The "Deal-Prone" Consumer

> Deal proneness is a function of both the consumer's buying behavior and the frequency with which a given brand is sold on a deal basis. A method is developed for combining these factors in a statistical measure of deal proneness for an individual consumer. Through regression analysis four consumer variables are identified as having a significant influence on the Deal Proneness Index, but these variables explain only a small percentage of total variation in the Index. The findings raise some doubt about the ability of consumer deals to accomplish the manufacturer's promotional objectives. Manufacturers of consumer goods spend millions of dollars annually to promote the sale of their products by means of coupons, price-off labels, premium packs and similar devices. A common element in these devices, which we call "consumer deals," is a reduction in the standard retail price of the product or an increase in value to the consumer. The magnitude of these efforts is suggested by a 1962 study of couponing which estimated that over 10 billion coupons were distributed in 1960, by direct mail and in publications, at a cost of almost one billion dollars [3]. Other forms of consumer deals probably represent an equally large annual expenditure. The purpose of the research reported here was to identify the "deal-prone" consumer. Are there demographic, socioeconomic, or purchasing characteristics which distinguish the deal-prone consumer? An answer to this question could provide some basis for increased efficiency in marketers' dealing activities, as well as a contribution to our understanding of consumer behavior in general. Data covering a recently completed three-year period were available from the Market Research Corporation of American (MRCA) for a major metropolitan area. These data provided information on purchases of a food item by 366 families in the consumer panel during the period. Included in the panel data was an indication of whether the individual purchase was made at the standard retail price or on one of several forms of deal. It is believed that the results reported below would be similar for any urban and suburban population and for any branded grocery item. The MRCA panel represented a cross-section of the population of a major metropolitan area. Being aware of the criticisms leveled against panel data, no better data base for examining consumer purchases of "packaged goods" over a long time period appears to be available. Branded staple food items of the kind used in this analysis are purchased by all segments of the population on a more or less routine basis. The product studied here is likely to evince some brand loyalty, and is believed to be typical of a wide variety of grocery items purchased on a typical trip to the supermarket. As such, similar results would be predicted for such branded items as bread, flour, frozen foods, canned fruits and vegetables, and beverages. Because the staple food item analyzed here is sold under both national and private brands, panel reporting errors associated with one brand or another would not produce a consistent bias in analysis [4]. There were two phases in the analysis of the data. The first step was the development of a measure of consumer deal proneness. The second step was an attempt to correlate this measure of deal proneness with available data on families' demographic, socioeconomic and purchasing characteristics.