IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v19y2003i2p223-243.html
   My bibliography  Save this article

Modeling coupon values for ready-to-eat breakfast cereals

Author

Listed:
  • Gregory K. Price

    (Economic Research Service, U.S. Department of Agriculture, 1800 M Street, NW, Room S-5199, Washington, DC 20036-5831. E-mail: gprice@ers.usda.gov)

  • John M. Connor

    (Department of Agricultural Economics, Purdue University, 1145 Krannert Building, West Lafayette, IN 47907-1145. E-mail: jconnor@purdue.edu)

Abstract

This study identifies the determinants of coupon values at the brand level within the context of a complex marketing program. A two-equation, fixed-effects, panel-data model accounts for the bidirectional causality between brand prices and discount levels. The empirical model is fitted with data on household purchases of ready-to-eat (RTE) breakfast cereals and captures the industry's 1996 price cuts and discount reductions. Higher brand prices cause coupon values to rise, supporting the price discrimination hypothesis. Coupon values fall with in-store displays and more intense advertising but rise when couponed products are featured in store flyers. Discount levels are positively related to brand market share and the size of discounts redeemed for rival cereals. Coupon values fall with increasing brand loyalty among RTE cereal purchasers. Cereal prices are positively affected by coupon values, advertising expenditures, input costs, and the prices of competing brands. Inventory levels are negatively correlated with brand price. [EconLit citations: Q130, D120, L130]. © 2003 Wiley Periodicals, Inc. Agribusiness 19: 223-243, 2003.*

Suggested Citation

  • 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.
    • Handle: RePEc:wly:agribz:v:19:y:2003:i:2:p:223-243
    DOI: 10.1002/agr.10048
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/agr.10048
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.10048?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Capps, Oral & Seo, Seong-Cheon & Nichols, John P., 1997. "On the Estimation of Advertising Effects for Branded Products: An Application to Spaghetti Sauces," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 291-302, December.
    2. John M. Connor, 1999. "Breakfast cereals: The extreme food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 15(2), pages 247-259.
    3. Gerstner, Eitan & Hess, James D, 1991. "A Theory of Channel Price Promotions," American Economic Review, American Economic Association, vol. 81(4), pages 872-886, September.
    4. Connor, John M., 1997. "Couponing As A Horizontal And Vertical Strategy: Theory And Effects," Working Papers 14344, University of Minnesota, The Food Industry Center.
    5. Alfred E. Kahn, 1999. "Statement on the breakfast cereals industry," Agribusiness, John Wiley & Sons, Ltd., vol. 15(2), pages 223-228.
    6. Aviv Nevo & Catherine Wolfram, 1999. "Prices and Coupons for Breakfast Cereals," NBER Working Papers 6932, National Bureau of Economic Research, Inc.
    7. Ronald W. Cotterill, 1999. "High cereal prices and the prospects for relief by expansion of private label and antitrust enforcement," Agribusiness, John Wiley & Sons, Ltd., vol. 15(2), pages 229-245.
    8. Greg Shaffer & Z. John Zhang, 1995. "Competitive Coupon Targeting," Marketing Science, INFORMS, vol. 14(4), pages 395-416.
    9. Ronald W. Ward & James E. Davis, 1978. "A Pooled Cross-Section Time Series Model of Coupon Promotions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(3), pages 393-401.
    10. Stanley, Linda R & Tschirhart, John, 1991. "Hedonic Prices for a Nondurable Good: The Case of Breakfast Cereals," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 537-541, August.
    11. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
    12. 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.
    13. Scott A. Neslin, 1990. "A Market Response Model for Coupon Promotions," Marketing Science, INFORMS, vol. 9(2), pages 125-145.
    14. Ronald B. Larson, 1997. "Using price discrimination theory to plan promotions," Agribusiness, John Wiley & Sons, Ltd., vol. 13(4), pages 401-408.
    15. Chakravarthi Narasimhan, 1984. "A Price Discrimination Theory of Coupons," Marketing Science, INFORMS, vol. 3(2), pages 128-147.
    16. Gerstner, Eitan & Hess, James D & Holthausen, Duncan M, 1994. "Price Discrimination through a Distribution Channel: Theory and Evidence," American Economic Review, American Economic Association, vol. 84(5), pages 1437-1445, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Price, Gregory K. & Connor, John M., 2002. "The Determinants Of Coupon Discounts For Breakfast Cereals," 2002 Annual meeting, July 28-31, Long Beach, CA 19838, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Jing Li & Edward C. Jaenicke & Tobenna D. Anekwe & Alessandro Bonanno, 2018. "Demand for ready‐to‐eat cereals with household‐level censored purchase data and nutrition label information: A distance metric approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 687-713, October.
    4. Golub, Alla A. & Binkley, James K., 2005. "Determinants of household choice of breakfast cereals: healthy or unhealthy?," 2005 Annual meeting, July 24-27, Providence, RI 19181, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Zhu, Chen & Lopez, Rigoberto A. & Liu, Xiaoou, 2019. "Consumer responses to front-of-package labeling in the presence of information spillovers," Food Policy, Elsevier, vol. 86(C), pages 1-1.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Price, Gregory K. & Connor, John M., 2002. "The Determinants Of Coupon Discounts For Breakfast Cereals," 2002 Annual meeting, July 28-31, Long Beach, CA 19838, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Connor, John M., 1997. "Couponing As A Horizontal And Vertical Strategy: Theory And Effects," Working Papers 14344, University of Minnesota, The Food Industry Center.
    3. 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.
    4. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    5. Zhang, Jianqiang, 2016. "The benefits of consumer rebates: A strategy for gray market deterrence," European Journal of Operational Research, Elsevier, vol. 251(2), pages 509-521.
    6. Aviv Nevo & Catherine Wolfram, 1999. "Prices and Coupons for Breakfast Cereals," NBER Working Papers 6932, National Bureau of Economic Research, Inc.
    7. Golub, Alla A. & Binkley, James K., 2005. "Determinants of household choice of breakfast cereals: healthy or unhealthy?," 2005 Annual meeting, July 24-27, Providence, RI 19181, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. 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.
    9. Kutsal Dogan & Ernan Haruvy & Ram Rao, 2010. "Who should practice price discrimination using rebates in an asymmetric duopoly?," Quantitative Marketing and Economics (QME), Springer, vol. 8(1), pages 61-90, March.
    10. Cotterill, Ronald W & Putsis, William P, Jr & Dhar, Ravi, 2000. "Assessing the Competitive Interaction between Private Labels and National Brands," The Journal of Business, University of Chicago Press, vol. 73(1), pages 109-137, January.
    11. Fei Gao & Ozgun Caliskan Demirag & Frank Y. Chen, 2012. "Early Sales of Seasonal Products with Weather‐Conditional Rebates," Production and Operations Management, Production and Operations Management Society, vol. 21(4), pages 778-794, July.
    12. Banks, Jeffrey & Moorthy, Sridhar, 1999. "A model of price promotions with consumer search," International Journal of Industrial Organization, Elsevier, vol. 17(3), pages 371-398, April.
    13. Anil Arya & Brian Mittendorf, 2013. "Managing Strategic Inventories via Manufacturer-to-Consumer Rebates," Management Science, INFORMS, vol. 59(4), pages 813-818, April.
    14. Qiang Lu & Sridhar Moorthy, 2007. "Coupons Versus Rebates," Marketing Science, INFORMS, vol. 26(1), pages 67-82, 01-02.
    15. Ben-Zion, Uri & Hibshoosh, Aharon & Spiegel, Uriel, 1999. "The optimal face value of a discount coupon," Journal of Economics and Business, Elsevier, vol. 51(2), pages 159-174, March.
    16. Reimer Jeffrey J, 2004. "Market Conduct in the U.S. Ready-to-Eat Cereal Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-29, November.
    17. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(1), pages 17-39, August.
    18. Vidyanand Choudhary & Shivendu Shivendu, 2017. "Targeted Couponing in Online Auctions," Information Systems Research, INFORMS, vol. 28(3), pages 490-510, September.
    19. Chen Chen & Yongrui Duan & Guiping Li, 2022. "Adoption of personalized pricing in a supply chain," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2715-2728, October.
    20. Demirag, Ozgun Caliskan & Keskinocak, Pinar & Swann, Julie, 2011. "Customer rebates and retailer incentives in the presence of competition and price discrimination," European Journal of Operational Research, Elsevier, vol. 215(1), pages 268-280, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:19:y:2003:i:2:p:223-243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.