A Qualitative Study to Elucidate Consumer Rejection of the Practice of Coupon Use

Abstract

Coupons are a marketing tool used to entice consumers to try a new brand or product in the hopes that they will then become loyal users after trial (Boundless, n.d.). Issuing coupons is a common practice for many businesses because it is relatively inexpensive to begin, and can be used for general advertising purposes in addition to attracting new customers. Digital coupons have been introduced in the last few years and their acceptance is growing, with redemptions in 2010 increasing by 10 times the 2009 rates and projected to increase exponentially with each year (Savings.com, n.d.). Despite the higher acceptance and redemption rates for digital coupon formats over the past 5 years, the overall coupon redemption rate has remained at around 2%. Early coupon academic studies in the promotional literature examine profitability maximization through manipulating coupon characteristics or the coupon process such as the timing of release, length of expiration dates, amount of the cents-off, and other related monetary factors. Despite the ability to adjust coupon features to maximize revenue and redemption, the effect is not strong enough to generate the motivation required to elicit new use from non-users being targeted nor improve the overall low redemption rates. Basic characteristics such as demographic and socioeconomic variables as well as some predisposing motivational characteristics have also been studied to predict coupon use. While some of these characteristics demonstrate differences between consumers who do and do not use coupons, characteristics provide little insight into why non-users choose not to coupon. Furthermore, the findings cannot be generalizable to the population as a whole when the redemption rate persists at 2%. With digital coupons a rapidly growing practice, it is important to determine whether or not this new coupon format might contribute to behavior change in current non- or infrequent users of coupons. The overarching goal of this research was to better understand the motivational processes driving the decisions to not use coupons in the context of consumer packaged goods (grocery). While most previous research has concentrated on characteristics of the consumer, characteristics of the coupon, and predisposing motivational constructs, this study examined why consumers rejected coupons by examining their narratives on the various stages of the coupon process to narrow down the factors contributing the most to deterring coupon use. A two-phase qualitative approach was selected to determine how digital coupons were perceived by both frequent and infrequent users followed by a more in-depth investigation into the timing, motivation and cognitive processes occurring behind the decision not to coupon. The Phase 1 study included 58 participants, 29 frequent users and 29 infrequent users. Participants completed a set of questionnaires measuring previously identified predisposing characteristics, given guidance on the selection of digital coupons loaded onto shopper loyalty cards and were provided with Sunday circulars. Each participant had 1 week to try and redeem the digital coupons and complete follow up questionnaires to determine any changes post-trial. Participants were invited to participate in 1 of 6 focus groups to determine themes related to the digital coupon trial. The Phase 2 study included 10 individuals who participated in depth interviews focusing on the processes, motivations and decisions related to coupon use during grocery shopping. The interview was broken out into 5 stages: 1 is an ice-breaker introduction to the study; 2 involves rapport building and setting the tone; 3 is the depth interview that attempts to elicit understanding into the motivation, timing, and rationale behind rejection of coupon use; 4 presents some popular emerging technologies based on emerging applications of interest to the Association of Coupon Professional Board; and 5 includes a brief discussion of different type of coupon and verification. Overall, the consumer's perceived purpose of the coupon is to save money through item cost reduction whereas from a marketing perspective the coupon is intended to entice consumers new to the brand or to encourage trial of a new product (Boundless, n.d.). This difference in perception could be a major contributor to the valuation process and resistance/rejection themes of infrequent users. Interestingly, very few infrequent users rejected the practice of coupons outright and were far more likely to resist or postpone the practice. More research should be conducted to identify when, how and why infrequent users re-evaluate coupons or try the process again. Coupon industry members should review the coupon practice and make a decision to either abandon or overhaul the process as it currently does not provide value to either the manufacturers issuing the coupons or the consumers, even those actively using coupons. If the decision is to overhaul the practice then a decision should be made whether or not to adapt to the current perceptions that coupons are a means to reduce product price or re-educate consumers and industry members alike on the coupon as a means to solicit trial. Lastly, many of the existing apps do not address any of the coupon-related barriers, incongruities, or infrequent user needs. A disruptive technology is needed to change consumer perceptions, encourage coupon use and provide value added utility beyond just bypassing the coupon process to make the practice relevant in today's mobile culture.