Empirical decomposition of customer responses to discount coupons in online FMCG retailing

Samaneh Montazeri, Ali Tamaddoni, Stanislav Stakhovych, Michael Ewing

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This study considers the efficacy of ‘general’ discount coupons: i.e. those whose discounts apply storewide. We decompose purchase behavior into three effects: spending, basket size, and inter-purchase time. The effects of dollar-off vs. percentage-off coupons are examined for 3,827 customers who had redeemed both types of coupon framings in an Australian online fast-moving consumer goods (FMCG) retail context. Results from Bayesian simultaneous equation modelling confirm that compared to dollar-off coupons, percentage-off general coupons induce customers to both spend more and shop more items. Moreover, by capturing consumer heterogeneity the customer base can be segmented into several clusters based on their reaction to coupons.

Original languageEnglish
Article number102340
Number of pages7
JournalJournal of Retailing and Consumer Services
Volume58
DOIs
Publication statusPublished - Jan 2021

Keywords

  • Bayesian estimation
  • Customer heterogeneity
  • Discount coupons
  • Price-based promotions

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