How Group Consumption Affects Coupon Acquisition and Redemption: The Moderating Role of Offline Agglomeration in Online Group Buying

ABSTRACT

Local merchants have implemented coupon promotions to attract consumer traffic and improve product sales. Drawing upon signaling theory, this paper examines how a social characteristic of a coupon (i.e., group consumption) influences coupon acquisition and subsequent coupon redemption, along with how such relationships are further influenced by offline agglomeration (i.e., density and product agglomeration). Specifically, we argue that group consumption increases coupon acquisition, which in turn increases coupon redemption, with coupon acquisition serving as a mediator in the relationship. These relationships, however, are contingent upon offline agglomeration signals. Using a large panel data set from a prominent group buying platform, we collect 121,909 observations to test our theoretical model. The findings reveal a positive relationship between group consumption and coupon acquisition and a positive relationship between coupon acquisition and redemption, while the relationship between group consumption and coupon redemption is fully mediated by coupon acquisition. Furthermore, we find that the effect of group consumption on coupon acquisition is strengthened by density agglomeration but attenuated by product agglomeration. The effect of coupon acquisition on redemption is reinforced by density agglomeration. These findings offer valuable implications for local merchants who are seeking to optimize their coupon promotions.