Running Head: Deal Me In! Assessing Consumer Response to Daily-Deal Sites
Deal Me In!: Assessing Consumer Response to Daily-Deal Sites
Extended Abstract
Kelty Logan, Ph.D.
Journalism and Mass Communication
University of Colorado
Boulder, Colorado
Laura F. Bright, Ph.D.
Schieffer School of Journalism
Texas Christian University
Fort Worth, Texas
Direct / Interactive Marketing Research Summit
Las Vegas, Nevada
October 13 – 14, 2012
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 American shoppers are likely to use coupons sent to their mobile devices. This behavior is even more pronounced among younger shoppers. In fact, 40% of American shoppers aged 18-34 are likely to use coupons sent to their mobile devices (BrandSpark 2010). This study examines factors that influence usage of daily-deal sites among young adults (aged 18-34). Specifically, it seeks to apply a theoretical framework, the Technology Acceptance Model (TAM), in regard to the role of individuals’ beliefs and attitudes when forming intentions to use a daily-deal site.
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 United States 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 fueled 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.
Theoretical Model
The TAM(Davis 1986), an adaptation of the Theory of Reasoned Action, was developed to model acceptance of information systems. TAM assumes that Attitude toward the Act directly affects Behavioral Intent (Davis 1986). Attitude toward the Act is affected by beliefs (Perceived Usefulness and Perceived Ease of Use) regarding the specific behavior and is indirectly affected by external variables. The model also assumes that Perceived Usefulness has a direct effect on Behavioral Intent while the effect of Perceived Ease of Use on Behavioral Intent is mediated by Perceived Usefulness and Attitude toward the Act.
A research model was developed to test the relationships among the core TAM variables and four external variables (Brand Consciousness, Online Ad Skepticism, Information-Seeking, Social Media Self-Efficacy). Specifically, the research model proposed that Social Media Self-Efficacy had a direct effect on Perceived Ease of Use but not on Perceived Usefulness. Online Advertising Skepticism and Information-Seeking Behavior had direct effects on Perceived Usefulness but not on Perceived Ease of Use. The research model also proposed that Brand Consciousness – a construct that underlies a great deal of consumer behavior – was not directly related to beliefs that ultimately affect use of daily-deal sites. The four external variables were designated exogenous variables and allowed to freely correlate. (See Figure 1)
H1: Perceived Usefulness positively affects Attitude toward the Act.
H2: Perceived Ease of Use positively affects Attitude toward the Act.
H3: Perceived Ease of Use positively affects Perceived Usefulness.
H4: Perceived Usefulness positively affects Behavioral Intent.
H5: Attitude toward the Act positively affects Behavioral Intent.
H6: Brand Consciousness does not affect the Perceived Usefulness of daily-deal sites.
H7: Information-seeking behavior positively affects Perceived Usefulness of daily-deal sites.
H8: Consumers’ perceptions of the usefulness of daily-deal sites will be negatively affected by their skepticism of online advertising.
H9: Social media self-efficacy is positively related to Perceived Ease of Use of daily-deal sites.
Methodology
A 122-item questionnaire was developed and administered to a representative sample of social media users between the ages of 18 – 34 via an opt-in subject pool. The final sample consisted of 502 social media users who engage with various SNSs, including daily-deal sites. Amongst this sample, 51.6% (N=259) were male and 48.4% (N=243) were female. Respondents ranged 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 U.S. Internet users.(US Census 2010)
The survey instrument included measures related to online advertising skepticism (Obermiller and Spangenberg 1998), social media self-efficacy (Chen et al. 2001), information seeking behavior (Raju, 1980), brand consciousness (Donthu and Gilliland 1996; Shim and Gehrt 1996), the perceived utility of daily-deal sites (Davis et al. 1989), the perceived ease of use of daily-deal sites (Davis et al. 1989), attitude toward the act of using daily-deal sites (Shimp and Kavas 1989), and behavioral intent for using daily-deal sites (Bauer et al. 2005).
Results
The scale items were summed and averaged to form scales. All of the composite scales achieved very good reliability. Pearson Correlations revealed significant, positive relationships between the key variables. Online Advertising Skepticism was significantly, negatively correlated with all other variables. Table 1 shows the correlations among the key variables.
A structural equation model was developed using Amos 18 statistical software to test the hypothesized relationships among the variables. Contrary to expectations, the structural equation model demonstrated poor fit. Although the CFI (Comparative Fit Index) was .96, close to the optimal 1.0 (Gerbing and Anderson 1993); the X²/df was 10.01 when it should be less than 3.0 (Carmines and McIver 1981); and the RMSEA (Root Mean Square Error of Approximation) was .13, well above the acceptable .05 (MacCallum, Browne and Sugawara 1996) (See Table 2). The modification indices indicated that the model fit could be significantly improved by adding a new path between the PEOU and BI variables.
The model was modified by adding a direct path between the PEOU and BI variables. The addition of the path indicated that, contrary to the TAM theory, the effect of Perceived Ease of Use on Behavioral Intent was not mediated by Perceived Usefulness and Attitude toward the Act. The new model demonstrated good fit (See Figure 2). The X²/df was 2.10, less than the 3.0 upper limit; the RMSEA was an acceptable .05; and the CFI was equal to 1.0. The model fit confirmed the proposed pattern regarding how the external variables related to the TAM variables. Table 3 provides the parameter estimates, standard errors, and p-values for each of the relationships. Hypotheses 1 through 4 were supported in terms of sign and statistical significance. The path between Attitude toward the Act and Behavioral intent was not significant. This result was not consistent with the TAM framework and failed to support hypothesis 5. In terms of the external variables, the results confirm hypotheses 6 through 9.
Discussion
The purpose of this study was to examine the use of daily-deal sites within the framework of TAM. While the hypothesized model was not a good fit within this sample, a modified version of the model provided interesting insights into consumer response to daily-deal sites. First, attitude toward the usage of daily-deal sites did not determine behavioral intention to engage with daily-deal sites. Contrary to the theoretical framework proposed, it appears that usage of daily-deal sites is determined more so by perceptions of the usefulness and ease of use than by attitude toward the act of using daily-deal sites. Consumers appear to be more appreciative of utility in this case rather than relying on their attitudes.With regard to perceived usefulness and perceived ease of use, this research indicates that an individual consumer who perceives the daily-deal sites to be useful will also perceive them to be easy to use and, in turn, will intend to use the sites to obtain special offers in their area.
The relationships between external variables and perceived usefulness and perceived ease of use indicate that daily-deal sites address some of the risks posed by traditional coupon promotions. For example, brand consciousness did not have a significant effect on the perceived usefulness of daily-deal sites. Information-seeking behavior significantly affected perceptions of daily-deal sites’ usefulness, indicating that users of daily-deal sites are interested in non-routine purchases. Consumers’ skepticism regarding online advertising negatively affected perceptions of daily-deal sites’ usefulness. Since the study also indicated that usefulness instigated the process of engaging with brands via daily-deal sites, it is imperative for advertisers to promote their brand’s “daily deal” as both useful and trustworthy to reduce skepticism. As shown here, consumers who feel confident in their abilities to effectively use social media also believe that daily-deal sites will be useful to them.
In totality, these results indicate that, when employing daily-deal sites as part of an integrated marketing strategy, marketers should focus on ease of use and ease of redemption. Offers should not only be attractive in terms of value. They must be simple to understand and simple to implement as well as cross-marketed with other social media sites.
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Tables and Figures
Table 1
Pearson Correlations between Key Variables (N = 502)
Scales / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 81. Brand Consciousness / 1.00
2.Online Adv. Skepticism / -.70** / 1.00
3.Info-Seeking / .65** / -.68** / 1.00
4.Social Media
Self-Efficacy / .50** / -.56** / .64** / 1.00
5.Perceived Usefulness / .48** / -.51** / .58** / .67** / 1.00
6.Perceived Ease of Use / .39** / -.44** / .52** / .70** / .83** / 1.00
7.Attitude toward
the Act / .17** / -.22** / .25** / .37** / .50** / .53** / 1.00
8.Behavioral Intent / .41** / -.44** / .55** / .66** / .84** / .84** / .50** / 1.00
**p < .01
Table 2
Parameter Estimates for Structural Model
Paths / Estimate / S.E. / Std. Est. / Sig (p)Self-Efficacy → PEOU / .79 / .04 / .70 / .001
PEOU → PU / .66 / .02 / .72 / .001
Info-Seek → PU / .13 / .04 / .12 / .001
Ad Skep → PU / -.08 / .04 / -.08 / .05
Brand Con → PU / .06 / .03 / .06 / N.S.
PU → Att_Act / .20 / .07 / .20 / .01
PEOU → Att_Act / .33 / .06 / .36 / .001
PU → BI / .84 / .03 / .78 / .001
Att_Act → BI / .12 / .03 / .11 / .001
Table 3
Parameter Estimates for Structural Model
Paths / Estimate / S.E. / Std. Est. / Sig (p)Self-Efficacy → PEOU / .79 / .04 / .70 / .001
Info-Seek → PU / .13 / .04 / .12 / .001
Ad Skep → PU / -.08 / .04 / -.08 / .05
PEOU → PU / .66 / .02 / .72 / .001
Brand Con → PU / .06 / .03 / .06 / N.S.
PU → Att_Act / .20 / .07 / .20 / .01
PEOU → Att_Act / .33 / .06 / .36 / .001
PU → BI / .43 / .04 / .46 / .001
PEOU → BI / .43 / .03 / .43 / .001
Att_Act → BI / .05 / .04 / .04 / N.S.
Figure 1
Research Model
Figure 2
Modified Model
1