Start Date
11-12-2016 12:00 AM
Description
Daily deals have emerged as an integral part of the marketing mix for retail merchants and have enjoyed wide acceptance by consumers. However, there is considerable ambiguity about the effects of deals on brand evaluation, and resulting electronic word-of-mouth (eWOM). In this paper, we propose that the effects of deals on eWOM are contingent on merchant heterogeneity and whether consumers perceive merchants' marketing efforts as desperate. We empirically model the effects of daily deals on eWOM for restaurants in Washington DC over 13 months. Results show that price segment, age, and competitive deal intensity strongly moderate the effect of deals on resulting eWOM. We also show that deals have significant spillover effects on neighboring merchants who do not offer deals. We confirm these effects using three controlled lab experiments, where similar results are obtained without the possibility of deal redemption.
Recommended Citation
Mejia, Jorge; Gopal, Anand; and Trusov, Michael, "Deal or No Deal? Consumer Expectations and Competition in Daily Deals" (2016). ICIS 2016 Proceedings. 19.
https://aisel.aisnet.org/icis2016/HumanBehavior/Presentations/19
Deal or No Deal? Consumer Expectations and Competition in Daily Deals
Daily deals have emerged as an integral part of the marketing mix for retail merchants and have enjoyed wide acceptance by consumers. However, there is considerable ambiguity about the effects of deals on brand evaluation, and resulting electronic word-of-mouth (eWOM). In this paper, we propose that the effects of deals on eWOM are contingent on merchant heterogeneity and whether consumers perceive merchants' marketing efforts as desperate. We empirically model the effects of daily deals on eWOM for restaurants in Washington DC over 13 months. Results show that price segment, age, and competitive deal intensity strongly moderate the effect of deals on resulting eWOM. We also show that deals have significant spillover effects on neighboring merchants who do not offer deals. We confirm these effects using three controlled lab experiments, where similar results are obtained without the possibility of deal redemption.