Scanning for discounts: examining the redemption of competing mobile coupons

Abstract

Coupons research has typically focused on single-coupon redemption, with scant attention devoted to multiple, competing coupons. To bridge this gap, we observe supermarket shoppers who used their smartphones to scan products in-store, receiving both coupons for the scanned product and several others as a result. We model the determinants of redemption in this context, particularly net price range (NPR), coupon value, brand loyalty, and number of coupons. Latent class analysis uncovers two consumer segments: brand-focused shoppers (79.9%), who use internal reference prices, and deal-prone shoppers (20.1%), who use stimulus-based reference prices. Targeting by means of segment membership, NPR, and loyalty is indispensable: the same $0.50 coupon can have a redemption probability as low as 30% and as large as 80%, depending on these characteristics. Overall, the study sheds light on drivers of redemption under competition and provides managers with a blueprint to improve redemption rates by targeting shoppers with customized coupons.

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Notes

  1. 1.

    The literature sometimes refers to SRP as the external reference price, because price depends on current rather than remembered prices. While the external reference price and SRP are sometimes used interchangeably, we adopt the SRP designation to refer specifically to reference prices based on a consumer’s comparison of a range of current prices, as consistent with the literature on range theory.

  2. 2.

    We thank an anonymous reviewer for suggesting these two potential confounds.

  3. 3.

    This figure represents the average face value of grocery coupons redeemed per item. We use this measure because some coupons are redeemed for multiple units, and thus the average face value for all grocery coupons was $1.42.

  4. 4.

    A possible concern with an isolated store is that shelf prices might be higher than prices in a more competitive location. We tested this possibility by conducting a price comparison. We shopped a basket of products used in this study (by randomly selecting four name-brand products from each of the four major product categories) and compared it to the same basket shopped at a larger store in a nearby city that has three competing grocery retailers. We found no significant difference in the total price of these two shopping baskets (t = 0.37, p > 0.10).

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Acknowledgements

The authors wish to thank the Marketing Science Institute for their financial support during the early stages of this project, and Jim Wilson, founder of Insight Market Data, for developing the mobile coupon app used in this study.

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Correspondence to Paul Mills.

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Rajkumar Venkatesan served as Area Editor for this article.

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Mills, P., Zamudio, C. Scanning for discounts: examining the redemption of competing mobile coupons. J. of the Acad. Mark. Sci. 46, 964–982 (2018). https://doi.org/10.1007/s11747-018-0592-7

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Keywords

  • Mobile coupons
  • Redemption
  • Competing coupons
  • Reference price
  • Range theory