Mike Shor: Research

"Digital Redemption of Coupons:
Satisfying and Dissatisfying Effects of Promotion Codes

Richard L. Oliver, Mikhael Shor


Journal of Product & Brand Management (Vol. 12 No. 2, pp. 121-134)


Coupons in the form of "promotion codes" are now a mainstay of the online shopping experience, but online coupon redemption differs substantively from that in traditional retailing. Generally, offline redemption of coupons is customer-initiated while Internet shoppers are usually prompted to enter a code towards the conclusion of the checkout process. This prompting may influence shopper perceptions and behaviors such as shopping cart abandonment. While a number of reasons may explain why consumers would leave a site mid-purchase, we hypothesize that perceived inequity by those not having codes or those without the means to acquire them is an alternative explanation for dissatisfaction and abandonment. We create an online experiment to test for such effects. While completing a hypothetical purchase, some respondents received a completed code field, others an empty field, and still others were not prompted for a code (the control group). Results showed strong negative effects on price fairness, satisfaction, and purchase completion in the code-absent group and positive effects on fairness and satisfaction in the code-present group. Moreover, differing presentations of the code prompt and terminology for the code itself (promotion, coupon, discount) were evaluated. Subtle differences were observed in the phrase used to describe the code. Lastly, we present implications for effective market segmentation through the use of online coupon codes.