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In the case where the consumer is exposed to clutter C multiple coupons, multiple store ads, and multiple in-store inducements--confusion may result in the use of a simple heuristic as a way to avoid further information processing demands. For example, the consumer may believe that using a coupon will lead to obtaining the lowest possible price.

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Using this rule avoids the necessity of processing additional price-related information. Both of these explanations would result in coupon primacy a form of serial position effect Feigenbaum and Simon The primacy construct has been primarily researched in the communications context as order effects in verbal learning where a U-shaped curve of both primacy and frequency effects has been repeatedly confirmed Ray, The Ray and Webb clutter studies in particular find first commercials of commercial strings most effective even in conditions of increasing clutter.

Primacy, rather than recency, is a particularly attractive hypothesis as it is bolstered by the construct of cognitive dissonance. Consumers may not wish to jeopardize previous decisions by being shown a failure to achieve objectives such as "pay the lowest price. This model of consumer coupon behavior should be mediated by individual differences. Information overload research has advanced a number of relevant differences see Malhotra a for a review.

Particularly relevant for promotion behavior should be the consumer's degree of experience in using coupons. Consumers relatively inexperienced in using coupons should be particularly vulnerable to a coupon primacy effect. Once consumers have become accustomed to using coupons, they may develop more complex decision rules--incorporating other purchase influences in a joint strategy or "best" rule--for example the decision rule "buy the cheapest.

According to a lowest price model, consumers may be more likely to consider all available options and not remain committed to Using a particular coupon. These consumers would be expected to be less motivated by feelings of wasted effort, as they would be more skilled at selection of only the best offers--high value coupons, store advertising with "hottest" specials, etc. Consumers without these skills may respond to such offers when not in possession of a particular coupon.

Once precommitted, other factors should have no impact on choice. Responding-to several promotions could be part of an overall purchasing strategy to find the lowest price. Information processing studies of consumer choice heuristics Bettman and Zins, show that some consumers are attempting this strategy. That consumers can actually determine the cheapest is not always clear. Capon and Kuhn show that only a minority of consumers are able to calculate best buys, although the Russo unit price experiment does show immediate consumer learning.

The distinction between the coupon primacy and lowest price models is analogous to the distinction made by Bettman between decision making outside and inside the store. A decision made outside the store--to buy the brand for which a coupon is available--is indeed an easier decision than one made by comparing a number of alternatives inside the store. Contrary to the Bettman conception, however, this type of decision is seen here as most appealing to those consumers with the [east experience at incorporating promotions into their decision making. The comparison of a number of brands on the basis of multiple promotional attributes -- the lowest price model -- should be appropriate for those more experienced with promotions.

The two models of coupon behavior described above are directly contradictory. However, the behavior patterns may accurately describe two alternative types of consumers. As discussed above, the two alternative models are distinguished by the consumer's desire to simplify the process of using a coupon. This desire should be more pronounced in those who are less experienced at using promotions. Experience with promotions can best be approximated by a consumer's current degree of deal-proneness. Deal-proneness will therefore provide the qualification to each model.

H1: Coupon primacy--Price paid should be higher when a coupon is used than when it is not used for less deal-prone consumers. Consumers who are relatively less experienced with using coupons should be particularly vulnerable to simplification strategies and thus more likely to ignore shelf price or other in-store stimuli when planning to use a coupon. Note that such consumers will be generally less responsive to other promotional elements. The hypothesis test the difference in responsiveness between coupon and noncoupon purchases.

H2: Lowest price--More deal-prone consumers should make choices based on the combination of coupon discount and shelf price.

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Consumers who are relatively more experienced with using coupons should, of course, be generally more sensitive to all forms of promotion. The hypothesis suggests that such sensitivities are more than additive; they are expected to interact in a positive fashion. The two competing models are tested by comparing the effect of using a coupon on a purchase and not using -a coupon.

The data are records of individual purchases collected from a "northeast scanner market"--a metropolitan area of about , population. This market contains three major grocery chains, with a total of 15 stores, all of which are part of the scanner system. The period covered by the data is from April to October for overlapping data series.

Purchases of two product categories are analyzed: bathroom tissue "paper" and caffeinated instant coffee "coffee". The categories were selected on the basis of data availability. Category boundaries are defined using preexisting partitioning data Urban, Johnson and Hauser ; Vanhonacker A data base was constructed with all category purchases and included brand choice, whether a coupon was used on the purchase, and characteristics price, advertising, and deal packs of all available brands.

The characteristics represent the price and promotional environment available to the consumer. Other purchase influences such as qualities of the brands themselves or media advertising are not used in modeling. The available variables include the following:. For paper the relevant price is price per roll; for coffee it is price per ounce. Retail Ad: Retail ad means that the product was advertised in local newspapers by the grocery store during the week of purchase.

Such advertising stressed price, but the product was not necessarily discounted by the retailer. Advertised specials were defined as pertaining to all variations of a brand size. Manufacturer Ad: This measure indicates that the brand was advertised in local newspapers by the manufacturer during the week of purchase. All such ads carried coupons. Coupon: Coupon denotes that the purchase was made using a coupon from any source.

The coupon did not need to be the one carried in a manufacturer's ad. Price Change: Price change was defined as the difference, measured in dollars, between the current price and the average shelf price at the same store, using store scanner data, during the week preceding the purchase. A value of -. This data base was divided into relatively homogeneous deal-proneness segments, defined on the basis of previous work see Henderson for details of the segmentation procedure.

These segments, shown in Table 1, were unique to each product category. The groups were isolated with the aid of cluster analysis on five variables: percentage of purchases made with coupons, price changes, deal packs, retail newspaper ads, and manufacturer newspaper ads. The coupon-using clusters are defined on the basis of very high heavy coupon users or moderately high light coupon users coupon usage. The multi-deal-prone group was a small segment with abnormally high responsiveness to all five forms of promotions.

The cluster analysis did not yield a multi-deal-prone cluster or the paper category. Preliminary analysis involved a cross-tabulation comparison of characteristics of coupon vs. A multinomial logit brand choice model was then used to compare purchase influences between purchases on which a coupon was used and those on which one was not used. The cross-tabulation compares purchase attributes which pertain to the selected brand, for example, the average price paid when a coupon is used and not used.

The logit model compares the relative effect of a variable, for example, the shelf prices of all available brands, on choice for coupon and noncoupon purchases see Malhotra b for a review of application of this model.

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This model has been widely used in promotion studies Hee ; Guadagni ; Novich ; Levin ; Jones and Zufryden and is based on a choice theory Luce The model's consumer homogeneity assumption is mitigated in this research by running the choice model for individual deal-proneness segments. Within each segment, consumers are assumed to be homogeneous. Where sample sizes permitted, the files were further divided into two samples to test the model's stability. A brand was considered unavailable if the consumer had never bought the brand or if the brand was out of stock.

In this way completely brand-loyal consumers were automatically eliminated from the analysis. There were some small correlations between these variables--with only coffee retail ads and price changes potentially problematic at. The overall significance of the model was tested with a likelihood ratio statistic and with U-squared Hauser , a measure of the amount of uncertainty in the data explained by the model.

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T-tests were used to test the significance of toe coefficients and the relative contribution between the coefficients of the coupon and noncoupon models. The brand choice model used in hypothesis 1 was expanded to include the additional variable net price-defined as shelf price per unit minus the average coupon value of all coupons redeemed on the brand during the week corrected to a per unit basis. Net price represents the average price available to a consumer taking advantage of current coupons.

Hypothesis 2 was tested by the coefficient of this variable--expected to be significant for the most deal sensitive consumers. For this analysis, the model was run on files combining both coupon and noncoupon purchases, the price variable was dropped from the model, and a new variable-- coupon share C was added. Coupon share accounts for the relative availability of a brand's coupons during the week of purchase and is defined as share of redemptions. Where possible, these files were subdivided by store of purchase.

The results of the comparison between coupon and non-coupon purchases are shown in Tables 2 and 3. Table 2 shows that price and price change remain virtually unchanged for both paper consumer segments irrespective of coupon use. These results fail to replicate the Levedahl findings. Both segments do show that consumers are more likely to be buying an advertised brand when they are using a coupon--although the result is not statistically significant--and are less likely to be buying a deal pack.

The results for coffee, shown in Table 3, are in the-direction predicted by the coupon primacy hypothesis. Consistently--across all three consumer groups shown--the price paid per ounce is higher when a coupon is used than when one is not used. While this finding is not statistically significant it is supported by two additional results.

Consumers are more apt to respond to a price change or a retail feature when they are not using a coupon than when they are. The results of the multinomial logit analysis are shown in Tables 4 and 5 for the coupon primacy hypothesis. There is only limited evidence to support the existence of a coupon primacy effect in brand choice.

Table 4, for the paper category, shows that light coupon users have a similar pattern of purchase influences irrespective of coupon use.

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Heavy coupon users, those not expected to exhibit coupon primacy, do show minor differences between the two types of purchases. For the coffee category, both the heavy coupon users and the multi-deal- prone segment have a similar set of coefficients for coupon and noncoupon purchases. However, there is one example of promotion variables becoming less important when coupons are used. Light coffee coupon users appear likely to buy the retail advertised brand when not redeeming a coupon. When using a coupon, this association is not seen--there is a significant negative coefficient for retail advertising on coupon purchases.

For these consumers, therefore, the use of the coupon would appear to- inhibit the "normal" effects of other purchase influences. While the likelihood statistics are significant using a Chi-square test for these models, the U-squared shows that in most cases the models have modest explanatory power. These results are consistent with previous work in this area for the impact of promotion variables alone Guadagni ; Hee The results are quite stable, however, as seen in the two samples generated for heavy coffee users. Eight out of the ten coefficients are well within one standard error between the two samples.

Table 6 shows strong evidence in favor of the lowest price hypothesis for the coffee category. Net price is significant for both the multi-deal segment and for store 1 a warehouse type of grocery store purchases for the heavy coupon-using segment. Heavy coupon users who do not shop in store 1, appear to make choices based on price changes alone.

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For these consumers net price--the price which incorporates coupon values--is not a significant predictor of choice. The multi-deal segment and store 1 shoppers are responding to a price variable which includes coupon values. Despite the widespread belief in the interactive effects of coupons with other elements of the marketing mix, this research finds only limited evidence for these effects.

For the most part, the results favor the null hypothesis: that coupons do not have large interactive effects with the other factors tested. Coupon and noncoupon purchases look surprisingly similar, both with respect to characteristics of the purchased brand and influences affecting brand choice.

These results are analogous to previous work Henderson profiling redemption occasions. Factors such as day of week were found to have no effect in distinguishing redemption occasions. The picture that emerges, therefore, is that coupons are largely incorporated in purchasing patterns without negating the usual influences on choice.

There is, however, some minor evidence supporting the coupon primacy hypothesis.

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All coffee consumers--not just those who are light coupon users-appear to be slightly less price sensitive or feature sensitive when using coupons. From this research alone, however, this result-is not really managerially relevant. Future research should test this finding in other product categories and with variables unmeasured in this study, particularly with display. If further evidence can be found for this effect, the heavy use of overlays and simultaneous events can be questioned.

The Interaction of Coupons With Price and Store Promotions by Caroline M. Henderson

This study shows an interesting pattern to the coupon primacy findings: the hypothesis is more clearly supported in the coffee category than in the paper category. You can use gDiapers with cloth inserts or disposable flushable or compostable inserts. The Velcro tabs make gDiapers easy to remove and replace. Contact Us.

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