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Couponing As A Horizontal And Vertical Strategy: Theory And Effects

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  • Connor, John M.

Abstract

This paper surveys developments in analytical models and empirical findings concerning the strategic use of manufacturers' coupons for U.S. grocery products. Traditional theories examine the horizontal effects of coupons as a strategy to charge various classes of consumers different prices. Recent developments focus on the use of coupons in manufacturer-retailer vertical competition. The paper provides data on trends in couponing: numbers, face values, redemption rates, total promotional costs, and international usage. The paper further analyses the effective price discounts provided by coupons across brands and segments of ready-to-eat cereals during 1992-1995.

Suggested Citation

  • Connor, John M., 1997. "Couponing As A Horizontal And Vertical Strategy: Theory And Effects," Working Papers 14344, University of Minnesota, The Food Industry Center.
  • Handle: RePEc:ags:umrfwp:14344
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    File URL: http://purl.umn.edu/14344
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    References listed on IDEAS

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    1. John M. Connor, 1999. "Breakfast cereals: The extreme food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 15(2), pages 247-259.
    2. James D. Hess & Eitan Gerstner, 1987. "Loss Leader Pricing and Rain Check Policy," Marketing Science, INFORMS, vol. 6(4), pages 358-374.
    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. Caminal, Ramon, 1996. "Price Advertising and Coupons in a Monopoly Model," Journal of Industrial Economics, Wiley Blackwell, vol. 44(1), pages 33-52, March.
    5. 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.
    6. Pashigian, B Peter, 1988. "Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g," American Economic Review, American Economic Association, vol. 78(5), pages 936-953, December.
    7. Chakravarthi Narasimhan, 1984. "A Price Discrimination Theory of Coupons," Marketing Science, INFORMS, vol. 3(2), pages 128-147.
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    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. Connor, John M., 1999. "Evolving Research On Price Competition In The Grocery Retailing Industry: An Appraisal," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 28(2), October.

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