Online Discount Coupon Promotions & Repurchasing Behaviors : The Groupon Case

Abstract: In recent years, online discount coupons provided through deal-of-the-day websites have grownrapidly. Perceived as a positive opportunity for local merchants to promote themselves in themarket, a mutual exchange occurs as consumers are able to simultaneously benefit from promotionsand discounts on services and products. In fact, studies and research (the literature) can unite on the notion that online price promotionshave an immediate positive impact on sales. However, there is less agreement regarding repeatpurchasing effects. Promotion usage effects may exist in which repurchase rates are negativelyaffected by the fact that a promotion was used to make a purchase. In that respect, the problem wehave identified concerns the customers likeliness of returning to the local merchant after redeeminga coupon from the online discount coupon website. With regard to this matter, the purpose of our thesis was to describe and analyze the factors that influence the likelihood of repurchase after a transaction on an online discount website. In orderto fulfill our purpose, we conducted a quantitative study with a deductive approach on thecustomers of Groupon Stockholm. The empirical findings of our study show that price, quality and service are important factors for repurchasing, while the location of a business has an indifferent role. We further conclude that the customers appear to be loyal to the online discount websites and respectively, the benefits gained from these websites rather than the local merchants and businesses. Thus, we round up this thesis by including various managerial implications with respect to the local merchant’s perspective and strategies of improving a relational customer relationship.