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The Effects of Cross-Ruff Coupons on Sales and Profits

Author

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  • Sanjay K. Dhar

    (Graduate School of Business, University of Chicago, Chicago, Illinois 60637)

  • Jagmohan S. Raju

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

Cross-ruff coupons are obtained at the time of purchase of a carrier brand and may be redeemed at a later date on a target brand. These coupons therefore have the ability to link consumer purchases across different brands as well as shopping trips. We model the effects of cross-ruff coupons on consumer choice behavior and derive the conditions under which cross-ruff coupons can lead to higher sales and profits than other types of package coupons. The model also provides insights into the selection of appropriate carrier and target brands, and on how the choice of an appropriate carrier or a target brand is affected when the categories that these brands belong to are demand complements or substitutes. We conduct an empirical analysis using data from 195 different cross-ruff coupon campaigns observed in grocery stores in a major U.S. city over a three-month period. The data are consistent with the key insights provided by the model.

Suggested Citation

  • Sanjay K. Dhar & Jagmohan S. Raju, 1998. "The Effects of Cross-Ruff Coupons on Sales and Profits," Management Science, INFORMS, vol. 44(11-Part-1), pages 1501-1516, November.
    • Handle: RePEc:inm:ormnsc:v:44:y:1998:i:11-part-1:p:1501-1516
    DOI: 10.1287/mnsc.44.11.1501
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    References listed on IDEAS

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    Cited by:

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    2. Casey E. Newmeyer & R. Venkatesh & Julie A. Ruth & Rabikar Chatterjee, 2018. "A typology of brand alliances and consumer awareness of brand alliance integration," Marketing Letters, Springer, vol. 29(3), pages 275-289, September.
    3. Osuna, Ignacio & González, Jorge & Capizzani, Mario, 2016. "Which Categories and Brands to Promote with Targeted Coupons to Reward and to Develop Customers in Supermarkets," Journal of Retailing, Elsevier, vol. 92(2), pages 236-251.
    4. Prasad, Ashutosh & Venkatesh, R. & Mahajan, Vijay, 2015. "Product bundling or reserved product pricing? Price discrimination with myopic and strategic consumers," International Journal of Research in Marketing, Elsevier, vol. 32(1), pages 1-8.
    5. Tin-Chun Lin, 2024. "Coupons versus Rebates: An Economic–Mathematical Comparative Analysis with Policy Implications," Mathematics, MDPI, vol. 12(12), pages 1-25, June.
    6. Geoffrey Fisher & Matthew McGranaghan & Jura Liaukonyte & Kenneth C. Wilbur, 2023. "Price promotions, beneficiary framing, and mental accounting," Quantitative Marketing and Economics (QME), Springer, vol. 21(2), pages 147-181, June.
    7. Lifeng Mu & Xin Tang & Vijayan Sugumaran & Wei Xu & Xiangyang Sun, 2023. "Optimal rebate strategy for an online retailer with a cashback platform: commission-driven or marketing-based?," Electronic Commerce Research, Springer, vol. 23(1), pages 475-510, March.
    8. Barat, Somjit & Amos, Clinton & Paswan, Audhesh & Holmes, Gary, 2013. "An exploratory investigation into how socioeconomic attributes influence coupons redeeming intentions," Journal of Retailing and Consumer Services, Elsevier, vol. 20(2), pages 240-247.
    9. Su, Meng & Zheng, Xiaona & Sun, Luping, 2014. "Coupon Trading and its Impacts on Consumer Purchase and Firm Profits," Journal of Retailing, Elsevier, vol. 90(1), pages 40-61.
    10. Foubert, Bram & Gijsbrechts, Els, 2010. "Please or Squeeze? Brand performance implications of constrained and unconstrained multi-item promotions," European Journal of Operational Research, Elsevier, vol. 202(3), pages 880-892, May.
    11. Subramanian Balachander & Bikram Ghosh & Axel Stock, 2010. "Why Bundle Discounts Can Be a Profitable Alternative to Competing on Price Promotions," Marketing Science, INFORMS, vol. 29(4), pages 624-638, 07-08.
    12. Marcel Goi'{c} & Kinshuk Jerath & Kannan Srinivasan, 2011. "Cross-Market Discounts," Marketing Science, INFORMS, vol. 30(1), pages 134-148, 01-02.
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    14. Yi-Chun (Chad) Ho & Yi-Jen (Ian) Ho & Yong Tan, 2017. "Online Cash-back Shopping: Implications for Consumers and e-Businesses," Information Systems Research, INFORMS, vol. 28(2), pages 250-264, June.

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