Reports

Snap Coupons: Investigating Mobile Coupon Adoption, Use, and Value

Paul Mills and César Zamudio, 2015, 15-119

By 2016, 44.5% of marketers are expected to use mobile coupons and 40% of U.S. smartphone users are predicted to redeem mobile coupons. Most research to date has focused on “push” coupons delivered by manufacturers and retailers. Here, Paul Mills and César Zamudio use commercial data to examine redemption behavior and mobile platform use of “pull” coupons, in particular, coupons delivered at the point of purchase, which they call “snap” coupons.

They analyze data from 171 supermarket shoppers who scanned 1,624 grocery items, generating 10,174 coupons across five major product categories. The dataset comprises shopper characteristics such as basket size and total expenditure, store trip patterns, and coupon characteristics for the scanned or focal product as well as for rival coupons in the set.

Using cluster analysis, logistic, and linear regression, they offer a rich picture of pull coupon adoption and use with three key managerial implications.

First, rather than evaluating coupons in isolation, consumers evaluate pull coupons by comparing the focal coupon to a set of rival coupons, based on “set size,” the number of coupons shown after scanning. A focal coupon is more likely to be redeemed when compared to few (2 to 4), or many (9 to 12), coupons. This suggests that brand managers should assess the likely number of competitors on such coupon platforms before committing to participate.

Second, shoppers evaluate coupons by comparing a coupon’s net price in relation to the range and distribution of net prices for rival brands. This is consistent with range theory, which predicts that customers evaluate prices considering the entire range of prices for competing alternatives. This suggests that brand managers and retailers should consider the net prices of competing brand coupons, and not only their own, when assigning coupon value.

Third, cluster analysis reveals three pull coupon user segments. The first segment consists of platform adopters, who scan consistently over 42 weeks. The remaining two are non-adopter segments: users who heavily use the platform for novelty, then stop; and users who slowly discontinue platform use.

Importantly, this novelty segment is as valuable as the larger adopter segment in terms of store expenditure. This suggests that promotional efforts to encourage platform adoption across the board may not be an appropriate strategy. Instead, it may be beneficial to intervene at critical points after adoption to encourage novelty users to become adopters.

Paul Mills is a Ph.D. candidate and César Zamudio is Assistant Professor of Marketing and Entrepreneurship, both in the College of Business Administration, Kent State University.

Acknowledgments

The authors wish to acknowledge the generous support of the Marketing Science Institute. This research was funded in part by an MSI research grant.   

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