Marketing in depth Analysis on Groupon–Helping Consumers with Purchase Decisions

Business Finance

strategic marketing / Marketing Orientation

Purdue University

Question Description

1. Read the case on pages 146-149 attached document.

2. Watch the video supplement to the case:

3. Respond to the following case questions below.

Like many established companies, Groupon is facing future challenges that may very well jeopardize their competitive advantage in the marketplace. This is especially true in the time of COVID-19. Goldman Sachs placed a sell rating on the Groupon’s stock and cut its price target. Research additional perspectives on the future of Groupon.

You, a member of the corporate marketing team, are tasked with developing a formal recommendation on what actions the company should take to address current challenges.

Search terms such as: “online coupon use” to find scholarly articles to help answer the questions below.

Research the impact of COVID-19 on Groupon's business model. (External sources are welcome, the more the better )

1. Evaluate the stages in the consumer purchase decision process and the impact of each stage upon the development of brand equity, as your strategic focus.

2. Determine how Groupon’s Promise affects the consumer’s perceived risk and cognitive dissonance; the five-stage purchase decision process for a typical Groupon customer; and the psychological and sociological influences on the Groupon consumer purchase decision process.

Responses should reflect higher level cognitive processing (analysis, synthesis, and evaluation), which is essential for someone in any industry, as marketing decisions affect all levels and stakeholders within the organization and in the external marketplace/marketspace

Case study should be only (4) pages in length, excluding the title and references pages. And double spaced

Must adhere to the APA writing style.

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Extreme Couponing: An Exploratory Study Zboja, Goldsmith, Clark and Gatzlaff EXTREME COUPONING: AN EXPLORATORY STUDY JAMES J. ZBOJA, Creighton University RONALD E. GOLDSMITH, Florida State University RONALD A. CLARK, Missouri State University KEVIN M. GATZLAFF, Ball State University The marketing literature devotes little coverage to the topic of extreme couponing, even though the consumer minority of heavy coupon users accounts for the bulk of coupon redemption. The present research seeks to close this gap by examining the attitudes of coupon users toward the practice of extreme couponing. The research uses a qualitative study plus an additional quantitative analysis of survey data from an online coupon user community (n = 309). The results indicate that most coupon users hold negative opinions of the practice of extreme couponing and there are only minor differences between couponing behaviors of those who self-identify and are positive toward extreme couponing compared with those who do or are not. A typology of coupon users is also introduced. INTRODUCTION After a record of 332 billion coupons were distributed in 2010 (NCH Marketing Services, Inc., 2011), coupon distribution declined slightly in recent years: from 329 billion in 2013 to 321 billion in 2015 (Inmar, Inc., 2016). Over the same period, coupon redemption dropped from 3.5 billion to 2.5 billion (Inmar, Inc., 2016). The decline can largely be attributed to a natural decrease in consumer frugality since the peak of the Great Recession to the present period of recovery and to the trend by supermarkets to offer more prepared food. Nevertheless, any decline in coupon redemption stimulates inquiry into the value of the coupon as a form of sales promotion. According to the Nielsen Company, the “80/20 Rule” is in effect when it comes to coupons; 83% of units purchased with manufacturer coupons in 2009 were done so by just 22% of households, and these coupon enthusiasts accounted for 18% of all unit purchases, making them a key target market for manufacturers (Hale, 2010). For marketers who continue to distribute coupons, newspapers and other media who depend on them for revenue, and for those interested in promoting consumer welfare through smart shopping, understanding coupon use can help develop strategies to encourage their use. Thus, the purpose of the present study was to increase our knowledge of coupon use by focusing on extreme couponers The Marketing Management Journal Volume 28, Issue 2, Pages 93-107 Copyright © 2018, The Marketing Management Association All rights of reproduction in any form reserved 93 and the attitudes of other shoppers towards them. The W all Street Journal coined the term "extreme couponers" in 2010 to describe the most frequent coupon users. Indeed, these coupon enthusiasts were featured on national news and television programs, such as Extreme Couponing, during the peak of the Great Recession. Extreme couponing is the practice of avid coupon collecting, organizing and redeeming with the goal of maximizing the quantity of products acquired, while simultaneously minimizing per purchase expenditures. Extreme couponing as a phenomenon likely emerged as a product of the increase in consumer frugality during the Great Recession (Curnalia, 2014). While extreme couponing has declined slightly from the fervor of the Great Recession, some consumers still practice it today as penny-pinching behaviors in a post-recession economy are still valued by frugal consumers (Williams, 2017). As noted by a recent U.S. News & W orld article, “Extreme couponing may not be all the rage the way it was during the recession, but it's still popular and probably always will be. Saving money never goes out of style” (Williams, 2017). Although the heaviest users of coupons appear to be the key drivers of overall coupon use, the marketing literature contains scant research on extreme couponing, leaving it to the popular press to describe this phenomenon of consumer behavior. The present study seeks to fill that gap to help marketers better understand extreme Marketing Management Journal, Fall 2018 Extreme Couponing: An Exploratory Study couponing plus the attitudes of coupon users toward the practice. Based on the little we know, some consumers have been intrigued and increasingly attracted to couponing by the buzz created by the U.S. media; however, it is certainly possible that many longtime moderate coupon users are less than enthusiastic about the concept. Even moderate coupon use has at times caused frustrations for other shoppers who must wait in line to checkout behind customers using multiple coupons. However, some of the more extreme behaviors exhibited by extreme couponers are certainly controversial and, thus, potentially even more frustrating for other customers. In fact, because of the behaviors of extreme couponers depicted in the TV show, coupon users may suffer from a perceived “courtesy stigma” or “stigma by association” (Goffman, 1963) caused by the backlash against the depictions of extreme couponers in the marketplace. Although these consumers may not have exhibited any of the questionable behaviors that can lead to stigma, just using coupons may be enough evidence to associate them with the behaviors in the minds of other customers. Our findings suggest that some potential users may be put off by negative images of extreme couponers, suggesting that promoters of the practice might steer away from such negative portrayals and emphasize instead the positive aspects of couponing. The present study’s goal is to examine the attitudes and opinions of coupon users on the concept of extreme couponing, a topic which, even at the height of its popularity, received surprisingly little coverage outside of the popular press. Our primary research question is what do shoppers who regularly use coupons think of the term and practice of extreme couponing and its implications? In so doing, this research provides some insight into consumer perceptions of the practice of extreme couponing as well as the motivation of these heaviest coupon users. Part of this study includes comparing couponing behaviors between those who consider themselves to be “extreme couponers” and those who do not, and between those who feel positively and negatively about extreme couponing. Are there significant differences among these groups in terms of their couponing behavior? Marketing Management Journal, Fall 2018 Zboja, Goldsmith, Clark and Gatzlaff Based on respondents’ opinions of whether they are extreme in their coupon use and the tone of their opinions of the concept and practice of “extreme couponing,” a typology of coupon users is developed. This typology can be used to examine the level of time spent on couponrelated activity, as well as relative average dollars saved by the developed segments. With this knowledge, marketers can devise ways to get coupons to those most likely to use them in the most efficient and convenient manner possible. Success should benefit both marketers, distributers, and especially consumers who would most benefit from the savings coupons afford. Additionally, the typology can shed light on some of the motivations and foci of couponing behavior in each of the four segments. Finally, while focused mostly on qualitative results, this research seeks to answer the call for quality qualitative research in marketing to better inform empirical efforts (e.g., Cohen, 1999; Hall & Rist, 1999; Nevid & Maria, 1999). LITERATURE REVIEW AND HYPOTHESES Coupon Background Research on coupon use by consumers did not appear until the late 1970's (Bonnici Campbell, Fredenberger, & Hunnicutt, 1997), despite their use in practice since the nineteenth century (Babakus, Tat, & Cunningham, 1988). The literature discusses three primary purposes of using coupons as a means of sales promotion (Blattberg & Neslin, 1990): (1) to attract new users to a product category, (2) to get current users to switch brands, and (3) to encourage repeat purchases. Coupons have also been popular among marketers for their relative immediacy and traceability, as well as among consumers because they reduce the product’s price and the perceived risk of new product trial. Two streams of coupon research characterized the past literature on coupon use (Mittal, 1994). The first stream is from the perspective of the marketer, more focused on the aggregate modeling of effects on redemption, such as coupon face value (e.g., Ward & Davis, 1978), expiration date (e.g., Inman & McAlister, 1994), and distribution volume (e.g., Neslin, 94 Extreme Couponing: An Exploratory Study 1990). An example of more recent research in this stream focuses on the impact of coupon design on attitudinal loyalty (Wierich & Zielke, 2014); specifically, that personalization has a greater positive effect on loyalty than does the face value and minimum purchase conditions of the coupon. The second stream, from the consumer’s perspective, focuses on coupon redemption by demographics and by individual differences among consumers. This research stream has resulted in relatively inconsistent results. For instance, some research finds coupon users to be older (Levedahl, 1988); younger (Teel, Williams, & Bearden, 1980); and older and younger, but not middle-aged (Ward & Davis, 1978). The age of these studies, however, suggest that they need to be updated. While most studies of coupon users seem to support a mid- to higher income for coupon users (e.g., Shoemaker & Tibrewala, 1985), Levedahl (1988) describes the relationship between income and coupon use as curvilinear; that is, peaking at mid-income levels, then decreasing as income rises. Many of these same researchers report that coupon users tend to be better educated and have larger households than non-users. Furthermore, Harmon and Hill (2003) report that, despite evolving gender roles in terms of shopping trends, only 17% of men (versus 24% of women) describe themselves as coupon users. The present study seeks to contribute to this second stream of inquiry by adding knowledge of consumer coupon use by focusing on extent of use. A recent new stream of coupon research has addressed the newer methods by which consumers obtain and use coupons. Consequently, recent coupon research has focused on the newer media from which consumers obtain and use coupons. Clark, Zboja, and Goldsmith (2013) emphasized the important mediating role of coupon proneness in both online (digital) and traditional coupon use. Kang, Hahn, Fortin, Hyun, and Eom (2006) studied consumer intent to use both traditional and e-coupons. Their research found the construct of perceived behavioral control to be vital to e-coupon use intentions, but not traditional coupon use intentions. This finding indicates the application of theory of planned behavior as most appropriate for e-coupon use, 95 Zboja, Goldsmith, Clark and Gatzlaff while the theory of reasoned action can more appropriately be applied to traditional coupon use intentions. Further, online coupons are processed differently than traditional print coupons and have outperformed them in attention, emotional engagement, buying intentions, and awareness (Clip or click, 2009; Suri, Swaminathan, & Monroe, 2004). An increasing number of research articles have studied mobile coupons that are issued to and used by consumers via mobile devices (e.g., iPhones). Many of these efforts focus on consumer adoption and acceptance of mobile media for coupon use, compared by gender (Ha & Im, 2013), nationality (Muk, 2012), and perceived value and individual differences, such as innovativeness and coupon proneness (Zhao, Zhao, Chau, & Tang, 2015). Im and Ha (2012) show that perceived usefulness, attitudes, and behavioral intentions differ across Rogers’s (2003) adopter categories (i.e., innovator, early adopter, early majority, late majority, and laggards). Moreover, Khajehzadeh, Oppewal, and Tojib (2015) report that for retailers offering hedonic products, shopping motivation is most vital for influencing mobile coupon use, whereas convenience and location hold more weight for consumers shopping for utilitarian goods. The present study thus contributed to the body of knowledge on coupon users by focusing on amount of use and including both print and the newer electronic coupons. Heavy Users of Coupons Coupon usage seems to exist along a spectrum of nonuse to occasional use to moderate use to heavy use. Extreme couponing would represent the heaviest of heavy users. As mentioned, there exists a substantial body of literature on coupon use versus nonuse. What is missing from the body of research on couponing, however, is a focus on the heavy users. This omission is puzzling because heavy users in a product category often account for much of its sales and profits so that usage rate often forms a basis for a product’s segmentation strategy (cf. Hackleman & Duker, 1980; Sharpe & Granzin, 1974). Moreover, a minority of coupon users seem to account for most coupon redemption (e.g., Hale, 2010). Thus, the primary purpose of the present study is to focus on a better Marketing Management Journal, Fall 2018 Extreme Couponing: An Exploratory Study understanding of these heavy users so that marketers can improve their efforts to persuade them to use their specific coupons. We also attempt to uncover a possible reason why so few consumers use coupons. The widely available imagery of the “extreme couponer” in the media is often not a positive one, which could lead shoppers to avoid couponing because of the phenomenon known as “stigma by association.” Stigma by Association The ancient Greeks used the term “stigma” to refer to physical evidence (e.g., cuts, burns) used to expose blemished individuals to be avoided by the “normal” populace (Goffman, 1963). Today, the term refers more to “the disgrace itself than to the bodily evidence of it; an attribute that is deeply discrediting” (Goffman, 1963, pp. 2-3). The concept of “stigma by association” (coined originally as “courtesy stigma”) was introduced by Goffman (1963) to describe a situation in which there exists a spillover effect extending to an individual who is in some way associated with, or perceived to be associated with, a stigmatized individual. While Goffman’s original conception of courtesy stigma considered primarily an extension of the stigma to individuals who were closely connected to the stigmatized (e.g., family members), more recent research shows some evidence of a proximity effect, where merely a perceived connection was sufficient for an extension to occur (Hebl & Mannix, 2003). Recent research has examined stigma by association in varied contexts, such as organizational misconduct (Pozner, 2008), blacklisting of artists during the “red scare” in Hollywood (Pontikes, Negro, & Rao, 2010), and racial concerns in assignment of monetary sanctions in criminal courts (Harris, Evans, & Beckett, 2011). Researchers also find stigma by association in the context of coupon use. Argo and Main (2008) report that the stigma of perceived cheapness of coupon-redeeming shoppers to extend to adjacent non-coupon-redeeming shoppers, particularly in cases of high similarity between the shoppers and low-value coupons. While coupon use has been shown to be avoided by some consumers to reduce negative social consequences, such as looking cheap to Marketing Management Journal, Fall 2018 Zboja, Goldsmith, Clark and Gatzlaff other consumers and/or the cashier at checkout (Ashworth, Darke, & Schaller, 2005; Brumbaugh & Rosa, 2009; Dhar and Hoch 1996), it is possible that additional consumers do not participate, reduce, or even discontinue coupon use to avoid being associated with extreme couponers. The disassociation with extreme couponing can be seen as a result of an individual’s attempts to avoid being tainted with the stigma that being assigned the label of “extreme couponer” may bring. Therefore, consistent with the 80/20 rule and previous findings regarding coupon redemption, plus the possibility of a stigma by association effect, our first hypothesis is: H1: The majority of coupon users surveyed do not self-identify as “extreme couponers.” There is likely a contingent of consumers in the marketplace who have been avid coupon users long before the term “extreme couponer” came into the public consciousness. While some consumers embrace the term, the authors contend that many more coupon users actively avoid the term in an effort to avoid stigma by association. They, and others, witness what they considered to be unacceptable behavior exhibited by coupon enthusiasts on television shows as well as online and do not wish to be associated with them in any way. Our study specifically focuses on coupon users’ opinions of extreme couponing, since it would be considerably less surprising to find that consumers who aren’t coupon users felt negatively toward extreme couponing. In short, opinions of extreme couponing vary across all levels of coupon users. The contention of the authors, however, is that even many active coupon users feel negatively toward the concept and practice of extreme couponing. It is possible that some shoppers feel even more negatively than do non-coupon users because extreme couponing reflects negatively on their own couponing behaviors. In fact, it is possible that some heavy coupon users feel very negatively toward extreme couponing, while some novice coupon users may feel quite favorable toward the practice (and even aspire to become an extreme couponer). All this taken together, along with the vivid imagery of extreme couponers portrayed in the media, we expected that coupon users would not have a 96 Extreme Couponing: An Exploratory Study very positive image of them, and so the second hypothesis proposes: H2: The tone of the narratives of the coupon users surveyed tend to be negative toward the concept of “extreme couponing.” Interestingly, many of these coupon users will not actually disassociate from couponing behaviors so much as to disassociate from the concept of extreme couponing. Couponing is a way of life for many consumers, and a very real part of their self-image is tied to their saving money for their families. As a result, they may feel negatively toward the concept and practice, but that is not enough to modify their own behaviors. As such, the authors also expected not to find significant differences in couponrelated behaviors across groups of coupon users based on their self-identification (or not) with the term “extreme couponing,” along with the tone of their narrative. The reasoning here is their self-identification (or lack thereof) and tone of narrative is due to an attempt to avoid stigma by association, rather than a lack of participation in the couponing activities. The following coupon-related behaviors are included in the study: weekly time spent looking for coupons, planning for coupon use, shopping, surfing couponing websites for social reasons, and the weekly dollar amount saved. H3: There are no significant differences in couponing behaviors across groups who identify/do not identify as extreme couponers and have positive/ negative narratives about the concept. Finally, the authors also sought to profile coupon users based on their self- identification (or not) with the term “extreme couponing,” along with the tone of their narrative. These profiles should serve to better understand the attitudes and opinions of coupon users in the marketplace. Additionally, it is hoped that this taxonomy can shed light on motivations of individuals in each group, that can vary (and, as hypothesis 3 states, not vary) based on their opinions toward extreme couponing. Zboja, Goldsmith, Clark and Gatzlaff METHOD Sample Given that the study sought to get opinions and attitudes of coupon users ...
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