COUPON FACE VALUE - ITS IMPACT ON COUPON REDEMPTIONS, BRAND SALES, AND BRAND PROFITABILITY

Although much research has examined the impact of coupons on redemptio n rates, incremental sales, and market share, only a few studies have addressed the impact of coupons on brand profitability. One possible r eason is lack of readily available profitability data. In the absence of such data, researchers have used managerial judgments (Neslin and S hoemaker, 1983) and experiments (Chapman, 1986) to investigate the pro fitability of coupons. We propose an integrative framework for evaluat ing the impact of coupon face value on brand profitability and impleme nt it by using readily available scanner data. The research reveals th at when a manufacturer optimizes the market-level profitability from a coupon program profit for individual chains in the market could be su boptimal.