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Competing Coupon Promotions and Category Sales

Author

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  • Jeongwen Chiang

    (Washington University in St. Louis)

Abstract

Recent reports show that manufacturers in many consumer product industries continue to use coupons as one of their main promotional tools. The rising intensity of coupon competitions, however, makes the issue of having better measures for coupon effects ever more important. This paper proposes a method to assess the category expansion effect in an environment where rival brands distribute coupons repeatedly over a period of time. A consumer utility maximization model is presented in which the decision of coupon use is endogenized along with the demand decision. Using single-source detergent data as benchmark, the proposed model is an advance over the conventional regression model in that the latter tend to produce upward-biased estimations for the category impact of coupons.

Suggested Citation

  • Jeongwen Chiang, 1995. "Competing Coupon Promotions and Category Sales," Marketing Science, INFORMS, vol. 14(1), pages 105-122.
    • Handle: RePEc:inm:ormksc:v:14:y:1995:i:1:p:105-122
    DOI: 10.1287/mksc.14.1.105
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    Cited by:

    1. Balakrishnan, Janarthanan & Foroudi, Pantea & Dwivedi, Yogesh K., 2020. "Does online retail coupons and memberships create favourable psychological disposition?," Journal of Business Research, Elsevier, vol. 116(C), pages 229-244.
    2. Jeongwen Chiang & Ching-Fan Chung & Emily Cremers, 2001. "Promotions and the pattern of grocery shopping time," Journal of Applied Statistics, Taylor & Francis Journals, vol. 28(7), pages 801-819.
    3. Harikesh S. Nair & Sanjog Misra & William J. Hornbuckle IV & Ranjan Mishra & Anand Acharya, 2017. "Big Data and Marketing Analytics in Gaming: Combining Empirical Models and Field Experimentation," Marketing Science, INFORMS, vol. 36(5), pages 699-725, September.
    4. Aviv Nevo & Catherine Wolfram, 1999. "Prices and Coupons for Breakfast Cereals," NBER Working Papers 6932, National Bureau of Economic Research, Inc.
    5. Navdeep S. Sahni & Dan Zou & Pradeep K. Chintagunta, 2017. "Do Targeted Discount Offers Serve as Advertising? Evidence from 70 Field Experiments," Management Science, INFORMS, vol. 63(8), pages 2688-2705, August.
    6. Chihwa Kao & Lung-fei Lee & Mark M. Pitt, 2001. "Simulated Maximum Likelihood Estimation of the Linear Expenditure System with Binding Non-Negativity Constraints," Annals of Economics and Finance, Society for AEF, vol. 2(1), pages 215-235, May.
    7. Noble, Stephanie M. & Lee, Kang Bok & Zaretzki, Russell & Autry, Chad, 2017. "Coupon clipping by impoverished consumers: Linking demographics, basket size, and coupon redemption rates," International Journal of Research in Marketing, Elsevier, vol. 34(2), pages 553-571.
    8. Yi Qian & Hui Xie, 2011. "No Customer Left Behind: A Distribution-Free Bayesian Approach to Accounting for Missing Xs in Marketing Models," Marketing Science, INFORMS, vol. 30(4), pages 717-736, July.
    9. Youngsoo Kim & Ramayya Krishnan, 2019. "The Dynamics of Online Consumers’ Response to Price Promotion," Service Science, INFORMS, vol. 30(1), pages 175-190, March.
    10. Baohong Sun, 2005. "Promotion Effect on Endogenous Consumption," Marketing Science, INFORMS, vol. 24(3), pages 430-443, July.
    11. Greg M. Allenby & Thomas S. Shively & Sha Yang & Mark J. Garratt, 2004. "A Choice Model for Packaged Goods: Dealing with Discrete Quantities and Quantity Discounts," Marketing Science, INFORMS, vol. 23(1), pages 95-108, June.
    12. Qin, Fei & Ma, Meilin, 2022. "Unit Pricing Regulation and Non-Price Responses of Retailers: Evidence from the U.S. Yogurt Market," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322243, Agricultural and Applied Economics Association.
    13. Xianghua Lu & Sulin Ba & Lihua Huang & Yue Feng, 2013. "Promotional Marketing or Word-of-Mouth? Evidence from Online Restaurant Reviews," Information Systems Research, INFORMS, vol. 24(3), pages 596-612, September.
    14. CAMPO, Katia & GIJSBRECHTS, Els & NISOL, Patricia, 1999. "Towards a conceptual framework of out-of-stock behaviour: The impact of product, consumer, and situation characteristics on out-of-stock reactions," Working Papers 1999023, University of Antwerp, Faculty of Business and Economics.
    15. Chintagunta, Pradeep & Kyriazidou, Ekaterini & Perktold, Josef, 2001. "Panel data analysis of household brand choices," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 111-153, July.
    16. Paul Mills & César Zamudio, 2018. "Scanning for discounts: examining the redemption of competing mobile coupons," Journal of the Academy of Marketing Science, Springer, vol. 46(5), pages 964-982, September.

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    Keywords

    coupon promotions; category sales;

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