Differential Responses to Retail Sales

~Promotion Amdng African-American and

Anglo-American Consumers

CORLISS L. GREEN
Georgia State University

Ethnicpopulations are growing in numbers throughout the UnitedStates, and retailers today
are challenged to develop promotional strategies to reach these consumers. Couponing is
one particular sales promotion activity to which ethnic consumers have historically re-
sponded poorly. This study examines the responses of African-American and Anglo-Ameri-
can consumers to four types of retail sales promotion--coupons, product displays, feature
advertisements, and price discounts. Results show that significant d@erences exist between
African- andAnglo-Americans only in their useof cents-offcoupons. One implication is that
there are possibly some media-related factors contributing to this outcome, since using
coupons is the one promotion activity involving media exposure outside of the retail
establishment. Thus, there is a needfor retailers to plan promotional strategies so that they
are effective in reaching the particular ethnic markets which they serve.

The widespread use of coupons and other retail promotions has motivated researchers to
identify the factors associated with deal proneness (Blattberg, Buesing, Peacock and Sen,
1978; Montgomery, 1971; Narasimhan, 1984; Webster, 1965). Coupon proneness can be
conceptualized as a single dimension of deal proneness. where individuals who use coupons
are referred to as “coupon prone” consumers (Lichtenstein, Netemeyer and Burton, 1990).
Several researchers have suggested that a household’s response to coupons is partly deter-
mined by household characteristics such as household income, education, and family size,
however, there is no clear relationship between demographics and consumer response to
deals. Of the demographic variables that have been examined, the positive relationship
between deal proneness and both income and household size is the most consistent (Mittal,
1994). One potentially important relationship which has not been adequately explored is the
effect of a consumer’s ethnic background on his or her response to deals. The research in
this area, however, is limited to only one dimension of deal proneness-response to coupon
promotions. The consensus here is that ethnic consumers are not coupon prone (Kaufman
and Hernandez, 1990, Yovovich, 1981) and that coupon redemption levels among them are
well below that of the general population.

Corliss L. Green, Georgia State University, Department of Marketing, Atlanta, GA 30303.

Journal of Retailing, Volume 71, Number 1, pp. 83-92, ISSN 0022-4359

Copyright 0 1995 by New York University. All rights of reproduction in any form reserved.

83
84 Journal of Retailing Vol. 71, No. 1 1995

The current study examines behavioral differences in African-American and Anglo-

American response to sales promotion activities including coupons, product displays, feature
ads, and price discounts. Most research focusing on the consumption behavior of African-
Americans is relatively dated (Alexander, 1959; Sexton, 1972; Bauer, Cunningham, and
Wortzel, 1965). Both the economic and social state of African-Americans has changed since
this research was conducted. Thus, given the empirical nature of the research question (i.e.,
linking demographic characteristics with behavioral outcomes without the benefit of strong
theory) further investigation on the effects of demographics on market-related behavior is
warranted.
This study broadens the scope of previous works by examining a variety of sales promotion
activities in ad&ion to coupon usage. Also, actual behavioral data is used, where most
existing research on ethnic coupon usage has relied on consumer self-report information
(Donthu and Cherian, 1992; Hemandez and Kaufman, 1989; Kaufman and Hernandez,
1990). This allows for a direct and unbiased examination of how Anglo-American and
African-American consumers differ in their responses to retailer promotional efforts. The
major question addressed in this study is whether or not Anglo-American consumers are
more prone than African-American consumers to engage in coupon usage and other popular
retail sales promotion activities.
The likelihood that ethnic consumers may differentially respond to sales promotion is an
important issue for retailers, particularly those which primarily serve ethnic markets.
Retailers are realizing that in order to reach ethnic markets, they must use differentiated
promotional strategies designed for specific groups. These conditions point the need for
retailers and manufacturers to critically examine current promotional activities in stores
serving a large portion of ethnic consumers. Neighborhoods are often identified by the ethnic
or racial background of their residences (i.e., black neighborhoods, white neighborhoods,
hispanic neighborhoods, etc.). Data from the most recent Census indicates that residential
areas are heavily segregated by race (U.S. Bureau of the Census, 1990). Therefore, some
grocery retailers may predominately serve white consumers, while others may predomi-
nately serve black consumers or hispanic consumers. Given these circumstances, it is
important for such retailers to have an understanding of the extent to which potential markets
respond to various sales promotion efforts in and outside the store.

BACKGROUND LITERATURE

One explanation for existing differences in coupon redemption is that consumers from
dissimilar cultural backgrounds may place different values on saving money. Saving money
is considered to be the primary motive for using coupons (Babakus, Tat and Cunningham,
1988). Past research seems to suggest that the value of saving money differs across racial
and ethnic backgrounds. For example, Sexton (1972) found that for the general population
the most important criteria in food store selection are the level of prices and the quality of
the food. A study on black homemakers, on the other hand, produced a quite different
ordering. Convenience of location and a friendly atmosphere were found to be the most
important criteria while low prices were found least important. Alexander (1959) also
Differential Responses to Retail Sales Promotions 85

suggested that saving money is of low priority among black consumers. He found that young
black homemakers rebelled against foods associated with low social status. Instead, they
commonly purchased packaged foods and quality meats as symbols of social status. Based
on this research, it might be expected that black consumers would place a lower priority on
using coupons to save money than white consumers. It has also been suggested that ethnic
consumers, blacks and hispanics in particular, are more brand loyal than the general
population (Bauer et al., 1965) and are probably less likely to use coupons as an incentive
try other brands. Another possible explanation for low coupon redemption among ethnic
consumers is the limited forms of media in which many ethnic consumers utilize. Research
shows that a major problem with communicating to ethnic consumers is media selection
(Kaufman, 1991). The literature also suggests that most African-American and Hispanic
consumers do not subscribe to major local newspapers (which is the number one source of
coupons) and many subscribe to media which are ethnically-oriented (i.e., weekly ethnic
newspapers or ethnic magazines) and are not widely utilized by national marketers or local
chain retailers for coupon distribution (Chain Store Age Executive, May 1988). It has been
suggested that problems unique to ethnic submarkets including preferences for ethnic brands,
shopping habits of ethnic groups and limited exposure to print media can limit the effective-
ness of traditional couponing techniques (Kaufman, 1991). Thus, the following hypothesis
is proposed:

Hl: There are significant dzflerences in coupon use behveen Anglo-Ameri-

can and African-American consumers.

Other Forms of Retail Sales Promotion

While most of the literature on ethnic consumers and retail sales promotion pertains to
coupon redemption, it is important to note that there may be different responses among
African-American and Anglo-American consumers to other types of retail sales promotions
including feature advertising, product displays, and price discounts. Feature ads are typically
run on a week day which is known as “Best food day,” and the items advertised usually
appear with special event or discount prices (Blattberg and Neslin, 1990). Because these ads
appear in local newspapers, the same informational barrier (i.e., media selection) that
potentially restrains coupon use by ethnic consumers may affect the likelihood of being
exposed to advertising for featured products. Thus, African-American consumers who are
not being exposed to local newspapers to the extent of their white counterparts, are not as
likely to be aware of advertised specials at their local supermarkets and as a result, may be
less likely to act on them. This rationale leads to the following hypothesis:

H2: There are significant difierences between Anglo-American consumers

and African-American consumers in purchase response to feature
advertising.
86 Journal of Retailing Vol. 71, No. 1 1995

One of the most important forms of retail promotion is the in-store product display. Product
displays, unlike coupons and feature ads, are a form of retail promotion that do not require
a media “search” effort on part of the consumer before he or she enters the retail estab-
lishment. Thus, the informational barrier that is commonly prevalent with respect to coupons
and featured ads are almost nonexistent with product displays. The following relationship is
therefore hypothesized:

H3: There are MI significant differences between African- and Anglo-

American consumers in the amount of products they purchase on
display.

The most popular promotional tool used by retailers is the price discount. Price discounting
is psychological in that it encourages the consumer to compare the regular price to the
discounted price, enhancing the perceived value of the discount. Like product displays, price
discounting is a sales promotion activity that occurs inside the store and does not require
out-of-store advertising exposure. Thus, once again, informational barriers are avoided. This
rationale leads to the following hypothesized relationship:

H4: There are no significant differences between African- and Anglo-

American consumers in the amount of products they purchase on price
discounts.

METHODOLOGY

Sample

IRI (Information Resources, Inc.) scanner panel data for frozen snack products including
ice cream and frozen novelty desserts were used for testing the hypotheses. Subjects included
in the panel were drawn randomly from the population. To have a manageable data set, the
analysis was restricted the data for frozen snack products in the Chicago, Illinois market.
This particular product category was chosen because it represents one of several major retail
product categories that is heavily promoted, ranking among the top twenty product categories
in coupon distribution (Nielsen Clearing House, 1990). African- and Anglo-American
consumers are approximately equal (in proportion to their populations) in purchases of
products within this category. The data set covers a panel of approximately 300 households
(250 Anglo-American households and 50 African-American households) making approxi-
mately 5300 purchases over a one-year period (1989-1990). It contains records of the
purchase history of each household in the panel, as well as information on purchasers’
demographic backgrounds. Purchase data for this study was collected from six grocery stores
and the proportion of African-Americans and Anglo-Americans in the sample who shopped
at each store was representative of the population.
Differential Responses to Retail Sales Promotions 87

Model

Four dichotomous logit models are used to test for differences among Anglo-Americans
and African-Americans in their response to retail sales promotion. The dependent variables
are coupon use, response to displays, response to discounts, and response to features.
Correlation coefficients indicate relatively low correlations among the independent variables
and variance inflation factors suggest a low degree of multicollinearity (see Tables, la and,
1b). For each type of promotional purchase a model is estimated in the form:

+ b7iRACE X INCI + bsiRACE X INC2 +bgiRACE X SIZE1

+ bloiRACE X SIZE2 +bl IiRACE X NEWS

where standard dummy variables were created as follows:

PI = { 1 if purchased with coupon INC2 = { 1 if $21,000-$45,000,

and 0 otherwise, and 0 otherwise,
P2= (1 if featured, and SIZE1 = (1 if 1 or 2 people
and 0 otherwise, and 0 otherwise,
P3 = [ 1 if purchased on display, SIZE2 = { 1 if 3-5 people, and
and 0 otherwise, and 0 otherwise,
P4 = ( 1 if purchased OJIdiscount, NEWS’ = { 1 if have newspaper subscription,
and 0 otherwise, 0 if not
INCl = ( 1 if $20,000 or less, RACE = { 1 if black
and 0 otherwise, 0 if white

TABLE1 A

Correlation Coefficients of Independent Variables

Household Newspaper
Race Family Size Income Subscription

Race 1.ooo
Family Size .013 1.ooo
L334)
Household Income -.270 .258 1.000
C.001) (.OOl)
Newspaper Subscription -.207 .150 .185 1.000
(.OOl) C.067) (.OOl)
88 Journal of Retailing Vol. 71, No. 1 1995

TABLE1 B

Variance-Decomposition Proportions, Variance Inflation, and Condition Indices

Condition var(Fami/y var(HH var(News Variance
Variable index var(/ntercept) var(Race) Size) Income) Sub) Mation
Intercept 1 .oo .008 .OlO .012 .012 .020 0.00
Race 2.00 .ooo .758 .OOl .008 .02 1 1 .12
Family Size 3.60 .OlO .038 ,043 .125 .893 1 .09
HH Income 4.94 .OOl .094 ,637 .591 .013 1.17
Newspaper Sub. 6.48 .979 .097 ,306 .261 .051 1.08

Results

Hl suggests that there are significant differences in coupon use between Anglo-Americans
and African-Americans. This hypothesis is supported @ < .Ol). Results presented in Table
2 indicate that Anglo-American consumers redeem significantly more coupons than Afri-
can-American consumers. The mean scores for coupon use among Anglo-and African-
Americans are .09 1 and .034 respectively. Findings also indicate that having a newspaper
subscription is not a significant factor in determining the level of coupon usage. This may
be the case because most coupons are concentrated in the Sunday edition of the newspaper.
Thus, different results are likely to be found when measuring exposure to the Sunday edition.
An unexpected finding is that coupon use tends to be greater among smaller families,

TABLE2

Link Between Demographic Variables and Coupon Use

Variable Parameter Estimate (Standard Error) Level of Significance
Intercept 1 .34 (.154) .OOl
Race -1 .13 (.249) .OOl
Income1 -.939 C.104) .OOl
Income2 -.882 (.089) ,001
Size1 ,518 C.144) .OOl
Size2 .085 (.144) ,556
Newspaper -.117 (.076) ,121
Race x Income1 ,688 C.330) ,037
Race x Income2 ,591 (.341) .083
Race x Size1 .064 c.178) .718
Race x Size2 .328 c.424) .439
Race x Newspaper ,035 c.178) .840
-2LoGL -3056.40
p-value 0.001
Differential Responses to Retail Sales Promotions 89

TABLE 3

link Between Demographic Variables and Purchases on Feature

Variable Parameter Estimate (Standard Error) Level of Significance

Intercept 2.65 (.299) .OOl

Race .450 C.695) .517
Income1 .144 (.151) ,338
Income2 -.015 (.129) .906
Size1 -.668 (.290) .021
Size2 -.526 (.29.5) .075
Newspaper .258 (.l 14) .023
Race x Income1 1.69 (.570) .002
Race x Income2 .880 (.561) .117
Race x Size1 -1.06 (.534) ,046
Race x Size2 1.34 (.507) .007
Race x Newspaper .947 (.581) .113
-2 LOG L 6611.15
p-value 0.001

decreasing as families get larger. In addition, fewer coupons are used by consumers at low
and middle income levels in comparison to consumers at higher levels.
H2 suggests that a greater amount of purchases made by Anglo-Americans are featured
in retail food ads than purchases made by African-Americans. Results presented in Table 3
do not provide support for this hypothesis @ > .OS). One possible explanation for this finding
is that copies of most newspaper feature ads are also made available in the store so that
everyone patronizing the store can read what the featured specials are. Results indicate that
one’s having a subscription to the newspaper is significant in determining the amount of

TABLE 4

Link Between Demographic Variables and Purchases on Display

Variable Parameter Estimate (Standard Error) Level of Significance

Intercept 1.786 (.185) ,001

Race .587 (.771) .446
Income1 -.470 (.134) .OOl
Income2 -.489 (.113) .OOl
Size1 .902 (.174) .OOl
Size2 ,446 (.173) .007
Race x Income1 -.842 (.757) .265
Race x Income2 -1.35 (.766) .076
Race x Size1 1.41 (.301) .OOl
Race x Size2 -.579 (-537) .281
-2 LOG L -4338.24
p-value 0.001
90 Journal of Retailing Vol. 71, No. 1 1995

TABLE5

link Between Demographic Variables and Purchases on Discount

Variable Parameter Estimate (Standard Error) Level of Significance

Intercept .845 (.145) .OOl

Race -.306 C.331) .355
Income1 -.665 (.092) .OOl
Income2 -.699 C.079) .OOl
Size1 .143 C.179) .304
Size2 .346 t.138) .012
Racex Income1 .153 C.312) .629
Racexlncome2 .170 C.322) .596
Racex Size1 .050 C.167) .765
Racex Size2 .OOl t.169) .VVl
-2LOCL -7234.62
p-value 0.001

featured products purchased. However, the interaction of race and newspaper subscriptions
was not significant. In addition, income was not found to be significantly related to featured
purchases and purchases of featured products were greatest among small families.
H3 suggests that there are no significant differences between Anglo-American and
African-American consumers in the amount of products they purchase on display. Results
presented in Table 4 provide support for this hypothesis 0, > .05) thus, race is not a significant
determining factor of response to product displays. Findings do indicate that there is a
significant impact of income and family size on purchases made on display. Consumers with
low and middle incomes (i.e., $45,000 or less) purchase a smaller number of products on
display than consumerS at higher income levels. In addition, small and medium sized families
(i.e., between 2 and 5 people) make more purchases of displayed products than larger
families, and small African-American families make significantly more display purchases
than small Anglo-American families.
H4 suggests that there are no significant differences between African-American and
Anglo-American consumers with respect to the amount of discounted products purchased.
Results presented in Table 5 provide support for H4 @ > .05). Thus, race is not significant
in predicting consumer response to price discounting. Income and family size, however, have
significant effects on discount purchasing. Consumers at lower and middle incomes make
more discount purchases than consumers at higher income levels, and middle-sized families
(between 3 and 5 people) make the most discount purchases.

DISCUSSION AND CONCLUSIONS

The findings of this study indicate that Anglo-Americans redeem significantly more retail
or trade coupons than African-Americans. However, no significant differences were found
between the groups with respect to theirresponses to product displays, feature ads, and price
discounts. These findings suggest that the types of promotion activities that retailers choose
to implement is an important decision to be made among retailers that serve specific ethnic
Differential Responses to Retail Sales Promotions 91

or racial markets. Store promotions are a major determinant of patronage and results of this
study suggest that promotions which appeal to the specific markets served should be
implemented in order to attract store loyal customers.
A key distinction between coupons and the other forms of sales promotion is that using
coupons is the only activity that requires a media search effort before entering the retail
establishment. Consumers can only take advantage of the benefits of using coupons (of which
over 80% are distributed through print media) by searching through media to collect coupons
for the brands that they purchase. On the other hand, features, displays, and discounts are
promotion activities that consumers can take advantage of once inside the store. African-
Americans in this study have displayed a more favorable response to in-store sales promo-
tions like displays and product discounts. This suggests that retailers serving
African-American markets may find the implementation of in-store sales promotion to be
more effective. This does not suggest, however, that couponing is necessarily an ineffective
method of promotion for grocery stores predominately serving ethnic markets. Technology
has brought about a new method of coupon distribution, the automatic coupon dispenser,
which issues coupons at the point of product selection. Hence, the effect is not much different
from that of a price discount. It is probable that this relatively new method of couponing
would elicit the same response among African-American shoppers as displays, features, and
price discounts, thereby possibly closing the gap between Anglo- and African-Americans in
their levels of redemption.

Limitations and Directions for Future Research

Findings of the current study indicate that ethnic consumers respond differently than the
general population to the activity of using coupons. A limitation of the study, however, is
that it does not suggest why these apparent differences exist. Prior research indicates that
coupon use is significantly related to media selection. What has not been tested, but may
provide an explanation for differences in coupon redemption is a possible difference in the
types of media that a large portion of African-Americans are being exposed to. The literature
indicates that many ethnic consumers prefer ethnic-oriented media which are not used much
by retailers or manufacturers for coupon distribution (Kaufman, 1991). This may suggest
that low levels of coupon redemption among African-Americans, as well as members of
other ethnic groups, may be due to differences in ethnic media patterns.
Prior research has found that pride (i.e., the level of satisfaction experienced by having
obtained an item on discount) is a motive of coupon use (Babakus et al., 1988). For
African-American consumers, however, the literature indicated that they generally have a
negative image of using coupons. For example, Yovovich (1981) suggests that black
consumers’ reputation for low coupon redemption is a result of their perception of coupons
as handouts. More specifically, coupons have been historically avoided by some low income
blacks, and due to their association with welfare they were considered to be a sign of the
inability to pay full price for an item. It would be interesting to test for possible differences
in perceived savings pride and attitudes towards price between Anglo-and African-American
consumers. In terms of using coupons to save money, it could be the case what is considered
to be “savings pride” among white consumers is considered a “savings stigma” among their
black counterparts.
92 Journal of Retailing Vol. 71, No. 1 1995

NOTES

1. The effect of having a newspaper subscription is only included in the models for coupon use
and response to features.

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