Logo Logo

Coordinating Price Reductions and Coupon Events, Journal of Marketing Research

Abstract

In this article, the authors use an economic model to show that it may be optimal to lower the retail price during a coupon event when marginal consumers have moderate hassle costs of coupon redemption. Results from the model offer predictions on the relationships among coupon redemptions, shelf price, and coupon face value. The authors test these predictions on a large data set of hundreds of coupon events across six packaged goods categories. The data show that when a small coupon face value is offered, the shelf price is likely to be reduced. They also find that coupon efficiency increases when there is a lower retail price. The results are of interest to managers planning a promotion calendar and deciding whether to coordinate price promotions with coupon events, and they contribute to economic theory. When a firm moves from uniform pricing (e.g., no coupons) to second-degree price discrimination (e.g., coupons), all consumers may face a lower price. This finding has public policy implications because second-degree price discrimination may increase the welfare of every consumer.

Type

Article

Author(s)

Eric T. Anderson, Inseong Song

Date Published

2004

Citations

Anderson, T. Eric, and Inseong Song. 2004. Coordinating Price Reductions and Coupon Events. Journal of Marketing Research. 41(4): 411-422.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more