The Influence of Cents-Off Coupons on Brand Choice Decisions At the Point of Purchase

ABSTRACT - Evidence from an exploratory, descriptive study of supermarket shoppers' use of cents-off coupons is discussed with respect to the role coupons play in brand-choice and general shopping behaviors. Support is reported for several ideas suggested in the couponing literature as to mechanisms involved in consumers' use of coupons.

Citation:

Jerry N. Conover (1989) ,"The Influence of Cents-Off Coupons on Brand Choice Decisions At the Point of Purchase", in NA - Advances in Consumer Research Volume 16, eds. Thomas K. Srull, Provo, UT : Association for Consumer Research, Pages: 443-446.

Advances in Consumer Research Volume 16, 1989      Pages 443-446

THE INFLUENCE OF CENTS-OFF COUPONS ON BRAND CHOICE DECISIONS AT THE POINT OF PURCHASE

Jerry N. Conover, Northern Arizona University

ABSTRACT -

Evidence from an exploratory, descriptive study of supermarket shoppers' use of cents-off coupons is discussed with respect to the role coupons play in brand-choice and general shopping behaviors. Support is reported for several ideas suggested in the couponing literature as to mechanisms involved in consumers' use of coupons.

INTRODUCTION

Probably the most familiar example of consumer sales promotion is the use of cents-off coupons that give shoppers a discount from the regular price of a product at the time of purchase. In 1987, manufacturers distributed more than 215 billion coupons in the U.S., of which more than seven billion were subsequently redeemed by consumers for a total savings of 2.8 billion dollars (Manufacturers Coupon Control Center 1988). Despite the immense aggregate economic impact of this activity, however, relatively little is known about how coupons influence brand choices of individual consumers, nor about consumers' motivations underlying the use of coupons.

Given the sizable expenses many marketers incur for coupon distribution and redemption, a better understanding of the role coupons play in shopping behavior would help in designing efficient, effective couponing programs. Moreover, the consumer behavior discipline's growing interest in consumers' use of price information would be well served by learning more about how this particular sort of price discount information influences choices. It was with these objectives in mind that the present study was designed to explore the role of coupons in consumer choice behavior.

BACKGROUND

Several mechanisms have been proposed in the effort to model consumers' coupon-use decisions. One line of thinking assumes that consumers incur costs in order to use coupons. For example, clipping coupons, saving them, remembering to take them to the store, and using them to buy couponed brands instead of other, preferred brands all impose certain psychological and time (opportunity) costs on the user. These costs, it is reasoned, are weighed by the user against the savings (and possibly other benefits) afforded by the coupon in deciding whether to use a coupon. Some support for this approach has emerged from studies using consumer panel data to observe purchase patterns involving coupons (Bawa and Shoemaker 1987; Blattberg, Buesing, Peacock and Sen 1978; Henderson 1984; Narasimhan 1984).

Another suggestion as to how coupons work is that they stimulate, in at least some users, feelings of being "smart" shoppers (e.g., Price, Feick and Guskey-Federouch 1988; Schindler 1987; Shimp and Kavas 1984). A shopper who saves money by using coupons may feel that he or she is thriftier, cleverer, or generally a better shopper than one who doesn't take advantage of such deals. Schindler (1987) reported experimental evidence that such feelings may account for the "coupon effect," wherein coupons are observed to cause greater stimulation of sales than an equivalent simple reduction in price. Price et al. (1988) quoted "market mavens," who tend to be heavy coupon users, as saying they enjoyed the challenge of seeing how much they could save -- they actually viewed economizing with coupons as recreational activity.

In a study investigating the interaction of coupons with other promotions, Henderson (1988) found some support for each of two mechanisms of couponing behavior. According to Henderson's "coupon primacy" model, coupons block the impact of other promotional influences, either because the consumer has precommitted to using the coupon (maybe due to the effort already expended to clip, save, and bring the coupon to the store), or because the consumer is trying to simplify choices amid the clutter of multiple brands, other promotions, etc. When coupon primacy is active, the brand for which a consumer has a coupon will be the one chosen, even if it does not represent the best price deal. Henderson's alternative "lowest price" model posits that a brand will be chosen on the basis of the lowest overall price, taking into account any coupons or other price promotions that may be offered. Thus, having a coupon for a particular brand would not necessarily predispose the consumer to select that brand. Henderson did find mild evidence of different groups of consumers using coupons in ways consistent with each of these two models.

The present study was designed to explore these various ideas concerning coupon usage through direct interviews with consumers following purchase decisions. The results of these interviews lend some credence to each of the explanations.

METHOD

Two-hundred thirty-one female adults were intercepted while shopping in two large supermarkets located in Flagstaff, Arizona. Shoppers were selected for interviews on the basis of having several products in their shopping carts, thereby increasing the chances of having already made a choice in which a coupon played a role.

Upon consenting to take part in the study, the shopper was asked whether she had a cents-off coupon for any product in her cart. If she had none, she was then asked several questions about her general use of coupons and other aspects of her shopping behavior. If she did have a coupon for one or more products already selected, she was first asked a series of questions about the most recent of those choices for which she had a coupon. These questions explored the range of brands considered, the nature of comparisons among brands, perceptions of similarity among brands, and the nature of the choice process, as well as brand loyalty and purchase history. Each shopper was finally asked for any additional comments concerning how coupons affect her shopping, and the interview was completed. Typical interviews lasted from two to six minutes.

RESULTS

Of the 231 shoppers interviewed, 74 (32%) had already chosen a product for which they had a coupon. Though the subject selection procedure might be expected to be biased toward shoppers likelier to have coupons, this figure is consistent with store managers' estimates of the proportion ("about a third") of their clientele who use coupons.

As one would expect, those 74 shoppers who had coupons for items already selected (the "with coupon" group) tended to be heavier users of coupons in general than the remaining shoppers (the "without coupon" group). They reported using coupons on an average of 64% of their grocery shopping trips, compared to 29% for those without coupons t(218)=7.5, p<.0005]. And those with coupons averaged 6.9 coupon redemptions per trip, compared to 4.4 coupons/trip for the other shoppers [t(180)=3.0, p<.003].

Since shoppers with coupons might be expected to engage in other thrift-oriented practices, it was not surprising to find that they claimed to read newspaper grocery ads to find the best prices slightly more often (averaging "more than weekly", compared to about three times per month for the without-coupon group, X2(3)=7.1, pc.07). The two groups did not differ, however, in the number of different food stores usually shopped per week (about 1.9), nor in the percentage of their coupon usage that is for brands they usually buy (about 76%).

Choice Processes

Of the 74 shoppers with coupons, 23% reported they had considered other brands before making their choice. Of this deliberating subset, 41% had with them a coupon for another brand (as well as the chosen brand), and 71% claimed to have compared prices among brands. Interestingly, of those who compared prices among brands, only 58% actually wound up choosing the one they thought was the cheapest (and 8% were not sure). Thus, as many as two-thirds of coupon-using shoppers who compared prices (or 16% of all shoppers with coupons) behaved in a manner consistent with the "lowest price" model.

Viewed another way, these results indicate that 29% of coupon-users who considered more than one brand did so on the basis of attributes other than price -- perhaps quality, personal tastes, or other factors. These shoppers are clearly not "lowest-price" shoppers, nor are the 25% of those deliberating coupon-users who compared prices but said their choice was not the cheapest brand. And clearly not lowest-price shoppers were the 77% of coupon users who did not even consider brands other than the one selected.

Thirty percent of the 74 shoppers with coupons reported they had assumed the brand they chose was the best deal (with the coupon) without checking to be sure. Such behavior is consistent with a "coupon primacy" model. The coupons these shoppers had for the brand they had already selected were of slightly (about 84) higher face value, on average, than the coupons held by the remaining shoppers. And the mean shelf price (without coupon) of the product already selected by these coupon-primacy shoppers ($2.46) was, in fact, slightly lower than the mean price of the item the other shoppers with coupons had selected ($2.88). Though both of these observations support the appropriateness of a coupon-primacy strategy for these shoppers, due to small sample sizes and large variances in the data, neither difference was significant.

One additional pair of comparisons between the coupon-primacy shoppers and other coupon users was of interest. The coupon-primacy shoppers reported using fewer coupons, on average, per trip- to the grocery [4.2 vs. 6.1 coupons, t(70)=1.88, p<.07]. And they used coupons on a slightly, though il significantly, smaller proportion of their shopping trips (59% vs. 65%). Thus, these coupon users who assumed without checking that they were getting the best deals tended to be lighter users of coupons overall.

After discriminating, among all shoppers with coupons, those who fit the coupon primacy mold and those who reported choices compatible with a lowest-price strategy, a sizable 51% remained who fit neither category. These shoppers said they did not consider brands other than the one they had chosen, yet neither did they assume their choice represented the best deal. These consumers apparently used other criteria to select a brand. It may well be that their choices were fairly routinized, based on non-price factors. When asked to rate the strength of their household's preference for the chosen brand over other brands (on a 5-point rating scale, where 1 = "no preference" and 5 = "we won't use any other brand"), these shoppers showed a significantly stronger loyalty to their chosen brand (3.2) than did the other coupon-users (2.5, t(71) = 2.26, p<.03).

Comments about Coupon Use

Through their comments at the end of the interview concerning the effect of coupons on their shopping behavior, the subjects shed some light on feelings and thoughts that play a role in the use of coupons. All but 10 of the 231 shoppers had comments to share.

While a thorough content analysis of these comments is beyond the scope of the present paper, useful insight is provided by looking at the sorts of statements made as a function of the consumers' coupon usage. To accomplish this, the shoppers were ranked according to their responses to two items: the percent of their grocery trips on which coupons are used, and the average number of coupons used per trip.

The heaviest users of coupons clearly got some satisfaction out of using them. Phrases such as "I love coupons," "I really like them," and "coupons are great" were quite common from the most regular users, as were comments of appreciation for the significant savings they offer. One moderately heavy user even said she keeps a chart of her coupon savings week-by-week, and she looks for coupons to see how much she can save each week. Thus, the "smart shopper" feelings suggested in the literature do appear to characterize those shoppers who make the most use of coupons. Several heavy users also commented that coupon savings are worth the time and effort involved, implying that they do weigh the tradeoff between costs and benefits of couponing, as suggested in the literature.

The lightest users of coupons offered rather different comments. For example, seventy percent of the 35 shoppers who said they never use coupons made comments about using coupons being "too time consuming" to be worth the "small savings" they generated. Others criticized the "hassle" or "pain" of clipping and using coupons. Slightly-more-frequent users also noted that time constraints limited their use of coupons. As coupon use increased, however, the nature of time-oriented comments shifted somewhat. For example, one shopper who reported using coupons on half of her shopping trips said that couponing is "kind of a nuisance, but the savings is worth the trouble." Thus, we find evidence throughout the range of heavy-to-light coupon usage that consumers do compare the anticipated savings with the opportunity-and psychological costs of the work involved.

Comments from some consumers in the study provide direct evidence of the use of a "lowest price' strategy. Ranging from heavy (99% of trips) to moderate (50%) users of coupons, several subjects claimed to shop for the best deals, with or without coupons. Some noted that having coupons encourages them to compare prices across brands, leading to better deals. Several shoppers noted that they like to use their coupons in stores offering "double coupon" values, to maximize their savings. One woman even showed how her shopping list was organized by stores and by coupons, with coupons for multiple brands in several product categories. Prior to shopping, she had determined which products to buy where, to take best advantage of price and double-couponing differences among stores. Clearly she was a "lowest price' coupon user.

Other interesting observations emerge from subjects' comments. A few shoppers indicated that the coupons they have on a given trip often help define the set of brands they consider -- they give preference to the brands for which they have coupons. Many consumers, ranging from heavy to light users, commented that they always or usually use coupons only for the brands they regularly buy. Finally, several women said they'd rather have lower regular prices than gain savings by coupons. However, as one heavy couponer commented, "as long as everyone else is paying for my savings, I'll keep using coupons." And, in the words of a moderate user, 'I hate coupons; but, since I'm paying for them in higher regular prices, I may as well use them." Several of the lightest coupon users expressed annoyance that they had to pay higher prices to cover the costs of coupon discounts, but this didn't motivate them to increase their coupon usage.

DISCUSSION

This study provides evidence that using coupons does influence brand choices in several ways as previously hypothesized. About half of those shoppers with coupons used them in ways consistent with either Henderson's (1988) "lowest price" or "coupon primacy" models. The "lowest price" consumers tended to be more regular users of coupons while the "coupon primacy" strategy was likelier among light coupon users, as Henderson had speculated.

Substantial numbers of shoppers, primarily the heavier users of coupons, reported positive, "smart shopper" feelings associated with coupon use. And evidence that shoppers weigh the benefits against the costs of coupon use came from many shoppers, heavy and light coupon users alike. Thus, each of the mechanisms postulated in the literature to be involved in coupon usage appears to apply to one or another segment of users.

While both heavy and light coupon users indicated they assess the costs and benefits they realize from couponing, their conclusions were quite different. Heavy couponers felt their savings from using coupons well justified the effort involved, while light- and non-users felt just the opposite. This poses an interesting question for future research: are these disparate perceptions of couponing both correct? That is, are the products (categories or brands) that light couponers tend to buy different from those bought by heavy users of coupons? And, if so, do the light users' preferences tend to be items for which coupons are often not available, or for which coupon values are generally small? Such findings would account for the two groups' perceptions, and, moreover, would suggest strategic changes in couponing behavior by marketers to appeal more to those who are currently light users. The findings of the present study don't answer the question, but they do suggest that marketers might be wise to explore segmentation of coupon users according to their views and usage patterns regarding coupons.

Several other coupon-use issues offer interesting questions for further study. The present study explored coupon use with respect to only a single product category per shopper. Does the way a consumer uses coupons (e.g., with a lowest-price strategy or a coupon-primacy approach) tend to be consistent across categories? Bawa and Shoemaker (1987) found that heavy coupon usage by a household for one product category tended to predict heavy usage in other categories, but they did not explore the processes by which those coupons influenced brand choices. An investigation of this issue would help clarify the relative influences of personal and situational variables in coupon usage patterns.

Another usage issue needing further study concerns those consumers who bring to the store coupons for multiple brands, and perhaps even multiple values per brand, within a product category. Such consumers might be expected to be lowest-price shoppers, but we know little about their brand-choice processes. While the present study found some evidence of this sort of coupon usage, a larger-scale study is needed to estimate the extent of such behavior among shoppers and to explore more fully their choice mechanisms.

A final area for further research concerns the relationship between coupon usage and other facets of deal-prone behavior. In the present study, coupon usage was found to be moderately correlated with frequency of reading grocery ads to find the best buys. But heavy users did not shop more stores per week than light users. An extension of this line of inquiry into a broader range of deal-seeking behaviors might help explain the role coupon use plays in the larger effort to economize when shopping.

In conclusion, this exploratory study has corroborated several ideas about how coupons influence brand choices, and it has provided a sense of how consumers view the role of coupons in their shopping. These results help provide direction for further efforts to learn much that remains to be known about consumers' use of coupons.

REFERENCES

Bawa, Kapil, and Robert W. Shoemaker (1987), "The 'Coupon-Prone' Consumer: Some Findings based on Purchase Behavior across Product Classes," Journal of Marketing, 51 (October), 99-110.

Blattberg, Robert, Thomas Buesing, Peter Peacock, and Subrata Sen (1978), "Identifying the Deal Prone Segment," Journal of Marketing Research, XV (August), 369-377.

Henderson, Caroline M. (1984), "Modeling the Coupon Redemption Decision," Advances in Consumer Research, Volume 12, Ed. E. Hirschman & M. Holbrook, Provo, UT: Association for Consumer Research, 138-143.

Henderson, Caroline M. (1988), 'The Interaction of Coupons with Price and Store Promotions," Advances in Consumer Research, Volume 15, Ed. Michael J. Houston, Provo, UT: Association for Consumer Research, 364-371.

Manufacturers Coupon Control Center (1988), The Scanner, Volume 3 (July), Wilton, CT.

Narasimhan, Chakravarthi (1984), "A Price Discrimination Theory of Coupons," Marketing Science, 3 (Spring), 128-147.

Price, Linda L., Lawrence F. Feick, and Audrey Guskey-Federouch (1988), "Couponing Behaviors of the Market Maven: Profile of a Super Couponer" Advances in Consumer Research, Volume 15, Ed. Michael J. Houston, Provo, UT: Association for Consumer Research, 354-359.

Schindler, Robert M. (1987), "Psychological Mechanisms of the Effects of Cents-Off Coupons," unpublished working paper, University of Chicago.

Shimp, Terence A., and Alican Kavas (1984), "The Theory of Reasoned Action Applied to Coupon Usage," Journal of Consumer Research, 11 (December), 795-809.

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