An empirical investigation of how perceived devaluation and income effects influence consumers' intended utilization of savings from coupon redemption.

Coupons are one of the most popular and attractive tools of promotion. Redeeming coupons makes shoppers feel that they are doing something good for their family's budget, because coupons offer 'savings.' On the other hand, a coupon might have several negative effects on purchase behavior as well, which might 'devalue' the promoted product in the consumer's perception. But a review of the literature shows a lack of attention afforded to the above-mentioned aspects of coupon redemption. In addition, the consumer's coupon redemption behavior is moderated by several factors drawn from research in the fields of market pricing, economics and psychology, each of which have contributed to the current study in their own way. Finally, there does not exist any substantive research as to why coupon redemption rates have been on the decline, despite an increase in distribution of coupons. Therefore, this research not only fills existing gaps in the literature but also enriches it by synthesizing views from different academic disciplines. This dissertation concentrates on grocery products. Data is collected from about 2500 adults, primarily residing in the Dallas-Fort Worth area. The conceptual framework is based on the theory of reasoned action, which suggests that an individual's beliefs influence his/her attitude towards the consequences of actions, and attitudes, in turn, influence the individual's actions. Toward this end, the model incorporates intention to redeem coupons, intention to keep or spend savings and intention of how to spend savings from coupon redemption as the dependent variables, and several other independent variables. Behavioral independent variables are measured using items borrowed from established scales, as well as those developed exclusively for the current study. Standard statistical tools such as factor analysis and accepted measures of reliability and validity (Cronbach's alpha) are applied and reported, while structural equation modeling has been used to re-validate certain findings. Multivariate regression is applied for testing the hypotheses. Results indicate that several psychological (e.g. arousal-seeking, novelty-seeking tendency), socio-economic (e.g. income effect, opportunity cost) and behavioral factors (e.g. savings propensity, switching behavior) influence the individual's intention to redeem a coupon. The current research offers several academic and managerial implications, while providing promising prospects for further studies