The Influence of Geolocated Mobile Coupons on Customer Behavior

Introduction

Smartphones have become a social marker in most developed countries – people aged 18-24 use them 50 times daily on average (Deloitte, 2017). Mobile devices offer great opportunities for their users, and their personal and ubiquitous nature (Chen & Hsieh, 2012) provides marketers with detailed information to create highly personalized advertising (Okazaki et al., 2009) such as mobile couponing (Jung et al., 2013). For instance, mobile advertising (i.e., delivering marketing messages to portable devices) is a powerful marketing tool and a growing market (Leppäniemi and Karjaluoto, 2005). Global mobile advertising expenses are predicted to increase by 245% to reach 247.4 billion US$ in 2020 (Statista, 2017), while 63% of customers declare to be likely to use coupons if they are delivered in a mobile form (Harvey & An, 2018).

A mobile coupon (“m-coupon”) is “[…] an electronic ticket solicited and / or delivered by mobile phone that can be exchanged for a financial discount or rebate when purchasing a product or service.” (Mobile Marketing Association, 2007, p.1). Location-based advertising uses ‘location-tracking technology in mobile networks to target consumers with location-specific advertising on their cellphones.” (Unni & Harmon, 2007, p.28). Mobile coupons allow the use of location-based services to offer personalized coupons based on consumers’ product preferences, contextual factors, and current locations (Khajehzadeh et al., 2015). M-couponing is growing steadily (Danaher et al., 2015). The number of digital coupons redeemed worldwide is expected to increase from 16 to 31 billion by 2019 (Statista, 2018) and will exceed $90 billion by 2022 (Juniper Research, 2017). Past studies found that receiving a location-based mobile coupon increases customers’ willingness to purchase a product; and that retailers integrate mobile coupons into their loyalty programs because of their high rates of redemption, as geo-targeting represents a promising opportunity for practitioners (Juniper Research, 2017). Academic research studying mobile coupons in geolocation contexts remains scarce (Danaher et al., 2015; Im & Ha, 2013). Location provides significant hints about product choices and interests based on the activity of a person at a specific moment (Khelladi et al., 2014). For example, previous research explored the factors influencing users’ intentions to redeem m-coupons, such as redemption ease and spam avoidance (Dickinger & Kleijnen, 2008), the distance, face value, product category, coupon order and time of day (Luo et al., 2013); and the short message service (SMS) content, price information format, time to redeem, and prior redemption behavior (Danaher et al., 2015). Other studies examined how m-couponing increases unplanned purchases (Hui et al., 2013) and influences shopping situation features such as the convenience of accessing a retailer and shopping motivation related to m-coupon perception and redemption (Khajehzadeh et al., 2015). Although many m-coupon features were disclosed, few studies explore the reasons behind their poor redemption rates (Danaher et al., 2015).

The present article addresses the call for additional insights on the effectiveness of mobile couponing (Grewald et al., 2016), particularly the impact of geolocated mobile coupons on consumer behavior. Using the theory of planned behavior (TPB) (Ajzen, 1991), the research explores the influence of integrating consumers’ geolocation on their attitudinal and behavioral determinants of m-coupon redemption. Considering the technical and social evolution of using smartphones (Rowles, 2017), additional insights are needed regarding the use of smartphone mobile advertising. Therefore, the research emphasizes two specific opportunities for mobile advertising: (1) incentives in the form of coupons delivered to a person’s smartphone (i.e., mobile coupons or vouchers) and (2) personalized offers based on a person’s geolocation (i.e., location-based mobile advertising). These two types of mobile advertising are viewed as key factors driving consumers’ acceptance and engagement (Nielsen, 2012). The research contributes to mobile marketing literature. Through an experimental design, it emphasizes the role of geolocation in improving m-coupon redemption rates. The research also enriches the TPB framework in a mobile context. It highlights the importance of subjective norms and perceived behavioral control on the intention to redeem geolocated m-coupons.