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A Study of Consumer Perceptions of Daily Deal Promotions
Utpal M. Dholakia* Rice University
Sheryl E. Kimes Cornell University
This Version: September 11, 2011
* Utpal M. Dholakia is a professor of management at the Jones Graduate School of Business, Rice University and Sheryl E. Kimes is the Singapore Tourism Board Distinguished Professor of Asian Hospitality Management at the Cornell University School of Hotel Administration. The authors would like to thank the Cornell Center for Hospitality Research for their financial support in funding the data collection effort for this project.
Electronic copy available at: http://ssrn.com/abstract=1925865
Daily Deal Fatigue or Unabated Enthusiasm? A Study of Consumer Perceptions of Daily Deal Promotions
Abstract We examined consumer perceptions of daily deal promotions. In a survey-based study conducted with a diverse sample of 973 respondents (655 daily deal users and 318 non-users), we find no evidence of daily deal fatigue. Instead, the heaviest daily deal users (those who have purchased 11 or more deals) are the most enthusiastic about them. They indicate the greatest interest in checking their email for deal offers every day, have little trouble in using the deals before they expire, believe that daily deals help them save money on things they would have purchased anyway, and say they have integrated these deals into their usual shopping behavior. As another positive sign, all users indicate high levels of intentions to purchase a daily deal again within the next month. Non-users indicate not using daily deals primarily because of awareness and access issues, and given that only 16.7% of our panel’s population has used daily deals before, there is significant opportunity for growth of daily deals on the consumer side. In assessing different sites, Groupon has the highest levels of awareness, use, and heart share among daily deal users, whereas LivingSocial, eversave, Travelzoo, and OpenTable score significantly lower on these metrics. We also find daily deal usage decreases with the consumer’s age, increases with the household income, and is the highest for those who live in urban areas. Psychologically, heavier daily deal users are less interested in being seen as different or “fringe” in their shopping patterns, are less careful with their personal finances, are more interested in trying new things so as to have experiences to talk about and influence others, and are attracted to a deal because it is a deal rather than because of its magnitude. Our findings suggest that consumers may be less sensitive to the depth of daily deal discount than is conventionally believed and may be appealed to via creative and subtle offers offering lower discounts.
Electronic copy available at: http://ssrn.com/abstract=1925865
See also Taylor. Available online at: goo. 3 Lynch. However. “Forrester predicts daily deals will die. “Daily deal sites dwindling: Competition results in fewer web discount options. Rachel (2011). August 11. Colleen (2011). Anna Marie (2011).gl/LBJ4Z. Available online at: goo. There are even predictions that “daily deals will die”7.”. are growing fatigued with them5 and remorseful after purchasing them6. and hypothesized that consumers. On the one hand. August 31. no other marketing program has received as much attention in recent months as daily deals have. reported with relish on the exit of Facebook and Yelp from the daily deal space3. Available online at: goo.”. and is skeptical about its future.gl/rDxdq. on the negative side.gl/OXisP. interest in this industry has never been higher. 4 See for example.” Wall Street Journal. While prior academic studies have examined the experiences of small and medium-sized See for example.gl/5Q4K5. 2 Jackson. 7 Virzi.” USA Today. Candice (2011). July 20.” ClickZ. August 26. 6 Choi. August 30. Introduction The daily deal industry stands at a crucial juncture in its evolution. Julianne (2011).gl/QQ13i. Available online at: goo.Daily deal user I.” The Atlantic. Available online at: goo.“These are the BEST THING EVER. experts have questioned the business model of industry leader Groupon2.gl/Q4qWT. and consumers all continue to evince sky-high levels of interest in daily deals1. 5 O’Donnell. Available online at: goo.” Vatornews.” Gigaom. Brendan (2011). In marketing circles for example. “The fall of Groupon: Is the daily deals site running out of cash?. The investor community. “Zulily daily deals for kids secures $43 million in funding. “Facebook and Yelp retreat from daily deals.Daily deal user “Keep them coming.” Boston Herald. August 24.” ZDNet.gl/cVKPZ. Available online at: goo. “Groupon remorse? Sites let users unload deals. Drew (2011). August 31. “Websites selling daily deals lose luster. a growing amount of the discourse is negative and critical of the daily deals industry. Available online at: goo. Nicholas (2011). “Juice in the City acquires Gaggle of Chicks. “Wine wars: Lot 18 gets new funds as Gilt debuts wine site.gl/X3dcz. In recent weeks.gl/LfJM8. August 25. especially the early adopters of daily deals. King. Available online at: goo. August 24. 1 3 . gloated over the lower summer traffic to Groupon’s website4. Pepitone. Jayne (2011). the small and medium-sized businesses across a wide swathe of industries.gl/8K6Sf.” ABC News. Fitzgerald.” CNN Money. or Merino. “Groupon traffic hits summer slump as rivals gain – hitwise. Available online at: goo. Faith (2011).
Hirschkorn.gl/gPMPZ. we seek a clearer understanding of how consumers view daily deals. and Dholakia Utpal M. Are daily deal shoppers growing fatigued with these deals? In general. II. and also chart heart share and fatigue rates for the major daily deal sites. their addictive nature.com. Which demographic and psychological characteristics of users predict amount of daily deal use? We create a profile of the daily deal user. do not provide a clear understanding. and Buywithme promotions.businesses with daily deal promotions8.” Rice University Working paper.gl/5YU1S. Travelzoo.gl/Empor. Ursula (2011). Which daily deal sites do shoppers know and use? We compare awareness and usage levels. cause stress from having to redeem the purchased offer before it expires. well. others raise the possibility that daily deals lead to the purchase of low-quality goods and services. “How effective are Groupon promotions for businesses?” Rice University Working paper. “groupie”? “ Forbes. we are able to assess and compared the perceptions of these different shopper groups. Utpal M.”Daily Mail. Available online at: goo. 8 4 . what do they think of daily deals? 2. We seek to answer the following questions in this study: 1. “Should I give up on Groupon? Millions of us use the money-off voucher website . Available online at: goo. 9 Collazo. Opentable. August 18. there is no comparable study of consumers’ experiences with and perceptions regarding daily deals that is available in the public domain. Media reports on consumers’ experiences are mixed and although full of vivid and engaging anecdotes. LivingSocial. “Are you a diehard Groupon. Dholakia. and often result in disappointment from the purchase9. Jason (2011). 3. Where some stories extol the benefits of daily deals such as the exciting shopping experiences they provide. and the deep discounts earned by consumers on a variety of products and services. Why have non-users not purchased a daily deal thus far? 4. Available online at: goo. Study Objectives In the current study. (2010). (2011). By conducting a large survey with a sample of daily deal non-users and users of different experience levels (novice consumers who have purchased a single or a few daily deals to experienced daily deal shoppers who have purchased 11 or more deals).but its deals aren't always what they seem. “How businesses fare with daily deals: A multi-site analysis of Groupon.gl/xjzRo. September 5. Available online at: goo.
all respondents This value is calculated as the number of respondents who had purchased at least one daily deal in the past divided by the total number of panel members who started the survey.960 were screened out because they indicated that they had not purchased a daily deal and our quota of non-users had already been reached. the actual proportion of daily deal users in the online panel’s membership is 16. 11 Respondents were also asked in depth about their experience with purchasing and using one particular restaurant daily deal.3%) had purchased at least one daily deal.III. such that daily deal users were oversampled relative to their actual incidence in the population.7%10.933 panel members (and screen out most of them because they were non-users). In the survey. we also obtained a number of personality characteristics so as to ascertain which psychological traits predicted daily deal use. A vast majority or 2.7% of the sample) had never purchased a daily deal before. 3-4. however. Thus. 11 or more). we employed a quota-sampling approach to select our respondent sample. various aspects of their perceptions regarding daily deals (described in detail below). It is important to note that this proportion does not reflect the actual ratio of daily deal non-users to users in the US population. we conducted an online survey of adult American consumers to understand their experiences with daily deals and their perceptions regarding such promotions. of which 318 (or 32. The analysis described in the current report is based on a dataset containing 973 respondents. how experienced they were with buying and using daily deals. 5-6. 7-10. we asked why they had never purchased a daily deal in the past. Because of the relatively low percentage of daily deal users in the population. 67. the online panel company had to contact 3. and are not described or analyzed here. and their awareness and use of specific daily deal sites11. Finally. are not the focus of the present report. We worked with a large national survey sampling and online panel company to conduct the survey. These questions. and the remainder (or 655. To nonusers. The remaining 318 non-users actually completed our survey. 1-2. we asked a number of questions including how many daily deals respondents had purchased in the past (none. Our online survey was conducted during August 2011. In fact. From all respondents (both daily deal users and non-users). Study Method and Sample Details To answer these questions. to obtain 655 daily deal user responses. 10 5 .
22%. In the final sample.000 per year whereas 18% had an income of over $100. 50%). 35 – 44. 13 To assess self-perceived experience with daily deals. 9%. 11%). Athima (2011).COM. Our sample of respondents contains shoppers having a wide range of prior daily deal purchase experience. The survey took between 10 and 15 minutes to complete for most respondents. Available online at: goo. A majority of them were married (59%). approximately two-thirds had a family income below $75. 24%. broad-based respondent sample.gl/btVEy. the respondents were fairly evenly split between males and females (45% and 55% respectively). 17%. “Yelp latest victim of daily deals fatigue. the specific question asked in our survey was “Which of the following best describes you? Please select one of the following descriptions” and participants could choose one of 12 6 . Age-wise. Available online at: goo. “Will ‘Groupon fatigue’ doom the daily-deals business?” PC World. Greim.000 per year.provided their demographic characteristics.” to those who have purchased more than eleven daily deals before and consider themselves “very experienced with them13. approximately half of them were 45 years of age or older (18-24. from those who have purchased just one or two daily deals in the past and state that they are “not very experienced with daily deals.gl/kdvSJ. as some observers have recently noted12? Or does their enthusiasm for daily deals remain undiminished? The answer to this question is a critical input into any prognostications regarding the short. and to better understanding consumer behavior regarding daily deals.” See for example. 55-64. Specifically.and longer-term potential of the daily deal industry as a whole. suburban. and Chansanchai . May 12. Furthermore. 19% and 65 or older. and about two-thirds (64%) had no children at home. IV.” Technolog at MSNBC. do daily deal users grow fatigued with such deals and less enamored of them with experience. These characteristics are indicative of a diverse. 45 – 54. Lisa (2011). 22%. The majority of respondents lived in an urban or suburban area (urban. 25-34. Daily deal fatigue or unabated enthusiasm? The perceptions of daily deal users A key question that forms the focus of this study is how perceptions regarding daily deals and their use vary as shoppers purchase more daily deals over time.
whereas close to two-thirds of experienced daily deal users described themselves as “quite experienced” (65. I am not that experienced with them. Figure 1: Distribution of online panelists by daily deal usage The figure provides a sense of the penetration of daily deals in the broader US consumer the following four responses: (1) I have been purchasing daily deals since they first appeared. we classified the daily deal users in our sample into three categories: (1) novice users. defined as those who purchased between 5 and 10 daily deals (N = 195) and (3) heavy users. Figure 1 summarizes the distribution of daily deal users (and non-users) in the online panel employed for the survey. and (4) I purchased my first daily deal very recently. I am very experienced with them. (2) experienced users. (3) I have been purchasing daily deals only for a short time. most of the novice users (or 61%) described themselves as “very inexperienced” or “not that experienced” with daily deals.3%) called themselves “quite experienced” or “very experienced” with daily deals. defined as those who purchased 11 or more daily deals (N = 92). (2) I have been purchasing daily deals for a while now. 7 .For inter-group comparisons. defined as those who purchased between 1 and 4 daily deals in the past (N = 359). I consider myself very inexperienced with them. These labels also represent the self-perceived experience of respondents with daily deals.1%) and a vast majority of the heavy users (91. Specifically. After accounting for all potential respondents who were screened out because they had never purchased daily deals. I consider myself quite experienced with them.
given the vast number of daily deal non-users.32 4.g. we explore the reasons why non-users have not adopted daily deals in more detail.25 3. We asked respondents who had purchased daily deals to provide their level of agreement or disagreement (on 1-7 scales anchored with “Strongly disagree” and “Strongly agree” labels at the ends) regarding a number of positive (e. I buy products and services I normally would not buy I spend more money on certain products and services because of daily deals 6 5 4. In this section of the report.g.. indicating that as of August 2011. Later in this report. and spend more on certain products or services. Obviously. increased buying and spending because of daily deals) aspects of daily deals. Figure 2: Perceptions of buying & spending by daily deal user type 7 Because of daily deals.15 4. we examine how these three daily deal user groups vary in what they think of daily deals and how they intend to use these deals in the future. The first set of survey measures concerned the extent to which daily deals made consumers buy products and services they normally would not buy. Buying and spending more because of daily deals. enthusiasm regarding daily deals) and negative (e.23 4. there appears to be significant room for growth for the daily deal industry.09 4 3 2 1 Novice DD Users Experienced DD Users Heavy DD Users 8 .. Both measures represent potentially negative perceptions of daily deals. Figure 2 provides the average responses of the three daily deal user groups. 1.66 4. just over 16% of individuals have purchased daily deals.base.
05) user groups had significantly higher mean responses than novice daily deal users. both experienced (M = 4.05.001. an ANOVA revealed a significant main effect of user type (F(2. The results of an Analysis Of Variance (ANOVA) showed there was no effect of user type on the response to this question (F(2. in the sample.001).39. There is no statistical difference between the groups on this measure14.Figure 2 indicates none of the users seems to believe that they are buying unusual products (ones they normally would not buy) because of daily deals to a significant degree (the means for all three groups are near the mid-point on the 7-point strongly disagree – strongly agree scale). To address the fatigue or unabated enthusiasm question more directly. even within these low levels across the sample of daily users.001).09. the levels of agreements for both measures are relatively low (substantially less than 4 on 1-7 scales).94. p < .” In this case. Changes in buying and amount of interest in daily deals over time.643) = .001) or the novice (p < . Figure 3 summarizes the mean responses of the three user groups. Post-hoc pairwise comparisons of group means showed that both the experienced (p < . p > . p < .50. if it exists.643) = 12. allowing us to find evidence of daily deal fatigue. we asked daily deal users to indicate their agreement to: “I buy daily deals less often than I used to” and “I have lost interest in daily deals over time”. A very similar pattern of results was obtained for the measure “I have lost interest in daily deal sites over time. As can be seen from the figure.66)15. the experienced and the heavy daily deal users did not vary from each other. The novice user group had a significantly higher level of agreement when compared to either the experienced or the heavy daily deal users.643) = 10. the results of an ANOVA found a main effect of user type (F(2.643) = 8. Post-hoc comparisons of group means showed that the heavy daily deal users had significantly lower agreement levels than either the experienced (p < . 15 In the case of this measure. the ANOVA again found a significant main effect (F(2. comparatively speaking. However.01) and the heavy (p < . Furthermore. 16 For the measure “I buy daily deals less often than I used to”. Both measures elicit potential changes in enthusiasm among daily deal users over time. p < .23) and heavy daily deal users (M = 4. However. 2.15) clearly feel that they spend more money on certain products and services because of daily deals to a significantly greater extent than novice users do (M = 3.001) user groups. those who have purchased 11 or more deals in the past (the heavy users) report significantly greater disagreement that they are buying deals less often as well as with the statement that they have lost interest in daily deals over time16. 14 9 .
8% 2.3% 10.51 3.8% 0% Strongly disagree Disagree Somewhat disagree Neutral Somewhat agree Agree Strongly agree 10 .61 2 1 Novice DD Users Experienced DD Users Heavy DD Users To probe this issue further.1% 14. we wanted to see what proportion of the experienced and heavy daily deal users are susceptible to daily deal fatigue.0% 21. Figure 4 provides the frequency distributions of responses for the two measures (‘buy deals less often’ and ‘lost interest’) for the experienced and heavy users.83 2. operationalized as the respondents who either “agree” or “strongly agree” with these two statements.Figure 3: Frequencies of buying and interest in daily deals 7 I buy daily deals less often than I used to 6 I have lost interest in daily deals over time 5 4 3.68 3. For this analysis.96 2.8% 10% 9.3% 13.6% 25% 24.40 3 2.6% 15% 14.3% 20% 19.2% 5% 3. the novice daily deal users were excluded. Figure 4: Frequency distribution of experienced & heavy user responses 40% Experienced and Heavy Daily Deal Users I buy daily deals less often than I used to I have lost interest in daily deals over time 35% 30% 28.5% 18.1% 5.6% 14.
20 5 4. the percentage is even lower. these results provide no evidence of daily deal fatigue among our study’s respondents. In the case of “I buy daily deals less often than I used to”. only a handful of the experienced and heavy daily deal users ‘agree’ or ‘strongly agree’ to the two statements.70 5. On the flip side.32 3 3.0%.43 3. at just 8. Taken together.51 2 1 Novice DD Users Experienced DD Users Heavy DD Users 11 .9% of respondents indicate agreement or strong agreement. and to use Facebook and Twitter to share deals that they like with their social network? These measures can be construed as another aspect of daily deal fatigue. Figure 5 summarizes their responses. 3. Figure 5: Checking daily deal emails and sharing deals with others 7 I check daily deal offers in my email every day I share daily deals I like through Facebook and Twitter 6 5. If anything. the results indicate the opposite: shoppers who have purchased daily deals to a greater extent in the past continue to remain enthusiastic about such deals to a significant and broad-based degree. Positive enthusiasm regarding daily deals.As can be seen from Figure 4.73 4 3. since lower interest in checking emails from daily deal sites. only 12. or sharing appealing deals with others is indicative of flagging enthusiasm. to what extent are daily deal shoppers continuing to check daily deal offers emailed to them. and for “I have lost interest in daily deals over time”.
the experienced group had a significantly higher agreement level than the novice group (p < . the level of agreement is significantly higher for experienced users when compared to novice users. we asked about the extent to which respondents ended up not using the daily deal within the specified time An ANOVA for this measure found a main effect of user type (F(2. 17 12 .05) or the novice (p < . the respondents are not as enthusiastic about sharing favored offers through social networking sites such as Facebook or Twitter. It appears that the “social” aspect of daily deals is not as important to our sample of respondents as is the personal aspect of looking for and receiving a good deal. Additionally. They clearly indicate that the enthusiasm for daily deals remains at high levels.005). 4. Other negative aspects of daily deals.62. We also examined three other potentially negative perceptions regarding daily deals. Even more encouraging. and is undiminished among the heavy daily deal users. we find that the heavy daily deal users are the ones who are the most interested in checking their email every day for daily deal offers. all three user groups indicate agreement (higher than 4 on a 1-7 scale). Instead. and finally. the second asked about the extent to which the person felt overwhelmed by the number of daily deal offers received every day. and for heavy users when compared to either one of the other two groups17. These results.001).001) user groups.When asked about checking emailed daily deal offers every day. Post-hoc comparisons of group means showed that the heavy deal users had significantly higher agreement levels than either the experienced (p < . coupled with the results obtained for respondents’ reported changes in buying and their levels of interest in daily deals offer unvarnished good news for daily deal site operators. Interestingly.643) = 14. Furthermore. The levels of agreement in this case are low for all three groups (less than 4 on the 1-7 scale) and there are no statistical differences between them. these findings show that none of the user groups seem to indicate any slowing in their purchasing activity of daily deals over time nor in their responsiveness to offers received through the email. The first measure concerned the extent to which the individual purchased daily deals impulsively. This is yet another data point contradicting the assumption of daily deal fatigue among consumers. p < .
41 3 3.period. however.005) and marginally lower than the experienced users (p < . the average levels for the groups for all three measures are below four. Figure 6: Negative aspects by daily deal user type 7 I often buy daily deals impulsively. Figure 6 summarizes the responses by user group. p < . the differences between the groups are interesting. what emerges from these results is a consistently high level of enthusiasm for daily deals among shoppers who use daily deals the most. the heavy daily deal users again indicate feeling overwhelmed due to the volume of daily deal offers received to significantly lower levels than the other two groups18. and by and large does not view not being able to use the daily deal within the specified time period to be an issue for them. Everyone indicates equal degrees of (moderate) agreement with the fact that they purchase daily deals impulsively. Furthermore. an ANOVA revealed a significant main effect (F(2.643) = 5. and post hoc comparisons showed the heavy users to be significantly lower than the novice users (p < . I feel overwhelmed by the number of daily deal offers I receive in my email every day.82 2. I often end up not using the daily deal within the specified time and lose money 6 5 4 3.83 2. without prior planning or deliberation.81 3. losing money on the deal.005). 18 13 .60. indicating neutral to low levels of overall agreement regarding the three potentially negative aspects of daily deals. Overall.05 3.10).32 2. Although recent articles in the press and by In the case of feeling overwhelmed.64 2 1 Novice DD Users Experienced DD Users Heavy DD Users Interestingly.53 3.65 3.
58 3. 5.33 5. our data find no evidence to support this phenomenon. Positive aspects of daily deals.74 4 3 2 1 Novice DD Users Experienced DD Users Heavy DD Users While all groups report relatively high levels. In fact. Figure 7: Positive aspects by daily deal user type 7 Daily deals help me save money on things I would have bought anyway Daily deals have become an important part of my shopping behavior 6 I intend to purchase a daily deal within the next one month 5. (2) the extent to which the deals have become an important part of their shopping behavior.49 5.10 5 4.29 5. the more enthusiastic they are about daily deals. we consistently find the opposite pattern of results here: the more experienced the daily deal users are as defined in terms of the number of deals purchased in the past. and their self-assessment of experience with daily deals.05 5.99 4.82 5. Finally. They not only seem receptive to receiving daily deal offers. we asked daily deal users about three positive aspects of daily deals: (1) the extent to which such deals help them save money on things they would have purchased anyway.marketing experts have discussed phenomena such as “Groupon fatigue”. and (3) their intentions to purchase a daily deal within the next one month. the heavy users report the highest average 14 . but they also feel like they are able to redeem purchased deals before time runs out. Figure 7 summarizes the average response levels for the three shopper groups.
Travelzoo. Note that our questions about these sites were limited to those respondents who had purchased at least one daily deal in the past. Finally.05 level of significance. Not surprisingly. and are significantly higher than the novice users in all three cases19. 19 15 . Figure 8 summarizes the percentages of those aware of each site and those who use the site. use. Gilt City. both experienced and heavy users have done so to significantly greater degrees. and also whether they used the site “sometimes” or “often”. all three groups report high levels of intentions to purchase another daily deal within the next one month. and Restaurant. LivingSocial. where the novice users still haven’t made daily deals an important part of their shopping behavior. We combined the responses for the two types of use to calculate the total percentage of respondents that used each of the daily deal sites in our list. V. Again. and most heartening from the viewpoint of daily deal sites. For all three measures. All three user groups confidently agree that daily deals help them save money on things they would have purchased anyway. Furthermore. eversave. and the heavy users have higher purchase intentions than either the novice or the experienced users. posthoc comparisons revealed that the heavy user group had significantly higher means than the novice group in all three cases at the p = 0. ScoutMob. The daily deal sites included in this analysis were: Groupon. BuyWithMe. Awareness and use of daily deal sites.com.levels (greater than 5 on 1-7 scales) for all three measures. 1. and perceptions of different daily deal sites. User perceptions of different daily deal sites We asked daily deal users a number of questions regarding their awareness. and therefore indicate the opinions of daily deal shoppers. Participants indicated whether they were aware of each site. there are systematic inter-group differences such that the experienced user group has higher purchase intentions than the novice user group. OpenTable. individual ANOVAs revealed significant main effects of user groups.
We then used the frequencies of their choices to calculate a “heart share” metric for each site. the largest proportion or 56.4% 46.8%). Heart share. Figure 9 provides the heart shares for the daily deal sites in our sample.6%). Of any site. which we define as the proportion of the respondents who designate the daily deal site as their favorite. there is a steep drop-off.8% 10.5%).8%) and OpenTable (18.5% 7. From these usage numbers. providing evidence of a largely fragmented market.1% 42. The usage numbers are equally interesting and counter-intuitive. 2. and LivingSocial (80. 16 .3% 56. followed by Restaurant. Again. awareness levels are the highest for Groupon (93.2% 45.1% 40% 32.3% use Groupon.1%) and LivingSocial (45.2%). awareness levels drop off significantly. where use by consumers is concerned.1% 22.2%).5% 30% 31.1%).com (83. followed by Restaurant. the next most used site is eversave (19.9% 20% 18.Figure 8: Awareness and use levels by daily deal site 100% 93.1% 80% 70% 60% 56. We also asked respondents to tell us which of the daily deal sites was their favorite one.8% 50% 48.8% 19.6% 90% % Aware of DD site 80.2% 10% 0% As seen from the figure. Beyond these three sites. followed by Travelzoo (18. we can conclude that virtually all the daily deal sites (including Groupon) have significant opportunities and room to grow in the future.5% 18.com (46.2% % Using DD site 83.5% 10.
We aggregated the responses for each site and divided by the total base of daily deal users. Restaurant.3 As can be seen. Where the two major daily deal sites are concerned.3 43. followed by OpenTable (6.2). indicating its relative brand strength.3 6. we calculated a “fatigue” metric for each daily deal site.3). 17 .0 3.3.3 5.Figure 9: Heart share by daily deal site 50 45 40 35 30 25 20 16.2 15 10 5 0 9.3 2. which is more than twice as much as the next daily deal site.9 7. 3. at just 7. Fatigue with daily deal site use. the heart share of LivingSocial is relatively very small.3 (or just over one-sixth the value of Groupon). Finally. and may be a cause for concern for LivingSocial given the relatively few daily deal users who consider it as their favorite site. This was done based on responses to the measure “I don’t use this site as much as I used to”. these numbers are positive from the standpoint of Groupon.3 3.1 3. Figure 10 summarizes the results.1) and eversave (5.com (16. Interestingly. Groupon has by far the largest heart share of 43.
5% 2. Why daily deal non-users have never purchased a daily deal In our study sample.1% 2.1% 2. these results are in line with our findings from earlier in the report that fatigue with daily deals is a relatively rare phenomenon among daily deal users. 18 . On this metric.Figure 10: Percentage fatigued with site by daily deal site 5.com. the fatigue levels are low for all sites.6% 4.9% 3. VI.0% 4. too.0% 2.0% 1.0% 3.5% 3.6% 2.7% 2.5% of respondents indicating that they are fatigued with the site.5% 1.6% 3. Overall.5% 1. Figure 11 summarizes the percentage of respondents that chose each reason for not having purchased a daily deal in the past as applicable to them. we provided these individuals with a list of ten reasons. They could choose as many or as few of the ten reasons as were applicable to them. a total of 318 respondents were included who had never purchased a daily deal in the past.0% 2. To find out why.6% of respondents admit that they use the site less than they used to. The highest value is for Restaurant. Groupon is the best-performer.0% 0.5% 0. in which case 4.5% 4. with only 1.4% Consistent with our earlier findings. and asked them to indicate which one(s) of them explained why they had never purchased a daily deal.
9% 15. is that they did not know about daily deals.6% 2. or coupons in general. by 45.3% of non-users.Figure 11: Reasons daily deal non-users have not purchased a daily deal 50% 45.0% I just never I am I feel guilty I feel like I thought of uncomfortable about using will receive buying one using coupons coupons poor service if I use coupons 3. For instance. 19 .0% 1.4% 25% 20% 17.8% 0% I did not know Daily deals are I don't like about daily not available using any deals in my area types of coupons I don't like Businesses I think daily buying things that offer daily deal coupons online deals are not are bad for appealing to businesses me As can be seen from the figure. the next most commonly given reasons were “I just never thought of buying one” (27. Most daily deal non-users have not used them simply because they don’t know about them or don’t have access to them. particularly through broadly accessed means such as television advertising. As the major daily deal sites continue or even ramp up their marketing activities targeted at increasing awareness. the greatest hurdles to the trial and adoption of daily deals appear to be awareness and access about such deals. our results indicate that adoption rates of daily deals among consumers should continue to grow. only 2. very few non-users gave reasons having to do with not liking or not wanting daily deals in particular. only 1. On the other hand.2% 5% 6. These results suggest that among the daily deal non-user base.5% 0. and enter smaller cities and towns throughout the US.4% of respondents) and “Daily deals are not available in my area” (17.3% 45% 40% % of respondents indicating reason 35% 30% 27. Relatedly.6% of daily deal non-users said they had not purchased a daily deal because such deals are bad for businesses. the most frequently given reason.9%).7% 15% 10% 7.6% of this group indicated that they are uncomfortable using coupons and not a single daily deal non-user indicated that they felt guilty about using coupons.
02 .13 .22 -.00 .00 .05 level of significance. Table 1: Results of regression of # daily deals purchased on demographic characteristics Variable Standardized Regression Coefficient -.67 . Demographic predictors of daily deal use.13 . we included the following demographic variables of respondents: their gender.40** 6. those living in either suburban or in urban areas are likely to have purchased significantly more deals. age. Table 1 summarizes the results.23 5. Demographic and psychological predictors of daily deal use In this last section of the report. urban consumers have purchased 20 . and the demographic variables as predictors. age is a negative predictor indicating that the younger the consumer. the more are the daily deals purchased. we examine how demographic and psychological characteristics of consumers predict daily deal use. These results indicate that four predictors explain the number of daily deals purchased by respondents. Second.05** 3. annual household income is a positive predictor. Our goal here is to provide both merchants and daily deal site operators with a better understanding of the profile of daily deal users. indicating that higher annual household income is associated with the purchase of more daily deals. marital status.VII.00 .99 .10 level of significance.00 -. R2 = .01 . To do so.42** -.017 -3. we focus on trying to understand which consumers are likely to use daily deals to a greater extent. Perhaps not surprisingly. Finally.19 . place of residence (whether urban or suburban).20 . First.43 . and surprisingly. *indicates statistically significant coefficient at the p = . We conducted a regression with the number of daily deals purchased (0 to 11+) as the dependent variable. and number of children under 18 in the household.23** . In the analysis.82 .00 . male = 0) Age Annual household income Whether single Whether married Whether live in urban area Whether live in suburban area Number of children in household under 18 -.01 t-value p-value Gender (female = 1. annual household income.85 **indicates statistically significant coefficient at the p = .11.
23 Tian. Daniel J. age (negatively). The only difference was that in this case. we wanted to see if greater daily deal use is associated with greater buying impulsiveness tendencies.” Journal of Consumer Research. Consumer psychologists call this basic motivation as “Need for Uniqueness. the suburban respondents in Table 120. William O. In the current analysis. 57. “Consumers’ Need for Uniqueness: Scale Development and Validation. marital status or the number of children in his or her household do not influence the purchase of daily deals. Prior research has shown that highly impulsive buyers experience spontaneous buying stimuli to a greater degree and their shopping behavior is more "open" and unplanned. the suburban dummy variable was no longer a significant predictor. immediately. 21 Ozer. 50-66 21 . referring to the person’s selection or use of products and brands that deviate from group norms and thus risk social disapproval that consumers withstand in order to establish their differentness from others23. Fisher (1995). Dennis W.” Annual Review of Psychology. receptive to sudden. Hunter (2001). 305-313. Here. It can be argued that daily deal shoppers make such purchases. income (positively) and urban residence (positively) predicts being a heavy daily deal user. and kinetically.” Journal of Consumer Research. and Robert J. Research has shown that people are motivated to perform many volitional actions such as purchasing and using daily deals to different degrees because of stable underlying individual differences21. Psychological predictors of daily deal use.” UCC is one aspect of need for uniqueness. 22 Rook. unreflectively. unexpected buying ideas22. We obtained substantively similar results as those in Table 1. “Normative Influences on Impulsive Buying Behavior. Thus. Buying impulsiveness characterizes a consumer's tendency to buy spontaneously. we examine the effects of the following six individual differences: Buying impulsiveness. as evidenced by the larger standardized regression coefficient for the urban vs. 0 otherwise) as the dependent variable and with the same set of demographic variables as Table 1 as the predictors.more daily deals than suburban consumers. Bearden and Gary L. to 20 We also conducted a binary logistic regression using heavy daily deal purchase (1 if respondent was a heavy daily deal user. “Personality and the prediction of consequential outcomes. this analysis shows that the individual’s gender. at least in part. Finally. 22(3). 401-421. Unpopular Choice Counterconformity (UCC): Many consumers are motivated to behave in ways that establish them as unique or different from others. Kelly Tepper. and Verónica Benet-Martinez (2006). 28(1).
daily deals as money-saving tools or as temptations to shop more – CSSC is expected to have a positive or negative effect on purchasing daily deals. Nenkov (2011). “Consumer Spending Self-Control Effectiveness and Outcome Elaboration Prompts. and expand their palette of experiences. by their very nature. daily deals can be viewed as double-edged swords.” Journal of Marketing. and Linda L. Consumers vary considerably in the degree to which they prefer to form loyal. 24 22 . Consumers who score high on this trait have a greater propensity to share information with others and usually have greater interpersonal influence.. 83-97. CSSC is defined as the defined as the individual’s ability to monitor and regulate his or her spending-related thoughts and decisions in accordance with self-imposed standards24. Price (1987). and one concern which has been raised by prior studies is that daily deals. “The Market Maven: A Diffuser of Marketplace Information. Bearden and Gergana Y. on the other. 24(4). 25 Feick . Consumer Spending Self-Control (CSSC): From a personal finance perspective. the consumer saves substantial amounts of money on the purchase. and other facets of the market. Because daily deals allow consumers to try out new products and services. Relational Orientation: We also wished to examine whether daily deal users are transactionally or relationally orientated towards the firms they do business with.establish their originality. longer-term relationships with products and brands26. they stimulate shopping for products and services that otherwise would not have been purchased. However. 51(1). Kelly L. Market Maven: Market mavens are individuals who have information about many kinds of products. places to shop. Susan (1998). “Consumers and their brands: Developing relationship theory in consumer research. On the one hand. and initiate discussions with and respond to information requests from other consumers25.” Journal of the Academy of Marketing Science. Lawrence F. Depending on which edge of the two-edged sword is more prominent in shoppers’ minds . attract transactionally oriented shoppers who have no interest in any future Haws. William O. 343=353. 26 Fournier. In this context.” Journal of Consumer Research. we wished to examine if the individual’s market maven trait can predict the use of daily deals. in press. and we wanted to see if UCC would be a positive predictor of daily deal purchase.
I buy things according to how I feel at the moment. 23 . think about it later" describes me. I closely monitor my spending behavior. Netemeyer and Scot Burton (1990). 2. Coupons have caused me to buy products that I normally would not buy. 54(3).83 Coupon Proneness (COUPON) . 3. 1.purchase from the store. Measures I often buy things impulsively. Having objectives related to spending is important to me. I like to develop long-term relationships with products and brands I like. I tend to remain loyal to it for a long time. I am more likely to buy brands for which I have a coupon. When I go out with friends.87 Relational Orientation (RO) . My friends think of me as a good source of information when it comes to new products or services. 2. 2. . Reliability . I carefully consider my needs before making purchases. measures. I rarely act in agreement with what others think are the right things to buy. I keep track of what I am spending. 54-67. I like helping people by providing them with information about many kinds of products. “Distinguishing Coupon Proneness from Value Consciousness: An Acquisition-Transaction Utility Theory Perspective. "Buy now. 3. I enjoy using coupons regardless of the amount I save by doing so. 4. we can say that these shoppers may be less sensitive to the actual size of the deal being offered. 2. 3. 2. and their reliability Construct Buying Impulsiveness (IMPULSE) 1. When I find a brand I like. which is defined as the increased propensity of the consumer to respond to a purchase offer because the promotion makes the purchase appear attractive (regardless of how much money is actually saved)27..52 Consumer Spending SelfControl (CSSC) . I have often violated the understood rules of my social group regarding what to buy or own.” Journal of Marketing. 4. 1. I like introducing new brands and products to my friends. 1. Coupon Proneness: The final psychological characteristic we examine in this study is the shopper’s coupon proneness. Table 2: Psychological constructs. 1. Richard G. 2. To the extent that daily deals attract coupon prone shoppers. Sometimes I am a bit reckless about what I buy. 3.78 Market Maven (MAVEN) .69 27 Lichtenstein. Donald R. I am loyal to companies that treat me well.85 Unpopular Choice Counterconformity (UCC) 1. 3.
However. R2 = .00 .05 level of significance.43** -.82** .54 .25 -. indicating that consumers for whom being distinctive through purchase of fringe brands or products is important are likely to purchase fewer daily deals.28** 6.65 . and the six psychological variables as predictors.Table 2 above summarizes the measures used in the survey to assess each of these psychological constructs and shows that each of the construct’s measures had adequate reliability. Table 3 summarizes the results.62 2. the measures were each averaged before use.09. this result reflects the appeal of daily deals for mainstream shoppers.02 -.33** -2. First. Consequently. which is in line with our earlier finding in this report that shoppers do not view their daily deal purchases as impulsive. *indicates statistically significant coefficient at the p = . buying impulsiveness does not predict daily deal usage.02 . suggesting that a key motivator for daily deal purchase is trying out new products such as restaurants to be able to talk about these new experiences and make suggestions to friends 24 .46 -2. interestingly.01 **indicates statistically significant coefficient at the p = . We conducted a regression with number of daily deals purchased (0 to 11+) as the dependent variable.10 t-value p-value Buying Impulsiveness Unpopular Choice Counterconformity Consumer Spending Self-Control Market Maven Relational Orientation Coupon Proneness .02 . In a sense.08 -.09 . unpopular choice counter-conformity is a negative predictor. These results show that four of the shopper traits predict daily deal usage. indicating that consumers who monitor and regulate their spending to a greater degree use fewer daily deals. Third.02 . Second. the shopper’s market maven trait is the strongest positive predictor of their daily deal usage. Table 3: Results of regression of # daily deals purchased on psychological characteristics Variable Standardized Regression Coefficient .10 level of significance. consumer spending self-control is a negative predictor of daily deal use.
Limitations of this study The current study has a number of limitations that should be noted to be able to accurately assess its results. VIII. and do not think about spending issues all the time. for any number of reasons. and live in urban or suburban areas. the sample is a convenience sample of respondents. higher income. we have no particular reason to believe that this is the case to any significant extent. First. and likely to be less sensitive to the actual terms of the offer made by the merchant. Have little interest in being seen as different or “fringe” in their shopping patterns Not very careful with personal finances. we found coupon proneness to be a positive predictor. On the other hand. raising the possibility that individuals may use daily deals to a greater extent simply because the item is being promoted. relational orientation was not found to be a predictor. Third. those who chose to respond to this survey could be different from those who chose not to respond and such a difference could results in biases in our findings. Second. suggesting that daily deals do not appear to be attracting particularly transactional or relational consumers to greater degrees. responses are self-reports and reflect the 25 . although we have a diverse sample of respondents covering a range of demographic characteristics. Finally.thereby influencing them. and as such is not meant to represent the US consumer population in precise ways. It was obtained from members of a large online panel. like any survey. To summarize. what emerges from these results is the following profile of daily deal users: DAILY DEAL SHOPPER PROFILE • • • • Younger. However. Interested in trying new products or services so as to have new experiences to talk about and influence others. • Attracted to a deal because it is a deal.
asking for deep discounts28. and high levels of future purchase intentions among every one.opinions of respondents. And they have actively integrated daily deals into their normal shopping behavior. Joseph W. “The Effect of Discount Frequency and Depth on Consumer Price Judgments. Probing deeper into their motivations for purchase See Wertenbroch. When consumers are asked how sensitive they are to price or how much of a discount they require. Urbany (1999). IX. 228-241 for a nice discussion of this issue along with a possible solution. they are subject to change and could have been provided strategically. 28 26 . Yet. Terence A. As such. They strongly believe that they are saving money on things they usually buy when using daily deals. Even looking beyond the heaviest daily deal users. in this behavior. Carl F. “Measuring Consumers' Willingness to Pay at the Point of Purchase. provide more accurate insight into how they will actually behave. Mela. even extreme enthusiasm with daily deals. as in other areas of life.” Journal of Marketing Research. The results of the present study reveal a consistent pattern of findings that brings into question one of the fundamental tenets held implicitly or explicitly by most in the daily deal industry: “Consumers have to be offered deep discounts to get them to buy daily deals. The heaviest daily deal users are found to be the most enthusiastic ones. 99-114.. follow from the findings of this and other daily deal studies conducted by us. they are notoriously strategic. between what people say and what they actually do. often a substantial one. They look forward to receiving their daily offer in the email. 29 Alba. Concluding Thoughts We conclude this report with thoughts that although somewhat speculative. we find an undercurrent of genuine appreciation and interest regarding daily deals among the other user groups. Klaus and Bernd Skiera (2002). 26(2). we have no particular reason to suspect that this is the case. Shimp and Joel E. Consumers’ motivations. rather than their stated intentions. 39(2). there is a gap. Their use of daily deals is here to stay.” Instead of fatigue with daily deals. although again. They may even threaten to stop buying the product if the discounts are restricted29.” Journal of Consumer Research. the picture that emerges in our research is one of users having an unabated.
Impulsiveness does not play a role in how many daily deals are purchased nor does a transactional orientation such as a “let me get the most I can out of the merchant” mentality. Available online at: goo. the findings of this study raise the possibility that a majority.). Available online at: goo. and prevent the prognostications of the industry’s demise from coming true. and the terms of the deal a little more well-defined and constrained. and in particular. “How effective are Groupon promotions for businesses?” Rice University Working paper. and the pleasure of getting a deal outweigh the specific depth of the discount received.gl/gPMPZ.both site operators and merchants --.to turn their attention away from offering deeper and deeper discounts and making blanket offers which bruise the merchants more often than not30. “ 27 . Utpal M. however. we believe that such a shift will mark the next step in the daily deal industry’s evolution. “How businesses fare with daily deals: A multi-site analysis of Groupon. if not most users. Travelzoo. Although difficult to do because of the greater thought. may buy daily deals even if the offer is a little less sweet. and Dholakia Utpal M. 30 See for example Dholakia. the continued operation of the local merchants that they like and want to support. In fact. and knowledge of the business and customers involved. nowhere in our results do we find a widespread and firm insistence on getting deep discounts among daily deal shoppers. (201(2010). to more creative and subtle ways of making offers that appeal to consumers and benefit merchants alike. effort.reveals that being able to try new experiences and talk about them to others.” Rice University Working paper. Especially when it is clear to shoppers that the sustainability of daily deals. depends on reaching a better balance between merchant welfare and consumer savings from such deals.gl/5YU1S. Although people naturally want to save money and get a good deal. Perhaps now is the time for the daily deal industry --. LivingSocial. Opentable. We note. and Buywithme promotions. that more research focused on examining this specific issue is needed to draw definitive conclusions. (2011).
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