Couponing as a Horizontal and Vertical Strategy: Theory and Effects

U of Minnesota Retail Food Industry Center Working Paper No. 97-06

42 Pages Posted: 23 Aug 2008

See all articles by John M. Connor

John M. Connor

American Antitrust Institute (AAI); Purdue University

Date Written: August 1, 1997

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.

Keywords: Coupons, sales strategies, vertical competition, food products, ready-to-eat cereals.

Suggested Citation

Connor, John M. and Connor, John M., Couponing as a Horizontal and Vertical Strategy: Theory and Effects (August 1, 1997). U of Minnesota Retail Food Industry Center Working Paper No. 97-06, Available at SSRN: https://ssrn.com/abstract=1242001 or http://dx.doi.org/10.2139/ssrn.1242001

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