Predicting Price Importance and Deal Proneness

ABSTRACT - The importance of price in consumer decision making is usually viewed as a continuum-price is less or more important. Consumers view prices as product attributes, in combination with other attributes, such as brand name or product quality. Price is perceptual and can be more or less important than other attributes in decision making. Additionally, consumers may act to reduce the impact of price on decision making. Using coupons is an example of such actions. Such actions are usually termed coupon or deal proneness. Previous research used similar conceptualizations to establish the impact of the two constructs on various outcome measures, such as coupon redemption. The data analyzed in this paper seeks to identify determinants of the two. It establishes differential impacts of two sets of explanatory variables on the two constructs.


Aviv Shoham, Lynn R. Kahle, and Gregory M. Rose (1995) ,"Predicting Price Importance and Deal Proneness", in E - European Advances in Consumer Research Volume 2, eds. Flemming Hansen, Provo, UT : Association for Consumer Research, Pages: 258-263.

European Advances in Consumer Research Volume 2, 1995      Pages 258-263


Aviv Shoham, Technion-Israel Institute of Technology

Lynn R. Kahle, University of Oregon

Gregory M. Rose, University of Oregon


The importance of price in consumer decision making is usually viewed as a continuum-price is less or more important. Consumers view prices as product attributes, in combination with other attributes, such as brand name or product quality. Price is perceptual and can be more or less important than other attributes in decision making. Additionally, consumers may act to reduce the impact of price on decision making. Using coupons is an example of such actions. Such actions are usually termed coupon or deal proneness. Previous research used similar conceptualizations to establish the impact of the two constructs on various outcome measures, such as coupon redemption. The data analyzed in this paper seeks to identify determinants of the two. It establishes differential impacts of two sets of explanatory variables on the two constructs.

Various approaches to segmentation have been suggested and used. Assael (1992) distinguishes between benefit, behavioral, and response-elasticity segmentation. The most common of the latter is price-elasticity segmentation (Assael and Roscoe 1970; Massy and Frank 1965; McCann 1974), which is based on identifying consumer characteristics that differentiate price elastic and inelastic segments in the population.

With scanner data more readily available, research has focused on identifying the impact of price changes on consumer purchases of promoted and non-promoted brands. Two recent meta-analyses find that price elasticity is -1.61 (Sethumaran and Tellis 1991) or -1.76 (Tellis 1988)-much higher than advertising elasticity of 0.11 (Sethumaran and Tellis 1991). Most of the studies reviewed in the two analyses report on sales effectiveness of price promotions. Another approach to studying the impact of prices is by identifying deal-prone and coupon-prone segments (Lichtenstein, Netemeyer, and Burton 1990). Most such research has focused on behavioral outcomes. In the case of special prices, attention usually centers on their impact on sales (Gupta 1988). In the case of coupons, attention usually focuses on redemption rates (Bawa and Shoemaker 1987a; Neslin 1990; see Bawa and Shoemaker 1989 for an exception).

We use a different approach and focus on explaining the importance of price and coupon /deal proneness rather than on their outcomes. The importance of price is measured compared to other product attributes whereas coupon / deal proneness centers around price-reducing behavior-the tendency to use coupons and shop for specials. We use two sets of variables to explain why price is more or less important to consumers than other attributes. The first includes demographic whereas the second includes psychological and psychographic variables such as opinion leadership and impulsive purchase tendencies. In explaining coupon / deal proneness, we use the same two sets of explanatory variables as well as the importance of price. Price importance and deal proneness are discussed first, followed by the two sets of explanatory variables. For each of these, we form research hypotheses. Then, the study used to test the hypotheses is described and the findings reported.


Day and Wensley (1988)argue that superior customer val uc is a key success factor. Most measures of value are based on multiattribute models, which, for the most part, explain attitude formation (Fishbein 1963; Fishbein and Ajzen 1975). Such models arrive at a summated score, based on each brand's performance on relevant attributes (Mazis and Ahtola 1975), which are multiplied by an evaluation of the attributes (Fishbein 1963) or by their importance (Bass and Talarzyk 1972). Summated scores underlie brand preference. These models enable marketing managers to segment consumers. Many segmentation bases are available. For example, Assael (1992) suggests needs and benefits, consumer behavior, and response elasticity as segmentation bases. Benefits include product attributes that underly multi-attribute models, behavior-based segmentation involves issues such as brand loyalty and usage rates, and response elasticity is based on price, deal, and advertising elasticities. Thus, segmentation requires an understanding of the major constructs of this paper: the importance of price relative to other attributes and coupon / deal proneness.

Most research on pricing dealt with the effects of special deals on revealed purchase behavior. Gupta (1988) reported that the onetime increase in sales due to sales promotions could be de-composed into switching (84%), time acceleration (14%), and stockpiling(2%) (Grover and Srinivasan 1992; Walters 1991). Sethumaran and Tellis (1991) and Tellis (1988) performed meta-analyses and concluded that price elasticity varies between -1.61 and -1.76. Other research focused on assessing coupon redemption rates. Neslin (1990) reported that 44% of coupon redemptions were incremental, making most coupon campaigns unprofitable. Bawa and Shoemaker (1987a) found similar patterns. Coupon redemption rates were highest for same-brand loyal consumers and most households revert to pre-coupon purchase behavior after redemption. In a later study, Bawa and Shoemaker (1989) report that face value, education, home ownership, household size, and prior redemption probability were positively related with incremental sales. Lichtenstein et al. (1990) distinguish between value consciousness and coupon proneness. They document empirically that the two are related but not identical.

The purpose of the present inquiry is different. It seeks to explain why some consumers assign more importance to prices and are more coupon-prone than others. We note here that we define the importance of price as relative to other product attributes. Stated differently, price is used here as a product attribute like quality and convenience. Common-sense suggests that most consumers prefer to pay as little as possible for a given product. However, they may be willing to pay more for higher quality, a willingness that is captured under the value-for-money equation.


Determinants of Price Importance and Coupon Proneness

The theory underlying the selection of determinants is based on the assumption that emphasizing some product attributes such as price and coupon proneness are predicated on changing consumer behavior and choice (Bawa and Shoemaker 1989). Thus, they both depend on perceived risks and benefits associated with such behavior. Like Bawa and Shoemaker (1989), we assume that predicting the importance of price and coupon proneness necessitates an identification of factors that either encourage or discourage such behavior. However, demographic variables such as the ones used by Bawa and Shoemaker (1989) only provide a partial explanation.

Therefore, a number of psychological and psychographic variables were included in the models as well. The general proposition (P) is:

Price importance and coupon / deal proneness are distinct constructs.

Demographic Variables

What motivates some consumers to assign more importance to price compared to other product attributes? Previous research suggests that education is associated positively with coupon usage (Bawa and Shoemaker 1987b). As their education increases, homemakers may be more efficient time managers. This, in turn, leads to more time to search for and use special deals, prices, and coupons (Narasimhan 1984). Bawa and Shoemaker (1989) theorize that education results in higher levels of variety seeking causing educated consumers to search for and use deals and coupons (Bawa and Shoemaker 1987b). Finally, educated consumers are more likely to be heavy media users, which increases the likelihood of prior exposure to and use of specials (Bawa and Shoemaker 1989). Hence:

H1: The more educated the female head of household, the higher the importance of price and the higher the level of coupon proneness.

There exists a relationship between income and the role of pricing in consumer decision making (Blattberg, Buesing, Peacock, and Sen 1978). AT&T found that higher-income consumers were more likely to maintain or increase consumption of long-distance calls when the rates were increased (Assael and Roscoe 1976). However, household income in and by itself does not tell the whole story. Two households with similar incomes may still differ to the extent that one has more members than the other. Using per-capita incomes, it is hypothesized that:

H2: The higher the per-capita income of the household, the lower the importance of price and the lower the level of coupon proneness.

The number of children in the household affects the importance of price and coupon proneness. As the number of children increases, time demands increase because the homemaker is required to handle a greater work-load. This will lead to lower coupon proneness and price importance. Furthermore, because of the importance of proper nutrition, children may necessitate purchases of food regardless of price considerations. Thus:

H3: The larger the number of children in the household, the lower the importance of price and the lower the level of coupon proneness.

It is also expected that older female homemakers will assign more importance to price and will be more coupon prone. Bawa and Shoemaker (1989) argue that efficient time users will tend to use coupons more. As a homemaker becomes older, (s)he will become more efficient due to learning. Furthermore, older homemakers have had more experience in finding, clipping and using coupons. Therefore:

H4: The older the age of the household head, the higher the importance of price and the higher the level of coupon proneness.

Psychological and Psychographic Variables

Consumers that exhibit innovativeness. tend to be the concentrated in the lower price consciousness segment of the population. Schnaars and Schiffman (1984) report that the "movers and shakers" segment of the book-reading public are also the least price conscious. Conversely, the "laggards" segment is typically the most price conscious. The relationship may be due to the fact that such consumers perceive less risk in trying new products and services. Thus, innovative behavior enhances the probability that a consumer will assign less importance to price and more importance to other product attributes. This leads to the following hypothesis:

H5: The more innovative the household head, the lower the importance of price and the lower the level of coupon proneness.

Spontaneous purchases are important because a number of studies documented that they account for a large proportion of supermarket sales. A recent study shows that 65-70% of the purchases of dinners, entrees, and soups were unplanned (Promote 1987). Impulse buying fall into four general types: pure impulse, suggestion, reminder, and planned impulses (Stern 1962). The first three pertain to the issues of price importance and coupon use. Pure impulse refers to novelty purchases to break out of normal buying patterns. Suggestion impulse purchase happens when consumers see an item for the first time and visualize a need for it. Reminder impulse is a situation where a consumer is reminded that stocks of an item are low while in the store. In all three cases, purchases are not planned beforehand. Therefore, consumers do not have a coupon (unless available in the store) and may discount the importance of price. Furthermore, it is expected that the general trait of spontaneity will carry over to purchases as well. Thus:

H6: The higher the level of spontaneity, the lower the importance of price and the level of coupon proneness.

Family lifestyle can affect the importance of price versus other product attributes and coupon proneness. Consumers in early family life cycle stages spend larger proportions of their incomes on eating away from home (Murphy and Staples 1979; Wells and Gubar 1966). As children are born, families tend to cat at home more. The arrival of children may also shift the emphasis in grocery purchases from price and specials to nutrition and quality. Thus:

H7: As home cooking and eating become more frequent, the importance of price and level of coupon proneness decrease.

Opinion leaders are defined as people to whom others turn for information (Childers 1986; Feick and Price 1987). We expect opinion leaders to have more information about and be more experienced in the use of different, alternative brands. Such information and experience lend opinion leaders expertise power (Higie, Feick, and Price 1987; Rogers 1983). Opinion leaders are category-specific rather than product-specific (King and Summers 1970; Myers and Robertson 1972). Since the topic of this inquiry is grocery products, the emphasis is on home opinion leadership. To be able to lead, opinion leaders need to know more than other consumers about the relevant brands regardless of their prices, leading to:

H8: The stronger the home opinion leadership of the home maker, the lower the importance of price and level of coupon proneness.

Finally, it is expected that price importance and coupon / deal proneness will be related. Lichstenstein et al. (1990) argue that both value consciousness and coupon proneness determine coupon redemption behavior. On the basis of their conceptualization, it is intuitively appealing to expect consumers for whom price is less important to also report lower levels of coupon proneness. Conversely, as price becomes more important compared to other product attributes, coupons' and specials' seeking behavior increases. This leads to the final hypothesis:

H9: As the importance of price increases so does the level of coupon proneness.


Sample and Procedures

While the data for this study encompass many consumer behavior variables, only those that pertain to this article's purposes arc described here. The data was collected between February and December 1993 by a private professional market research firm. In each month, 130 female heads of household were recruited. Individuals were 18 and older, selected to be nationally representative on age and education. Other requirements resulted in recruiting only individuals who did not participate in personal and group interviews in the 12 months' period preceding this study, were primary grocery shoppers for the household, and were not competitively employed.

Age quota was 35% for 18-34,35% for 35-54, and 30% for the 55 and over age group, not more than half of which over 65. The education quota called for 20% with some high school, 40% high school graduates, 25% with some college education, and 15% college graduates. Participants were invited to a hotel for a data collection session lasting approximately three hours. A few days before the session, a reminder letter was mailed to each participant. This procedure resulted in a sample of 1078 participants over I I months. Table 1 provides sample descriptive statistics.


Price importance. Lichtenstein et al. (1990) define value consciousness as the ratio between quality and price. The seven items they used to measure value consciousness were structured accordingly. However, quality is multi-dimensional and includes convenience, technical quality, etc. Since the present study involves the importance of price, and given the multi-dimensionality of quality, we use three items to measure the importance of price. Respondents were asked to indicate the extent to which price, compared to quality, convenience, and brand name, influenced decision making on ten-point scales. The questions were phrased similarly: "When you make decisions about grocery products do you usually buy the item with" (O=lowest price even if it's not quite as good; lowest price even if it's less convenient; and lowest price to 10=highest quality even if it costs more; greatest convenience even if it costs more; and a brand name I trust).

Scores on the three items were averaged to form a price importance scale. Scale reliability was assessed by Cronbach's CL. Cronbach's cL for the scale was .71 indicating a reliable scale.

Coupon / deal proneness. Our coupon / deal proneness scale is similar (but not identical) to Dickerson and Gentry's (1983) "price consciousness", Lichtenstein et al.'s (1990) "value consciousness", and Lumpkin's (1985) "sales advertising watcher" scales. Agreement to four items was measured on ten-point scales (O=disagree to 10=agree). The items were: "I only buy a product if I have a coupon for it; I buy products based on what coupons I have"; "I always wait for items to go on sale before I buy them"; and "how often do you use coupons (O=never to 10=always)?" Scores on the four items were averaged to form a coupon / deal proneness scale. Cronbach's ct for the scale was .71 indicating a reliable scale.

Price importance and coupon / deal proneness are related but distinct. Their discriminant validity was established by calculating an inter-scale correlation coefficient, expected to be negative and moderate. In support of the general proposition, this indeed was the case (r=-0.21, p<01).

Demographic variables. Education was measured by one item-"What is the highest level of schooling that you have completed?" Respondents indicated one of four levels corresponding to some high school or less, full high school, some college, and college graduate. Age was indicated as one of ten categories ranging from 18-20 to 65 and over. Per capita income was calculated by dividing household annual income by the number of people living in the household, including children.

Spontaneity. ne questionnaire included a battery of self concept, ten-point items. Three of the 14 items were selected as measures of innovativeness and spontaneity. Respondents were asked to rate themselves as cautious, predictable, and expecting the best or adventurous, spontaneous, and expecting the worst. The scale was created by averaging the scores on the three items (reversing the optimism item). Reliability of the scale was assessed by Cronbach's a, which was.65, suggesting that the scale is reliable.

Innovativeness. A single item asking respondents to indicate on a ten-point scale (O=never to 10=usually) the extent to which they go out of their way to learn about and make use of new products was used. Its reliability was assessed by its correlation with another item on which respondents recorded their agreements with the statement "I'm always the first among my friends to try out new products". The correlation coefficient should be moderate and positive, which was the case (r=0.21, p<0.01).

Home Cooking and Eating. Three items were used: how times the family set down to dinner together over the past 10 days, how many times it had dinner out (reverse coded) and the times respondents prepared a meal for the entire family. These items were averaged to form the scale. Cronbach's a for the scale was 0.65, indicating a reliable scale.

Home opinion leadership. The home opinion leadership scale was based on averaged responses to four items: raising children and babies, cooking methods and recipes, health issues, and nutrition. Coefficient oc was .65, suggesting an acceptable level of reliability.


Regression Results

The nine hypotheses were tested by two multiple regression models-one for price importance and the other for coupon / deal proneness (Table 2). Both regression models resulted in significant F values (F=12.05, p<.01 and F=5.41, p<01 for price importance and coupon / deal proneness respectively). The independent variables explain 11.2% and 8.5% of the variance in price importance and coupon / deal proneness respectively.

H1 posited that higher education will be associated with increased price importance and deal proneness. It was substantiated for one of the two regressions. The relationship between education and the importance of price was significant (p<.01) and in the expected direction. Education did not affect coupon / deal proneness, contrary to expectations. The effect of per-capita income (H2) was significant only for price importance. This was also the pattern of relationships for the age of the household head (1-14). The number of children in the household did not have a significant impact on either of the two dependent variables, disconfirming H3.



Concerning psychological and psychographic variables, the situation is reversed in that significant relationships were only found for coupon / deal proneness. H5 stated that the more innovative the household head, the lower the importance of price and level of coupon proneness. While the data lends directional support to H5, both regression coefficients failed to reach significance. In the case of spontaneity (H6), there exists a relationship opposite to the one expectated for coupon / deal proneness. Home eating (H7) did not affect either of the dependent variables. The directional support for this hypothesis failed to reach significance, although it was marginally significant (p=.07) for coupon / deal proneness.

The data disconfirmed the inverse relationship between home opinion leadership and price importance or coupon proneness. The relationship reached significance for coupon / deal proneness, but the direction was opposite of expectations (H8). Finally, price importance had the expected impact on coupon / deal proneness (H9). Consumers who emphasize other product attributes more than price tend to be less coupon / deal prone.


The present article argued that the two price-related constructs are distinct and each is important in its own right. The data lend support to this proposition. The correlation between the two is moderate. While the hypotheses posited a similar set of predictors (except for including the importance of price as an independent variable in the coupon / deal proneness regression), the findings show clear differences between the sets explaining each. Whereas price importance is explained by demographic variables only, coupon / deal proneness is explained by psychological and psychographic variables and by price importance.

In explaining the pattern of findings, we note that whereas the importance of price is attitudinal, coupon and deal proneness are behavioral. Most studies find a weak relationship between attitudes and behavior (Fishbein and Ajzen 1975). Stated differently, consumers may indicate that price is less or more important than other attributes with minimal commitment. The importance of price may thus depend on various demographic variables such as income. Acting on these attitudes in way of sale hunting and coupon clipping requires additional commitment of time and money. It is not surprising that coupon proneness was significantly related to psychological and behavioral constructs, such as product involvement and product knowledge, and price knowledge (Lichtenstein et al. 1990). Groups with high means on the "sales advertising watcher" scale (Lumpkin 1985) were similarly the most socially active and had higher shopping interest levels. Therefore, coupon / deal proneness requires more than just demographic predictors. Psychographic and psychological constructs are also necessary.



The number of children failed to have an impact (1-13). This may be due to the high correlation between this variable and per capita income-another independent variable. The correlation between these variables was high (r=.51, p<0.01). The variance in the dependent constructs it should have explained may have been captured by the income variable.

Three of the psychographic and psychological constructs used in this study (innovativeness, spontaneity, and home eating and cooking) provide only directional support to H5-n7. In examining the structure of this directional support, it may be that the demographic variables may have reduced the variance explainable by the three constructs in H5-H7. To test this possibility, we specified another regression model, which only included psychographic and psychological predictors. This regression resulted in a slightly lower, but still significant R2 (R2=.08, p<.01). Two of the three-innovativeness and spontaneity-were significantly associated with coupon / deal proneness and the third-home cooking and eating was marginally significant as well (p<.09). Spontaneity and home eating had the hypothesized effect on coupon / deal proneness, supporting H6 and H7 (marginally) for the reduced model. Innovativeness, however, resulted in increased deal proneness in the reduced model, contrary to H5. The possibility that the general measure of innovative behavior used here is unrelated to the importance of deals and coupons for groceries was rejected because it would have explained insignificant findings, but not inverse relationship as was the case. A more plausible explanation views innovative behavior and active couponing and deal seeking as active consumer actions. The two may be outcomes of higher consumer involvement in purchases in general. If that is the case, active consumers will tend to be innovators and deal seekers at the same time, leading to the relationship identified here.


Several managerial implications arise from our findings. When assessing the importance of prices, demographics appear to be more promising segmentation and positioning variables than psychographic and psychological variables. Price was less important to older, better educated, and higher income consumers. It was more important for younger, better educated consumers with lower incomes. Stressing low prices to the former may be sub-optimal since it emphasizes non-price product attributes. Emphasizing non-price attributes may be sub-optimal for the latter.

It was found that demographics fail to explain heavy use of coupons and deals. On the basis of the two regressions for coupon / deal proneness, heavy users tend to be those for whom price is more important than other product attributes. This suggests that the message used in coupon and advertisements' delivery should stress the price aspect of the product, rather than other product attributes. Heavy users also tend to be innovative and opinion leaders, at least with respect to home-related products. Thus, the message should portray users in this light.

This research has a number of limitations, which suggest fruitful directions for future research. Most of these limitations arise out of the measures used. An effort was made to use multiple measures for the central constructs and to assess reliability directly or indirectly. However, future research may use multiple measures for innovativeness, which was measured here with one item. The findings are based on a sample of females and involves grocery products. Future research is needed to replicate the findings using males and different product categories. Naturally, to the extent that product categories differ, measurements should follow suit. For example, a study of do-it-yourself products with a male sample necessitates measuring technical opinion leadership.

In sum, explanatory variables differ for price importance and coupon / deal proneness. The contribution of this research is its focus on explaining why price may be more important to some consumers than to others and why some consumers are more coupon and deal prone than others. Thus, it extends existing literature, which focused on outcome measures (revealed preferences) rather than on stated preferences as is the case here.


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Aviv Shoham, Technion-Israel Institute of Technology
Lynn R. Kahle, University of Oregon
Gregory M. Rose, University of Oregon


E - European Advances in Consumer Research Volume 2 | 1995

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