Author
Doğan, Kutsal
Publication Date
2010-11
Publication Place
-
Decision Sciences Institute
Subject
Consumer effort, Coupons, Price discrimination, Promotions, Rebates
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
0011-7315
Record ID
65683aa1-fbe0-43d8-8977-33387e92fabb
Library Location
Management Information Systems
Date
2010-11
Notes
Due to copyright restrictions, the access to the full text of this article is only available via subscription.
Sample Text
Consumers need to exert effort to use the incentives provided in a promotion campaign. This effort is critical in the consumers’ decision process and for the success of the campaign. We develop a model of consumer redemption effort that is general in nature and is applicable to coupons, rebates, and other price-discrimination devices. We find that the impact of redemption effort is quite intricate on a firm’s profit and consumers’ surplus. We find that there are cases where a firm would like to operate in a low redemption cost environment while consumers would be better off with higher costs. We identify cases where price can remain the same with or without the promotion. In these cases, it is possible that the surplus for each individual consumer is higher when a firm price discriminates and improves its profit. Our results indicate that a firm would rather have variation in consumer redemption costs than to have variation in consumer valuations. However, in a market with low valuation variability, consumer redemption cost variability is essential for an efficient promotion campaign. Therefore, the markets that naturally have a lot of variability in consumer valuations should be the ones targeted for online promotion programs that reduce consumer effort levels, not the markets with low variability.
DOI
10.1111/j.1540-5915.2010.00295.x
Cilt
41
