Estimating the effects of higher coupon face values on the timing of redemptions, the mix of coupon redeemers, and purchase quantity

Abstract

One of the key decisions a manager must make in designing a coupon promotion is to decide on the face value. In this study we examine the effects of higher face values on coupon redemption timing, category purchase timing, the mix of buyers who redeem the coupon, and purchase quantity. Data from a field experiment on coupon face values are used to test the hypotheses. A new method of measuring the effects of a coupon on category purchase timing is proposed. We find that coupons per se tend to advance category purchase timing, but higher face values do not increase the magnitude of this effect. Surprisingly, higher face values appear to increase redemption rates for both the prior nonbuyers and prior buyers of the brand in a similar way. However, higher face values have little effect on the package size purchased, the number of units purchased, or the total quantity (package size times units) purchased.

Influences on consumer response to direct mail coupons: An integrative review

“…Consequently, as face value increases, the profile of redeemers will shift toward the nonbuyer group. This phenomenon was observed both by Shoemaker and Tibrewala (19851, who found that the effect of face value on intention to redeem was greater for nonbuyers and infrequent buyers of the brand than for regular buyers, and by Krishna and Shoemaker (1992), who observed that at higher face values the redeemer profile shifted toward nonbuyers. This effect might be attributed to nonbuyers having higher substitution costs associated with coupon usage (Bawa & Shoemaker, 1987b), which would make them less likely to use low-value coupons compared to buyers of the brand.…”

“…Krishna and Shoemaker (1992) studied face value effects on timing of the redemption purchase, purchase quantity, and package size and found no significant effects on any of these aspects of purchase behavior. Neslin, Henderson, and Quelch (1985) found that coupons had no effect on purchase timing but tended to increase purchase quantity.…”

“…The redeemer profile is important t o the evaluation of coupon effectiveness because it has a direct bearing on the incremental sales generated by the coupon (Krishna & Shoemaker, 1992;Neslin & Clarke, 1987). The more nonbuyers who redeem the coupon, the greater the incremental sales generated per redemption.…”

Use it or lose it: purchase acceleration effects of time‐limited promotions

“…Most researchers have measured the temporal and quantity dimensions of purchase acceleration by using two separate measures (eg, Neslin et al, 1985;Krishna and Shoemaker, 1992). The authors propose a summary measure of purchase acceleration that captures both these dimensions in one index.…”

Effects of perceived behavioral control on the consumer usage intention of e-coupons

“…One stream of literature focuses on the characteristics of coupons that could lead to higher redemption rates (Bawa, Srinivasan, & Srivastava, 1997;Fry & McDougall, 1974;Reibstein & Traver, 1982;Shoemaker & Tibrewala, 1985;Ward & Davis, 1978), such as discount rates (Bawa & Shoemaker, 1987b;Krishna & Shoemaker, 1992;Raghubir, 1998) and expiration dates (Bowman, 1980;Inman & McAlister, 1994). Also proposed is that perceived value and credibility of coupons and consumer involvement (Raghubir, 1998) are related to the redemption rate (Fry & McDougall;Monroe & Chapman, 1987;Monroe & Dodds, 1988).…”