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A Market Response Model for Coupon Promotions


  • Scott A. Neslin

    (Dartmouth College)


An econometric market response model for measuring the effect of coupon promotions upon market share is developed and estimated. In addition to the brand's own couponing efforts, the model takes into account retailer promotions for the brand as well as competitive couponing activity. The model is multi-equation, simultaneous, and is estimated using scanner panel data. Results indicate that coupons have a pronounced effect upon market share, although the effect varies from brand to brand and may not be strong enough for some brands for couponing to be profitable in the short term.

Suggested Citation

  • Scott A. Neslin, 1990. "A Market Response Model for Coupon Promotions," Marketing Science, INFORMS, vol. 9(2), pages 125-145.
  • Handle: RePEc:inm:ormksc:v:9:y:1990:i:2:p:125-145

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    Cited by:

    1. Yuxin Chen & Chakravarthi Narasimhan & Z. John Zhang, 2001. "Consumer Heterogeneity and Competitive Price-Matching Guarantees," Marketing Science, INFORMS, vol. 20(3), pages 300-314, June.
    2. Gregory K. Price & John M. Connor, 2003. "Modeling coupon values for ready-to-eat breakfast cereals," Agribusiness, John Wiley & Sons, Ltd., vol. 19(2), pages 223-243.
    3. Francesca Magno & Fabiio Cassia & Marta Ugolini, 2014. "L’efficacia delle campagne di social couponing: uno studio tra i merchant di Groupon," MERCATI E COMPETITIVITÀ, FrancoAngeli Editore, vol. 2014(3), pages 41-63.
    4. Aviv Nevo & Catherine Wolfram, 1999. "Prices and Coupons for Breakfast Cereals," NBER Working Papers 6932, National Bureau of Economic Research, Inc.
    5. Peter Ebbes & Dominik Papies & Harald J. van Heerde, 2011. "The Sense and Non-Sense of Holdout Sample Validation in the Presence of Endogeneity," Marketing Science, INFORMS, vol. 30(6), pages 1115-1122, November.
    6. Randolph E. Bucklin & Sunil Gupta, 1999. "Commercial Use of UPC Scanner Data: Industry and Academic Perspectives," Marketing Science, INFORMS, vol. 18(3), pages 247-273.
    7. Shor, Mikhael & Oliver, Richard L., 2006. "Price discrimination through online couponing: Impact on likelihood of purchase and profitability," Journal of Economic Psychology, Elsevier, vol. 27(3), pages 423-440, June.
    8. (Catherine) Zhang, Jie & Savage, Scott J. & Chen, Yongmin, 2015. "Consumer uncertainty and price discrimination through online coupons: An empirical study of restaurants in Shanghai," Information Economics and Policy, Elsevier, vol. 33(C), pages 43-55.
    9. Guimond, Lisa & Kim, Chankon & Laroche, Michel, 2001. "An investigation of coupon-prone consumers: Their reactions to coupon feature manipulations," Journal of Business Research, Elsevier, vol. 54(2), pages 131-137, November.
    10. Aradhna Krishna & Z. John Zhang, 1999. "Short- or Long-Duration Coupons: The Effect of the Expiration Date on the Profitability of Coupon Promotions," Management Science, INFORMS, vol. 45(8), pages 1041-1056, August.
    11. Ajay Kalra & Mengze Shi, 2002. "Consumer Value-Maximizing Sweepstakes & Contests: A Theoretical and Experimental Investigation," Review of Marketing Science Working Papers 1-3-1008, Berkeley Electronic Press.
    12. 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.
    13. Laroche, Michel & Kalamas, Maria & Huang, Qinchao, 2005. "Effects of coupons on brand categorization and choice of fast foods in China," Journal of Business Research, Elsevier, vol. 58(5), pages 674-686, May.


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