THE EFFECT OF PACKAGE COUPONS ON BRAND CHOICE

We propose a stochastic choice model, and supporting empirical analyse s, to understand the effect of package coupons on brand choice. Packag e coupons can be broadly classified into three types: peel off coupons , on-pack coupons, and in-pack coupons. Our model helps understand the relative impact of these three types of coupons on market share. We f ind that on-pack coupons may lead to a higher market share than peel-o ff coupons. What makes this result potentially interesting is that whi le the benefit of a peel-off coupon is realized immediately, the consu mer has to wait until the next purchase occasion to cash in the benefi t of an on-pack coupon. Though we primarily examine situations where p ackage coupons are dropped frequently, a scenario that is quite repres entative of today's marketplace, we show that our results are also app licable when a manager is evaluating a particular coupon campaign. We compare the key predictions of our model with data collected from a se ries of in-store quasi-experiments. The data are consistent with the m odel's predictions.