Daily Deal Fatigue or Unabated Enthusiasm? A Study of Consumer Perceptions of Daily Deal Promotions

27 Pages Posted: 13 Sep 2011 Last revised: 26 Sep 2011

Utpal M. Dholakia

Rice University - Jesse H. Jones Graduate School of Business

Sheryl E. Kimes

Cornell University - School of Hotel Administration

Date Written: September 11, 2011

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.

Keywords: daily deals, consumer perceptions, Groupon, LivingSocial, price promotion, price sensitivity, marketing strategy

Suggested Citation

Dholakia, Utpal M. and Kimes, Sheryl E., Daily Deal Fatigue or Unabated Enthusiasm? A Study of Consumer Perceptions of Daily Deal Promotions (September 11, 2011). Available at SSRN: https://ssrn.com/abstract=1925865 or http://dx.doi.org/10.2139/ssrn.1925865

Utpal M. Dholakia (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Sheryl E. Kimes

Cornell University - School of Hotel Administration ( email )

348 Statler Hall
Ithaca, NY 14853-6902
United States

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