Deal me in! Assessing Consumer Response to Daily-deal Sites

Int. J. Internet Marketing and Advertising, Vol. 8, No. 3, 2014 161

Copyright © 2014 Inderscience Enterprises Ltd.

Deal me in! Assessing consumer response to daily-deal sites

Kelty Logan* University of Colorado at Boulder, 478 UCB, Boulder, CO 80309, USA Fax: +1-303-492-0969 Email: [email protected] *Corresponding author

Laura Bright School of Journalism and Strategic Communication, The Bob Schieffer College of Communication, Texas Christian University, 2805 S. University Drive, Fort Worth, TX 76109, USA Fax: +1-817-257-7233 Email: [email protected]

Abstract: Daily-deal websites, such as Groupon and LivingSocial, have become increasingly popular in the USA. This research applies a theoretical model, the Theory of Planned Behaviour, to consumer use of daily-deal websites. An online survey was fielded among 502 US social media users. Structural equation modelling was used to test the proposed model. Consumers’ attitudes towards the use of daily-deal sites, their perceptions regarding referent approval, and their self-confidence regarding their ability to use social media effectively all positively affect their intentions to use daily-deal sites. Neither brand consciousness nor advertising scepticism significantly affected attitude toward the use of daily deal sites, however information seeking behaviour did positively and significantly impact attitude. This suggests that consumers are open to trying new brands while at the same time wanting clear and concise information about the daily deal offer before making a purchase.

Keywords: interactive; theory of planned behaviour; daily-deal websites; Groupon; mobile marketing; social media; consumer promotion.

Reference to this paper should be made as follows: Logan, K. and Bright, L. (2014) ‘Deal me in! Assessing consumer response to daily-deal sites’, Int. J. Internet Marketing and Advertising, Vol. 8, No. 3, pp.161–180.

Biographical notes: Kelty Logan is an Assistant Professor of Journalism and Mass Communication at the University of Colorado at Boulder. She received her PhD from The University of Texas at Austin. She has more than 20 years of experience as a Marketing Executive in the advertising, broadcast network, and product marketing industries. Her research focuses on the challenges of the new media environment. In particular, she is fascinated by the changing patterns of media usage resulting from digital technology and its impact on the advertising industry. Her refereed publications have appeared in the Journal of Marketing Communications (2013), International Journal of Integrated Marketing

162 K. Logan and L. Bright

Communications (2013), Journal of Research in Interactive Marketing (2012), and Journal of Advertising Research (2011).

Laura Bright is an Assistant Professor of Strategic Communication at Texas Christian University. Her research interests focus on consumer interactions in online environments, including social networking sites, customised websites, RSS feeds and new media applications. Professionally, she has spent over a decade working in the interactive advertising business in Austin, Texas. Her refereed publications have appeared in the Journal of Marketing Communication (2012), Journal of Interactive Advertising (2008), Journal of Research in Interactive Marketing (2011), International Journal of Integrated Marketing Communications (2012), and the International Journal of Electronic Business (2008). Her work also appears in two recently published books on New Media and Technology, Handbook of Research on Digital Media and Advertising: User Generated Content Consumption (2010, IGI-Global) and Immersed in Media: Telepresence in Everyday Life (2010, Erlbaum).

This paper is a revised and expanded version of a paper entitled ‘Deal me in’ presented at The Direct and Interactive Research Summit, Las Vegas, NV, 13–14 October 2012.

1 Introduction

Since 2008 Americans have been coping with the gravest economic recession since the Great Depression of the 1930s. As consumers, they have responded to the economic challenges by reducing consumption, increasing selectivity, and increasing coupon usage. They are not only more likely to use coupons delivered by mail, newspaper, or stores; they are more likely to download coupons (Deloitte, 2010). In fact, 25% of US shoppers are likely to use coupons sent to their mobile devices. This behaviour is even more pronounced among younger shoppers. Forty percent of US shoppers aged 18–34 are likely to use coupons sent to their mobile devices (BrandSpark, 2010). This study examines factors that influence daily-deal website usage among young adults (aged 18–34). Specifically, it seeks to apply a theoretical framework, the theory of planned behaviour, in regard to the role of individuals’ beliefs, attitudes, and referent influence when forming intentions to use a daily-deal site. The remainder of this paper will review the current, relevant consumer promotion trends, the pertinent literature regarding coupon promotions, and support for using the proposed theoretical framework for consumer acceptance of daily-deal sites. Following a discussion of the research hypotheses, method, and results, the paper will provide a discussion of the conclusions, research limitations, and suggested areas for further research.

2 Consumer promotion trends

2.1 SoLoMo marketing

US Marketers have responded to consumers’ increased demand for coupons by focusing on mobile apps requiring more consumer data in exchange for discounts, and segmenting that data to better target and customise promotions. These trends are consistent

Deal me in! Assessing consumer response to daily-deal sites 163

with the growing interest in ‘SoLoMo’ strategies which focus on social, mobile, and local approaches to promotions. While the yellow pages, classified ads, and – more recently – Craig’s List have dominated the local media space, the SoLoMo emphasis incorporates the concept of hyperlocal search. The phrase ‘hyperlocal search’ emerged when consumers began to use search engines to search online for the latest information, news and deals in a specific geographic area. The emergence of smartphones and tablets that integrate geo-location technology allowed marketers to develop a mobile-centric version of ‘hyperlocal search’ that put consumers in touch with proximate goods and services such as nearby restaurants, stores, and entertainment. SoLoMo marketing strategies not only inform potential customers of their location, however. They also incorporate promotional incentives. Using their smartphone screen to verify and redeem the offer, customers can obtain discounts on goods and services ranging from a ‘buy one get one free’ offer at Starbucks to a ‘limited time offer’ for a health club membership.

2.2 Daily-deal websites

The emergence of daily-deal websites such as Groupon and LivingSocial was a natural evolution of the SoLoMo trend. Daily-deal sites comprise a $2 billion industry that has grown more than 300% since 2007. Groupon and LivingSocial account for more than half of the revenues (IBISWorld, 2012). In fact, it appears that the industry is consolidating. Nearly one-third of the daily-deal sites in the USA shut down during 2011, including entries by Facebook and Yelp (Raice, 2011). Groupon remains the daily-deal site giant, accounting for approximately 12 million unique visitors during December 2011 compared to 4 million for LivingSocial (Schonfeld, 2012).

Daily-deal sites offer discounts on goods and services for a limited time (typically 24 to 36 hours). Customers purchase vouchers to be redeemed for the physical good or service. The industry’s revenue includes the price paid by the customer for the voucher or the coupon; profit is earned after paying an agreed-upon percentage of the purchase price to the featured business. Groupon and LivingSocial have both launched mobile applications allowing users to buy deals on their phones and retrieve them using the screen as a coupon. Importantly, the growth of daily-deal sites has been fuelled by local businesses rather than national brands (Weiss, 2012). Daily-deal sites offer small business advantages compared to newspaper, radio, and online advertising because they do not charge for placement and provide targeted distribution. Groupon, for example, is able to contact potential customers on the basis of personal information that has been provided by their members.

About 15% of Americans over 12 years of age are registered users of a daily-deal site. Users of daily-deal sites are more likely to be female (66%), between the ages of 25–54 (70%), and more affluent than the average population. More than half of daily-deal site users joined in the past year and 98% own a cell phone. Daily-deal site users are also more likely than the average population to use social media. For example, 83% of daily-deal site users have a profile page on Facebook compared to 54% of the US population over the age of 12 (Edison Research, 2012). While there is no evidence that online daily-deal sites are affecting traditional couponing services, the traditional players such as Valassis and SmartSource, are worried because they have developed an entirely new consumer promotion concept. In fact, daily-deal sites such as such as Groupon and LivingSocial differ from traditional couponing services in several ways. Daily-deal offers must be purchased by the customer in advance thus, the redemption rates are closer to


85% (Neff, 2011) compared to 1.2% for newspaper-delivered coupons and 5–20% for online coupons (Experian, 2009). Unlike traditional coupon offers, the daily-deal sites typically require a minimum number of participants to activate the offer and limit the redemption liability by terminating the offer when a defined maximum number of participants have been achieved.

Although daily deal websites have seen dramatic growth in recent years, the verdict is very much still out on their effectiveness for businesses of all sizes with regard to revenue generation and business expansion. Future growth of the daily deal trend hinges on businesses that are willing to accept the terms and conditions of daily deal companies – many times to their detriment when it comes to return on investment and new customer acquisition. In fact, a recent study reported from a survey of 1,087 business owners that 82% had no intention of running a daily deal promotion in the coming year, only 3% saw daily deals as being effective at garnering repeat business, and 11% had either lost money or broken even on a previous daily deal offering – very few had made money and attracted repeat customers (Klein, 2012). Dholakia (2011) found similar results regarding small business interaction with daily deal sites and suggests that daily deal sites need to decrease their revenue share in order to attract and retain businesses for their service offerings. Taken together, these findings suggest that daily deal sites will need to make their services more appealing to businesses in order to survive regardless of the current economic climate.

3 Literature review

3.1 Traditional coupon promotions

There are two significant streams of academic research regarding traditional coupon promotions. One stream focuses on the characteristics of the coupons such as discount rates, expiration dates, and perceived value. A second stream focuses on the characteristics of coupon-users such as their propensity to use coupons, seek deals, or pride in their ability to find bargains. The econometric models that resulted from this research indicated profitability issues that are addressed by the daily-deal websites.

For example, Gonul and Srinivasa (1996) computed a ‘stock out cost’ based upon a consumer’s decision not to buy in a given week. They maintained that consumers hold beliefs about the availability of coupons in the future and their expectations of future coupons shape their purchase decisions. In other words, consumers will delay a purchase until a coupon is available. Neslin (1990) developed an econometric model to calculate the incremental sales per coupon redemption. His results also showed that coupon promotions generated relatively low incremental sales per redemption and did not draw from non-loyal customers. Therefore, while coupons tended to have a positive effect on market share, they were not profitable. Daily-deal offers, however, are less likely to result in stock out costs because the offers are not predictable reoccurrences.

Neslin and Clarke (1987) determined that coupon programmes were more profitable if they skewed towards new triers or occasional users, reflecting their concern that coupons were most often subsidising the regular purchases of current users. They also determined that profitable coupon promotions featured low-share brands, customer-


requested methods of coupon delivery, redemption within two weeks of coupon delivery, and lower redemption rates. Daily-deal offers address most of these concerns. Due to the SoLoMo orientation of daily-deal sites, the promoted brands and services are frequently new or in need of brand development; the delivery method is customer-requested, and the redemption occurs instantly.

3.2 Theoretical framework

The theory of reasoned action focuses on the antecedents of behaviour. It assumes that consumers deliberately consider the costs and benefits of alternative behaviours and, after considering the consequences, form a behavioural intent. Specifically, the theory of reasoned action proposes that individuals’ behavioural intentions are affected by their attitudes toward the act as well as the influence of key referents; people the individuals respect or admire. Attitudes towards the act reflect the outcomes or costs associated with the act and are, therefore, positive or negative. Similarly, individuals form perceptions regarding key referents’ approval or disapproval of a behaviour. The theory also assumes that overt behaviour is a function of behavioural intent, based upon research on a range of behaviours such as voting or drug use (Ajzen, 1991; Sheppard et al., 1988).

The theory of reasoned action was extended to specify the limitations of behavioural intent as a predictive measure of behaviour. The new theory, the theory of planned behaviour, introduced the concept of behavioural control. Behavioural control suggests that individuals’ intentions to perform an act may be limited by the opportunities or resources available. When applied to purchase behaviour, opportunities to purchase may be limited by regional distribution, restrictive store hours, or out of stock merchandise. Resources that could limit the ability to purchase include available funds or storage space. The sincere intent to purchase a product or service can, therefore, be thwarted by the lack of volitional – or behavioural – control. The theory of planned behaviour incorporates a measure of perceived behavioural control that focuses on the individual’s perception of the easiness of the behaviour, consistent with Bandura’s (1977, 1982) concept of self-efficacy (Ajzen, 1991). Bandura’s research indicated that an individual’s perception of his or her ability to perform a task affects the likelihood of performing the task.

Shimp and Kavas (1984) applied the theory of reasoned action to traditional coupon usage and concluded that “even a mundane and relatively trivial act such as coupon usage can be partially accounted for by the theory of reasoned action” (p.807). Kang et al. (2006) determined that while the theory of reasoned action was an accurate predictor of traditional coupon usage, the theory of planned behaviour was a more accurate predictor of e-coupon usage due to the significant role that behavioural control plays in the formation of intent to use e-coupons. The authors suggested that behavioural control was a less important factor when considering the use of traditional coupons due to the lack of limitations that were manifest when moving to an online platform. In their study of mobile coupon usage, Dickinger and Kleijnen (2008) also indicated the importance of perceived control. Specifically, their study suggested that attitude towards the use of mobile coupon usage and confidence in their ability to use mobile coupons were the key determinants of mobile coupon usage.


4 Developing a model of consumer acceptance

A research model was developed to test the relationships among the four core theory variables (attitude towards the act, subjective norms, behavioural control, and behavioural intent) and three external variables (brand consciousness, information seeking, and advertising skepticism). The three external variables are discussed in further detail in the next section. They were designated exogenous variables and allowed to freely correlate.

In accordance with the theory of planned behaviour framework, the following hypotheses were generated regarding the specific relationships among the core variables:

H1 Attitude towards the act positively affects behavioural intent.

H2 Subjective norms positively affect behavioural intent.

H3 Perceived behavioural control positively affects behavioural intent.

The research model also incorporated the following proposed relationships among the external variables and beliefs.

4.1 Brand consciousness

Brand consciousness measures consumers’ orientation towards buying well-known brands (Sproles and Kendall, 1996). This strategy parallels the initial use of television infomercials (programme-length television commercials that employ a direct-response component). During the early 1990s, most infomercials featured unfamiliar brands of cleaning products, grooming products, appliances, personal fitness devices, and home exercise machines. Donthu and Gilliland (1996) hypothesised that infomercial shoppers would, therefore, be less brand conscious than non-shoppers. They found, however, that infomercial shoppers were more brand conscious than the non-shoppers. The result was surprising given that brand consciousness was thought to be based on risk-aversion. The fact that brand-conscious consumers would purchase unfamiliar brands based on a television infomercial suggested that consumers’ tendencies toward risk-aversion were somehow alleviated by the infomercial. While the authors attributed the result to the possibility that infomercials were regarded as entertainment more than shopping, it is also possible that the infomercials provided sufficient information to compensate for the consumers’ lack of familiarity with the brand.

Daily-deal sites alert potential consumers via daily e-mail notifications. The appeal of the sites appears to be the fact that the offers vary daily and are rather unpredictable in nature. This suggests a willingness to evaluate options and some comfort with new brands. Therefore, the daily-deal shoppers’ attitudes towards daily-deal sites should not be affected by their level of brand consciousness.

H4 Brand consciousness does not affect attitudes towards the use of daily-deal sites.

4.2 Information-seeking behaviour

Information Seeking measures consumers’ interest in knowing about various products and brands. Schiffman et al. (1976) found a positive correlation between perceived risk levels and brand loyalty and information seeking. While most marketing practices are


consistent with these findings, exploratory behaviour research offers a different interpretation. Exploratory behaviour has been defined as an individual’s attempt to adjust stimulation from the environment (Hebb, 1955; Leuba, 1955). Raju and Venkatesan (1980) suggested that consumers’ stimulation needs were satisfied by risk taking, variety seeking and curiosity. They propose, therefore, that curiosity – or information-seeking behaviour – is not inversely related to risk. Rather, information-seeking is a means to satisfy a consumer’s need for stimulation.

By alerting potential customers to daily deals, the daily-deal sites appeal to consumers’ curiosity. In fact, Groupon consciously uses an editorial voice that incorporates strategies such as fake proverbs, mixed metaphors, and science fiction references (Gobry, 2010), to provoke consumers’ information-seeking behaviour. Information-seeking behaviour, therefore, should positively affect the perceived usefulness of daily-deal sites.

H5 Information-seeking behaviour positively affects attitudes towards the use of daily-deal sites.

Figure 1 Research model (see online version for colours)

4.3 Online advertising skepticism

Online Advertising Skepticism assesses consumers’ tendency to disbelieve advertising claims (Obermiller and Spangenberg, 1998). Consumers also have general beliefs regarding the credibility of various information sources such as television news, newspaper reports, internet blogs, and advertising. In a cross-cultural comparison of Chinese and Romanian consumers’ attitudes towards online advertising, Wang and Sun (2010) determined that the perceived credibility of online advertising had a significant,


positive effect on consumers’ attitudes towards online advertising and an indirect effect on their use of online advertising. Consumers’ skepticism of online advertising should, therefore, negatively affect their perceptions of the usefulness of daily-deal sites.

H6 Consumers’ attitudes towards the use of daily-deal sites will be negatively affected by their skepticism of online advertising.

5 Methodology

A 122-item questionnaire was developed and administered using qualtrics, a web-based survey management system. The survey was administered to an opt-in subject pool recruited for web-based research (i.e., online panel). A representative sample of social media users between the ages of 18 – 34 was recruited for the survey. Data was gathered from a total of 502 participants over a seven-day period to ensure an even distribution of respondents on each day of the week (i.e., weekdays and weekend days). Roughly 72 respondents were collected each day from March 26th to April 1st, 2012. Respondents were incentivised to complete the survey using a virtual credits system developed by ResearchNow, the panel administrator. ResearchNow enables researchers to gather representative data by embedding surveys into social networking websites and online communities. Respondents completed a profile questionnaire and were screened via a digital fingerprinting device prior to participation in the survey.

5.1 Sample

The final sample consisted of 502 current social media users who engage with various SNSs, including daily-deal websites. Amongst this sample, 51.6% (N = 259) were male and 48.4% (N = 243) were female. Respondents ranged in age from 18 to 34 with 49.2% (N = 247) between the ages of 18–24 and 50.8% (N = 255) between the ages of 25–34. The racial, ethnic, geographic, and income composition of the sample was roughly comparable to those of US internet users, although it was less skewed to the Southern region and included a greater percentage of Asian participants. Compared to US daily-deal site users, the sample was also more racially and ethnically diverse and less heavily concentrated in the South (see Appendix A). All participants had experience with daily-deal sites. In terms of frequency of daily-deal site usage, 37.5% (N = 188) used the sites at least once a day, 40.8% (N = 205) used the sites at least once a week, and 21.7% (N = 109) used the sites at least once a month.

5.2 Measures

Scales were developed by summing and averaging the items for each of the following variables. Detailed items for each scale are provided in Appendix B.

5.3 Independent variable

Behavioural Intent was measured by modifying an established three-item, seven-point Likert-type scale (1 = ‘very strongly disagree’ and 7 = ‘very strongly agree’) to assess the


degree of intention to use the Groupon daily-deal site with questions such as “My general intention to receive special offers from Groupon is very high” (Bauer et al., 2005).

5.4 Dependent variables

Attitude towards the act was measured using an established five-item, seven-point semantic differential scale to assess the respondents’ general attitude toward use of daily-deal sites such as Groupon. For example, “receiving special offers from online coupon sites like Groupon is (1 = foolish; 7 = wise)” (Shimp and Kavas, 1984).

Subjective norms were measured by modifying an established seven-item, seven-point Likert-type item (1 = ‘very strongly disagree’ and 7 = ‘very strongly agree’) to assess the respondents’ perceptions regarding referents’ likelihood to approve the use of social media advertising and three seven-point semantic differential scale items to assess the respondents’ perceptions of the referents degree of approval (Fishbein and Ajzen, 1975).

Perceived behavioural control was measured by modifying an established, eight-item, seven-point Likert-type item (1 = ‘very strongly disagree’ and 7 = ‘very strongly agree’) to assess the respondents’ perceptions of their own self-efficacy regarding the use of social media with questions such as “I believe that I can successfully use most social media options if I want to” (Chen et al., 2001).

Brand consciousness was measured by creating a six-item, seven-point Likert-type items (1 = ‘very strongly disagree’ and 7 = ‘very strongly agree’) from two established scales to assess respondents’ degrees of brand loyalty with questions such as “The well-known national brands are best for me” (Donthu and Gilliland, 1996; Shim and Gehrt, 1996).

Information-seeking was measured by modifying an established, six-item, seven-point Likert-type item (1 = ‘very strongly disagree’ and 7 = ‘very strongly agree’) to assess the respondents’ degree of information-seeking behaviour with questions such as “I often read the information on the package of products just out of curiosity” (Raju, 1980).

Advertising skepticism was measured by modifying an established, nine-item, seven-point Likert-type item (1 = ‘very strongly disagree’ and 7 = ‘very strongly agree’) to assess the respondents’ skepticism regarding online advertising with questions such as “Online advertising is a reliable source of information about the quality and performance of products” (Obermiller and Spangenberg, 1998).

6 Results

6.1 Measurement validation

An exploratory factor analysis, utilising IBM SPSS statistical software, was employed to determine how many factors emerged from the 42 items. A scree test (Cattell, 1966) indicated that seven factors should be extracted. Seven factors were extracted and an oblique rotation was then applied. The pattern matrix confirmed that the seven factors aligned with the four variables central to the theory of planned behaviour (attitude toward the act, subjective norms, perceived behavioural control, and behavioural intent) and the three external variables (brand consciousness, information seeking, and advertising skepticism).


The scale items were summed and averaged to form scales. After assessing reliabilities, two items were deleted from the brand consciousness scale. All of the final scales achieved very good reliability: Brand consciousness (M = 4.44, SD = 1.34, α = .91), information-seeking behaviour (M = 4.75, SD = 1.26, α = .88), online advertising skepticism (M = 3.49, SD = 1.32, α = .95), attitude towards the act (M = 5.23, SD = 1.32, α= .84), subjective norms (M = 4.83, SD = 1.21, α = .72), perceived behavioural control (M = 5.09, SD = 1.26, α = .95), and behavioural intent (M = 5.02, SD = 1.42, α = .91).

Pearson correlations revealed significant, positive relationships between the key theory of planned behaviour variables (attitude towards the act, subjective norms, perceived behavioural control, and behavioural intent). Two of the external variables (brand consciousness and information-seeking behaviour were also significantly, positively related to the other variables, but the correlations between the two variables and attitude towards the act were weak. online advertising skepticism was significantly, negatively correlated with all of the variables and also exhibited a significant but weak correlation with Attitude towards the Act. Table 1 shows the correlations among the key variables. Table 1 Pearson correlations between key variables (N = 502)

Scales 1 2 3 4 5 6 7

1 Behavioural intent 1.00 2 Attitude towards the act .50** 1.00 3 Subjective norms .58** .30** 1.00 4 Perceived behavioural control .66** .37** .72** 1.00 5 Brand consciousness .41** .17** .63** .50** 1.00 6 Information-seeking .55** .25** .67** .64** .65** 1.00 7 Advertising skepticism –.44** –.22** –.71** –.56** –.70** –.68** 1.00

Note: **p < .01

6.2 Results of the core model

A structural equation model was developed using Amos 18 statistical software to test the hypothesised relationships among the variables. The structural equation model demonstrated less than optimal fit. The comparative fit index (CFI) was .91, less than the desired .95–1.0 (Gerbing and Anderson, 1993); the X²/df was 3.0 when it should be less than 3.0 (Carmines and McIver, 1981); and the root mean square error of approximation (RMSEA) was .06, above the acceptable .05 (MacCallum et al., 1996). Table 2 provides the parameter estimates, standard errors, and p-values for each of the relationships. All of the paths were significant with the exception of the path between attitude towards the act and brand consciousness and the path between attitude towards the act and advertising skepticism. The modification indices indicated that the model fit could be significantly improved by adding correlations between the error terms of two attitude items and two subjective norm items. In the case of the attitude items, the only two reverse-coded semantic differential items measuring attitude towards use of daily-deal sites (‘foolish – wise’ and ‘waste of time – wise use of time’) appeared to measure something


in common compared to the other three items. Two of the Subjective Norm items appeared to measure the same idea (‘useful – useless’ and ‘valuable – worthless’). Table 2 Parameter estimates for structural model

Paths Estimate S.E. Std. est. Sig. (p) Brand consciousness → attitude towards the act –.05 .05 –.08 N.S. Information-seeking → attitude towards the act .18 .06 .30 .001 Advertising skepticism → attitude towards the act .01 .05 .02 N.S. Attitude towards the act → behavioural intent .38 .07 .21 .001 Subjective norms → behavioural intent .19 .08 .14 .01 Perceived behavioural control → behavioural intent .61 .06 .57 .001

6.3 Modified model

The model was modified by adding correlations between the error terms of two Attitude items and two Subjective Norm items.

Figure 2 Theory of planned behaviour model for daily-deal website use (see online version for colours)

Notes: *p < .05, **p < .01, ***p < .001


The new model demonstrated good fit (Figure 2). The X2/df was 2.21, less than the 3.0 upper limit; the RMSEA was an acceptable .05; and the CFI was .95. The model fit confirmed the proposed pattern regarding how two of the external variables related to the Attitude towards the act and the relationships between the core variables of the theory of planned behaviour. Table 3 provides the parameter estimates, standard errors, and p-values for each of the relationships.

Hypotheses 1 through 3 were supported in terms of sign and statistical significance. Consumers’ attitudes towards the use of Groupon, their perceptions of referent approval or disapproval of Groupon, and their self-confidence regarding their ability to use social media effectively all positively affected their intentions to use Groupon.

In terms of the external variables, the results confirm Hypotheses 4 and 5. Consumers who were likely to seek information routinely were also likely to have positive attitudes towards the use of Groupon. On the other hand, consumers’ tendencies to value brand names had no effect on their attitudes to use Groupon.

Hypothesis 6 was not supported indicating that consumers did not regard Groupon as a form of advertising. In fact, consumers’ level of skepticism towards advertising was completely unrelated to their attitudes regarding use of Groupon. Table 3 Parameter estimates for modified structural model

Paths Estimate S.E. Std. est. Sig. (p) Brand consciousness → attitude towards the act –.04 .05 –.07 N.S. Information-seeking → attitude towards the Act .17 .05 .29 .001 Advertising skepticism → attitude towards the act .01 .05 .01 N.S. Attitude towards the act → behavioural intent .39 .08 .21 .001 Subjective norms → behavioural intent .24 .08 .19 .01 Perceived behavioural control → behavioural intent .57 .06 .54 .001

7 Discussion

The purpose of this study was to examine the use of daily-deal websites within the theoretical framework of the theory of planned behaviour as well as to explore possible antecedents to the attitudinal beliefs that affect consumers’ intentions to use daily-deal sites such as Groupon. The results indicate the hypothesised model was a good fit within this sample.

Consumers’ attitudes towards the use of daily-deal sites, their perceptions regarding referent approval, and their self-confidence regarding their ability to use social media positively affect their intentions to use daily-deal sites. The link between attitudes and action is not controversial. Indeed, most marketers strive to create likeable, trusted brands to increase purchase intent. The role of referent influence is less established in the realm of e-commerce, however. In a study regarding an online pre-purchase model, it was suggested that online purchase was not affected by subjective norms due to the private nature of e-commerce (Shim et al., 2001). The present study suggests that subjective norms are, in fact, relevant to the use of daily-deal sites. In the last decade, it is probable that the socialisation of the internet has changed the dynamics of e-commerce. While internet search is conducted individually, it is often a collaborative effort drawing on


comments from websites, blogs, and social media. Indeed, Google has termed the word-of-mouth and internet search that occurs prior to purchase as the ‘zero moment of truth’ for any product or service (Lecinski, 2011). Now, more than ever, referent influence is available and sought. The ‘zero moment of truth’ also indicates the importance of social media efficacy. The effective use of social media is a desirable ability and the fact that consumers’ self-confidence regarding this skill is positively related to their intentions to use daily-deal sites such as Groupon reflects the perceived importance of social media in general.

This study provides an interesting look at some of the antecedents that contribute to consumers’ attitudes towards the use of daily-deal sites. For example, brand consciousness did not have a significant effect on the attitudes towards use of daily-deal sites. If, in fact, consumers are not seeking brand specific offers, the daily-deal sites avoid some of the profit draining characteristics of traditional couponing. Academic research indicates that traditional coupon promotions generate low redemption among non-users (Gonul and Srinivasa, 1996; Neslin and Clarke, 1987; Neslin, 1990). Not only are consumers targeted by daily-deal sites based on their potential interest in the offering, consumers’ lack of brand consciousness indicates a willingness to try new brands. This is good news for small businesses looking for new clientele – however, as previously noted, companies must demand better revenue sharing options in order to make daily deals a lasting portion of the promotional mix.

Consumers’ skepticism regarding online advertising also did not affect attitudes towards the use of daily-deal sites. This suggests that consumers consider the daily-deal sites to be coupon distributors; not advertising. Additionally, consumers may be less likely to perceive daily deals as advertising as it is an opt-in service. In some respects, the daily-deal sites have filled the void caused by declining newspaper distribution. In particular, the daily e-mails are reminiscent of the ‘Best Food Day’ coupons that run midweek in local and national newspapers and were traditionally the mainstay of grocery retail operations. The daily-deal e-mails are expected and consumers can search for attractive offers at will.

Importantly, however, information-seeking behaviour significantly affected attitudes towards use of daily-deal sites, suggesting that users of daily-deal sites are interested in non-routine purchases. Not only does information-seeking behaviour suggest consumers’ openness to new brands and services, it suggests that daily-deal site usage does not perpetuate the ‘stock out cost’ referred to by Gonul and Srinivasa (1996) that results when consumers delay purchases based on their expectation of future coupons.

In totality, these results indicate that, when employing daily-deal sites as part of an integrated marketing strategy, marketers should focus on informativeness. In the spirit of the ‘zero moment of truth’, they should maintain a web presence that can be easily referenced, maintain good customer relationships to ensure positive comments, and provide informative promotional offers. This along with better incentives offered to companies employing daily deals will help to insure the continued popularity of daily deal websites.

8 Limitations and future research

The novelty of daily-deal websites and their offerings provide endless research opportunities for the future. As noted in the literature review, daily-deal websites are


particularly popular with small, local businesses that can make their offers available via mobile phone. Future research could probe consumer response to local versus national brands within the context of mobile coupon delivery. Since brand consciousness and advertising skepticism were not found to significantly impact attitude towards the act of using daily deal sites, it is possible that consumers may have a variety of individual differences that impact attitude formation. As such, it would be appropriate to examine goal motivation (hedonic versus utilitarian), level of involvement, or source credibility in future research. In addition, it would be interesting to determine what factors drive consumers to actually purchase and redeem a daily-deal coupon.

Several limitations existed for this study. First, in order to improve the overall model fit, correlations for error terms for several items had to be created. The items in question either measured the same concept or idea in comparison to the other scale items. As such, future research should incorporate another variation of the attitude toward the act scale that differentiates more clearly between the ideas of wasting time and being foolish. At the same time, the subjective norms scale entangled two items related to usefulness and value. Second, the sample for this research was slightly skewed when compared to US internet users as well as the general consumer profile of daily-deal website users (see Appendix A). Specifically, the sample was skewed towards greater racial and ethnic diversity, less concentration in the Southern USA, greater representation of men, and broader income distribution compared to the typical user of daily-deal websites. It should be noted that, at present, daily-deal sites have achieved low penetration among US consumers, and the user demographics will likely broaden as the sites gain more users. Therefore, although these limitations exist, they are not considered to be a large impediment to the study or the validity of the results.

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Appendix A

Table A1 Sample composition

U.S. internet users* Daily-deal users** Sample

% % % Gender Male 50.0 34.0 51.6 Female 50.0 66.0 48.4 Age 18–24 39.0 56.7 49.2 25–34 61.0 43.2 50.8 Race/ethnicity Caucasian 66.0 71.0 59.0 African American 11.0 11.0 10.8 Asian 5.0 5.0 11.0 Hispanic 10.0 8.0 10.2 Other 8.0 5.0 6.4 Region South 37.0 45.0 29.5 Northeast 19.0 13.0 28.9 Midwest 22.0 20.0 19.3 West 23.0 22.0 22.3 Income Less than $35,000 46.0 9.0 25.0 $35,000–49,999 24.0 21.0 31.0 $50,000–74,999 16.0 17.0 33.0 $75,000 + 15.0 32.0 Refused to answer 21.0 11.2 Education High school or less 31.0 N/A 22.9 Some college 31.0 N/A 27.9 College+ 38.0 N/A 46.1

Notes: *2010 U.S. Census/2012 Pew American Internet & American Life Project **Report on Daily Deals (2012)


Appendix B

Table A2 Factor analysis of key variables

Patte

rn m

atri

x

Fact

or

1 2

3 4

5 6

7

Bran

d co

nsci

ousn

ess

The

wel

l-kno

wn

natio

nal b

rand

s are

bes

t for

me

–.14

.6

7

Th

e m

ore

expe

nsiv

e br

ands

are

usu

ally

my

choi

ces

.8

4

Th

e hi

gher

the

pric

e of

a p

rodu

ct th

e be

tter t

he q

ualit

y .1

6

.7

4

N

ice

dept

. sto

res a

nd sp

ecia

lty st

ores

off

er m

e th

e be

st p

rodu

cts

.6

2

I u

sual

ly p

urch

ase

nam

e br

and

prod

ucts

–.

15

.70

Stor

e br

ands

are

of p

oor q

ualit

y

–.12

.1

1 .6

6

A

ll br

ands

are

abo

ut th

e sa

me

–.10

–.

45

–.25

In

form

atio

n-se

ekin

g

I l

ike

to b

row

se th

roug

h m

ail o

rder

cat

alog

ues e

ven

whe

n I d

on’t

plan

to b

uy

anyt

hing

.6

8

I o

ften

read

the

info

on

the

pack

age

of p

rodu

cts j

ust o

ut o

f cur

iosi

ty

–.26

.53

I g

ener

ally

eve

n re

ad m

y ju

nk m

ail j

ust t

o kn

ow w

hat i

t is a

bout

.1

0

.2

8

.4

5

I ofte

n re

ad a

ds ju

st o

ut o

f cur

iosit

y .1

6

.1

3

.13

.53

I o

ften

opt-i

n to

follo

w b

rand

s on

FB o

r TW

to o

btai

n br

and

rele

vant

info

.2

0

–.18

.49

I o

ften

give

my

e-m

ail a

ddre

ss to

reta

ilers

to re

ceiv

e pr

oduc

t offe

rs a

nd in

fo

.11

.5

5

Not

es: E

xtra

ctio

n m

etho

d: p

rinci

pal a

xis f

acto

ring

Rot

atio

n m

etho

d: O

blim

in w

ith K

aise

r nor

mal

isat

ion


Table A2 Factor analysis of key variables (see online version for colours)

Patte

rn m

atri

x

Fa

ctor

1

2 3

4 5

6 7

Onl

ine

adve

rtis

ing

skep

ticis

m

We

can

depe

nd o

n ge

tting

the

truth

in m

ost o

nlin

e ad

verti

sing

.8

1

.1

6

O

nlin

e ad

verti

sing

’s a

im is

to in

form

the

cons

umer

.7

7

I bel

ieve

onl

ine

adve

rtisi

ng is

info

rmat

ive

.75

O

nlin

e ad

verti

sing

is g

ener

ally

trut

hful

.8

5

Onl

ine

adve

rtisi

ng is

a re

liabl

e so

urce

of i

nfo

abou

t the

qua

lity

and

perfo

rman

ce o

f pro

duct

s .8

3

O

nlin

e ad

verti

sing

is ‘t

ruth

wel

l tol

d’

.80

In

gen

eral

, onl

ine

adve

rtisi

ng p

rese

nts a

true

pic

ture

of t

he p

rodu

ct b

eing

ad

verti

sed

.81

I f

eel I

hav

e be

en a

ccur

atel

y in

form

ed a

fter v

iew

ing

mos

t onl

ine

ads

.84

M

ost o

nlin

e ad

s pro

vide

con

sum

ers w

ith e

ssen

tial i

nfo

.80

.1

4 At

titud

e to

ward

s use

of d

aily

-dea

l site

s

Fo

olis

h_W

ise

.1

0

–.

69

U

sefu

l_U

sele

ss

.8

5

W

aste

of t

ime_

Wis

e us

e of

tim

e

–.

73

V

alua

ble_

Wor

thle

ss

.8

4

G

ood_

Bad

.82

Not

es: E

xtra

ctio

n m

etho

d: p

rinci

pal a

xis f

acto

ring

Rot

atio

n m

etho

d: O

blim

in w

ith K

aise

r nor

mal

isat

ion


Table A2 Factor analysis of key variables (see online version for colours)

Patte

rn m

atri

x

Fa

ctor

1

2 3

4 5

6 7

Subj

ectiv

e no

rms

Mos

t peo

ple

who

are

impo

rtant

to m

e th

ink

I __

use

soci

al m

edia

adv

ertis

ing

.12

–.11

–.

23

.14

–.21

.2

4

Fo

olis

h_W

ise

.13

–.15

–.

38

.32

Use

ful_

Use

less

.15

.7

0

V

alua

ble_

Wor

thle

ss

.8

5

Perc

eive

d be

havi

oura

l con

trol

I w

ill b

e ab

le to

use

mos

t of t

he so

cial

med

ia o

ptio

ns th

at I

wan

t to

use

–.78

Whe

n fa

cing

a c

onst

ant b

arra

ge o

f (is

sues

) I a

m c

erta

in th

at I

will

be

able

to

keep

from

bei

ng o

verw

helm

ed

–.70

In

gen

eral

, I th

ink

I can

use

soci

al m

edia

to a

chie

ve o

utco

mes

that

are

im

porta

nt to

me

–.77

I b

elie

ve th

at I

can

succ

essf

ully

use

mos

t soc

ial m

edia

opt

ions

if I

wan

t to

–.80

I will

be

able

to su

cces

sful

ly o

verc

ome

tech

cha

lleng

es w

hen

usin

g so

cial

m

edia

–.

83

I a

m c

onfid

ent t

hat I

can

effe

ctiv

ely

use

man

y di

ffer

ent k

inds

of s

ocia

l med

ia

–.

85

C

ompa

red

to o

ther

peo

ple,

I ca

n us

e so

cial

med

ia v

ery

wel

l

–.

80

Ev

en w

hen

it is

har

d to

kee

p up

, I c

an u

se so

cial

med

ia v

ery

wel

l .1

2

–.83

–.

12

In

tent

to u

se d

aily

-dea

l site

s

M

y ge

nera

l int

entio

n to

rece

ive

spec

ial o

ffer

s fro

m G

O is

ver

y hi

gh

–.13

–.62

–.

11

.22

I w

ill th

ink

abou

t rec

eivi

ng sp

ecia

l offe

rs fr

om G

O

–.17

–.61

.18

I w

ill re

ceiv

e sp

ecia

l off

ers

from

GO

in th

e fu

ture

–.

21

–.

61

.2

1

Not

es: E

xtra

ctio

n m

etho

d: p

rinci

pal a

xis f

acto

ring

Rot

atio

n m

etho

d: O

blim

in w

ith K

aise

r nor

mal

isat

ion

Deal me in! Assessing Consumer Response to Daily-deal Sites

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