is intertwined with brand choice, the two decisions can be modelled separately.

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The factors that affect these three stages can be adapted from the aggregate case. Since half of all redeemed coupons are kept at least four weeks Blair , Nielsen Clearing House , the intention and redemption stages must be strongly related to factors that occur beyond the time of the coupon drop itself. For this reason, Table 1 expands on the influences appropriate for the aggregate case and includes more characteristics of the purchase. These factors are expected to affect coupon redemption in the following ways.

At the collection stage, there are two primary influences: Consumers should be more inclined to notice coupons for brands which they normally buy and more inclined to decide that such coupons are worth collecting. The characteristics of the coupon itself influence this process. The media used to distribute the coupon will affect the collection decision through spotlighting the coupon. The value offered and the quality of the execution of the coupon make the coupon more or less attractive to collect.

Thus, the factors used in the aggregate models are most appropriate at the collection stage as they influence how many coupon collections the new coupon will join. A combination of effort and value effects are evident in these variables. High value coupons clearly offer superior economic incentives. Perceived value may also increase if the coupon is for a preferred brand. Consumers will incur low collection costs if coupons are made generally more available.

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At the intention stage consumers will be affected by two additional types of influences -the characteristics of the purchase and the presence of other promotions. If consumers have the time and inclination to plan their shopping they may be more inclined to use coupons. There is some evidence that coupon use and pre-planning use of a list, reading newspaper ads - Progressive Grocer are interconnected.

Under hurried conditions, coupons will be less likely to be taken to the store. If the consumer has a greater need to purchase in a particular product category a long time has elapsed since the last purchase was made or a greater than average quantity is needed -then the product category may be more salient. Under this condition, the perceived value of the coupon may rise and redemption intentions may be more likelY.

The presence of other types of promotions can also affect this stage as they act to remind the consumer to use the coupon and to offer an ever. For example, if a particular brand is featured in retail advertising, the advertising may remind the consumer to use a saved coupon. Alternatively, the consumer may be looking for multiple promotions to get the best overall deal.

While it is doubtful if consumers car.

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In reminding the consumer to use the coupon, such ads also lower the consumers effort -or thinking costs -by presenting an acceptable and easy choice. At the redemption stage, the consumer is in the store and makes the final decision to redeem a coupon for a particular brand. All four types of influence are assumed to be operative at this point. A consumer with more time, with greater need for the product, who has recently received or beer.

In this research, a simplified form of this model is tested using only the final stage -redemption- and a limited set of redemption predictors. Data were available from the SAMI "northeast scanner panel" and covered consumer purchases from April to October The scanner market includes Two product categories were available for analysis: A total of panelists made paper purchases and panelists made coffee purchases during this time period.

A data base was constructed by merging coupon redemption records with panel purchases and with local newspaper advertising data. Each observation consisted of the record of one purchase occasion - brand choice, coupon redemption, price and promotion data, store and date. All consumers who had nu coupon redemptions. Of these, paper purchases and coffee purchases involved a coupon redemption. As coupon redemption is a binary choice, it is appropriate to model redemption using logistic regression Fienberg The observed dependent variable assumes values of 0 -no coupon redeemed - or one or more coupons redeemed on the purchase.

Using maximum likelihood estimation, the model finds parameters that yield predicted probabilities of coupon redemption for a particular set of independent variables. The significance of the overall regression was tested with a chi-square test using the log likelihood ratio. The ability of the model to provide information beyond an equally likely null model was analyzed with U2 Hauser Each coefficient was tested with a t-test and each category analyzed in split-halves to test the reliability of the model.

Rent this from Deepdyve. Article Options and Tools. Journal Information. Previously published as: Direct Marketing: An International Journal. Current Issue Available Issues Earlycite. Most read Most cited Related The most popular papers from this title in the past 7 days:. Omni-channel marketing, integrated marketing communications and consumer engagement: A research agenda. Social media and consumer engagement:

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