Street Marketing: How Proximity and Context drive Coupon Redemption

Abstract

Purpose: In 2009, US coupons set a new record of 367 billion coupons distributed. Yet, while coupon distribution is on the rise, redemption rates remain below 1 percent. This paper aims to show how recognizing context variables, such as proximity, weather, part of town and financial incentives interplay to determine a coupon campaigns success. Design/methodology/approach. The paper reports an empirical study conducted in co-operation with a restaurant chain 9.880 Subway coupons were distributed under different experimental context conditions. Redemption behavior was analyzed with the help of logistic regressions. Findings: It was found that even though proximity drives coupon redemption, city center campaigns seem to be much more sensitive to distance than suburban areas. The further away the distribution place from the restaurant, the less does the amount of monetary incentive determine the motivation to redeem. Practical implications. When designing a coupon campaign for a company, coupon distribution should not follow a -- one is good for all strategy -- even for one marketer within one product category. Instead each coupon strategy should carefully consider contextual influence. Originality/value. This paper is the first to the authors knowledge that systematically investigates the impact of context variables on coupon redemption. It focuses on context variables that electronic marketing channels will be able to easily incorporate into personalized mobile marketing campaigns.