DRIVERS OF REPEAT PURCHASE AND WORD-OF-MOUTH FOR GROUPON MERCHANTS
Abstract
Daily deal site companies such as Groupon offer coupons for services and products with deep discounts, a practice that typically ends up in a loss of revenue for the participating merchants. Thus, the key question for long-term viability is whether daily deal consumers repeat purchase from and/or generate positive word-of-mouth for the merchants. This research investigates the deal, merchant and consumer characteristics that influence the initial purchase of the deal, the repurchase likelihood of the service at different price levels and the word-of-mouth behavior of consumers in an experimental setting with 960 participants. The results reveal that when consumers have high satisfaction, merchants are likely to get (1) more repeat purchase when they give a moderate (vs. low or high) initial discount, and (2) more word-of-mouth occurs when merchants are physically close (vs. distant) to the consumers. Furthermore, consumers’ coupon proneness (but not price consciousness) increases both daily deal purchase and after-deal word-of-mouth. Interestingly, consumers who are more concerned with price as a cue for quality are more willing to repurchase at full price. These findings give merchants specific recommendations as to how to price and target their deals to improve the likelihood of repeat purchase and WOM generation.
Keywords
References
- Alegre, J., and Cladera, M. (2009). Analysing the effect of satisfaction and previous visits on tourist intentions to return. European Journal of Marketing, 43 (5), 670–685.
- Alford, B.L., and Biswas, A. (2002). The effects of discount level, price consciousness and sale proneness on consumers’ price perception and behavioral intention. Journal of Business Research, 55 (9), 775–783.
- Amblee, N. C.,and Bui, T. X. (2012, August). Value proposition and social proof in online deals: an exploratory study of Groupon. com. InProceedings of the 14th Annual International Conference on Electronic Commerce(pp. 294-300). ACM.
- Anderson, E.T., and Simester D.E. (2004). Long-run effects of promotion depth on new versus established customers: Three Field Studies. Marketing Science, Winter 23:4-20.
- Bearden, W. O., and Shimp, T. A. (1982).The use of extrinsic cues to facilitate product adoption. Journal of Marketing Research, 229-239.
- Berry, L. L., and Parasuraman, A. (2004).Marketing services: Competing through quality. Simon and Schuster.
- Blattberg, R. C., and Neslin, S. A. (1989). Sales promotion: The long and the short of it. Marketing Letters,1(1), 81-97.
- Blattberg, R. C., and Neslin, S. A. (1990).Sales promotion: Concepts, methods, and strategies (pp. 313-43). Englewood Cliffs, NJ: Prentice Hall.
Details
Primary Language
Turkish
Subjects
-
Journal Section
Research Article
Authors
Ela Arı
Türkiye
Publication Date
June 14, 2017
Submission Date
January 10, 2017
Acceptance Date
March 14, 2017
Published in Issue
Year 2017