News Column

Can Mobile Coupons Influence How People Shop?

March 19, 2013

Teresa F. Lindeman

Location, location, location. It's important in the grocery business, where colorful apples and lettuce draw customers in the door and the dairy case reliably pulls them all the way to the back of the store.

But the trip through the grocery can be long and winding, and customers sometimes skip a few aisles because they don't think they need anything from the toothpaste shelves or the cereal display.

New research, using all the latest technology, finds the proper use of mobile coupons could significantly pump up unplanned grocery spending, getting shoppers to go beyond those lists they've brought to the store.

University of Pittsburgh business professor Jeffrey Inman thinks this could be helpful -- and not just to retailers. Customers sometimes need to see the Band-Aids to remember they should have been on the list.

Mr. Inman and his fellow researchers have been studying aspects of shopper behavior for a while but the most recent study, appearing in the March edition of the Journal of Marketing, specifically looked at the effect of in-store travel distance on unplanned spending and how that might be applied to mobile promotion strategies.

About 50 percent of consumers in the U.S. owned a smartphone, while 31 percent are using mobile technology in the grocery store for things like making lists, finding recipes or researching products, according to data from Nielsen and Booz & Co. compiled in a 2012 trend report by the Arlington, Va.-based Food Marketing Institute.

"Now, retailers around the country are investing all this money in mobile apps," Mr. Inman noted, but he said there hasn't been a lot of research on how those could be used to affect buying patterns.

In addition to Mr. Inman, Sam K. Hui, assistant professor of marketing at New York University; Yanliu Huang, assistant professor of marketing at Drexel University; and Jacob Suher, a doctoral student at the University of Texas at Austin took a closer look at the issue.

If a store could send a few coupons to shoppers' smartphones at the right moment, maybe for a box of Shredded Wheat or a tube of Crest, those customers might travel further and see other things they need.

That was the premise.

To gather information, the researchers talked with 300 shoppers at an Oregon store, said Mr. Inman. Caught as they entered, customers were asked if they had a list and a planned budget.

Those who agreed to participate were given a belt with radio frequency identification technology. While that wasn't exactly Google Earth, it was an improvement over past experiments where researchers had to be disguised as store employees to track customers or where RFID tags were put on carts. As everyone knows, sometimes the cart gets parked while the shopper fights past traffic to get to the Ovaltine.

Shoppers generally covered less than half of the areas in a grocery store, traveling about 1,400 feet on average. Going an additional 55 feet triggered about one dollar more in unplanned spending, the researchers found.

A second round of research took place in an unidentified Pittsburgh grocery a year ago in April, when about 90 shoppers were interviewed at the main entrance.

This time the researchers entered the customers' planned purchases into a laptop. The computer compared the lists and a store map, then kicked out coupons for things like toilet paper, canned soup, pasta and over-the-counter medicines.

Some shoppers got coupons for items close to their expected route, while others got promotions that required them to go much farther.

No surprise, those who had to pass more goods to use their coupons spent more. The study found the average in unplanned spending was $13.83 for shoppers given deals near their routes, but $21.29 for those who traveled a longer distance. Excluding the merchandise category that they got a coupon for, they still spent $12.50 vs. $20.14.

Mr. Inman said there's more work to be done. The researchers are interested in knowing whether shoppers would have made the purchases anyway on a future trip. Even that could be a good reason for retailers to try offering targeted promotions, because it would avoid losing the purchases to a competitor.

In the Journal article, the researchers note there are ways other than mobile coupons to offer promotions based on locations, such as offering shelf-level instant coupons for goods elsewhere in the store or analyzing data to find items that are typically not bought together and promoting one near the other.

Even with improving smartphone technology that makes it possible to pop out offers as customers roam a store, Mr. Inman said retailers should be careful in how they use location strategy to direct shopper behavior. "It's really key not to make people mad."

Source: (c)2013 the Pittsburgh Post-Gazette. Distributed by MCT Information Services.

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters