Lead Offer Spillovers

51 Pages Posted: 11 Dec 2017  

Matthew McGranaghan

Cornell University, SC Johnson College of Business

Jura Liaukonyte

Cornell University

Geoffrey Fisher

Cornell University

Kenneth C. Wilbur

University of California, San Diego (UCSD) - Rady School of Management

Date Written: December 5, 2017

Abstract

Price promotions are typically offered in groups on websites, mailings and circulars, but little is known about how proximate promotion offers affect each other. Across two large scale field experiments (N=66,184) conducted on a multi-brand coupon website, we find that when lead promotions present high-value deals, consumers are more likely to print subsequent offers, a finding we call a "lead offer spillover." In the first field experiment, doubling the value of three lead offers increased the printing of subsequent offers by 18%. In the second, doubling the value of a single lead offer increased subsequent offer prints by 11%. Lead offer spillovers primarily result from attracting new users, rather than increasing activity among existing users, and occur even among consumers who are unlikely to print the lead offer. We investigate several mechanisms that could generate lead offer spillovers by combining additional online experiments with deeper analysis of the field experiment data. The results show that lead offer spillovers are primarily driven by increased consumer search for subsequent promotions in the group.

Keywords: price promotions; consumer search; attention; spillovers; field experiments; lab experiments

JEL Classification: M30, M31

Suggested Citation

McGranaghan, Matthew and Liaukonyte, Jura and Fisher, Geoffrey and Wilbur, Kenneth C., Lead Offer Spillovers (December 5, 2017). Available at SSRN: https://ssrn.com/abstract=3083248 or http://dx.doi.org/10.2139/ssrn.3083248

Matthew McGranaghan

Cornell University, SC Johnson College of Business ( email )

Cornell University
363 Warren Hall
Ithaca, NY 14850
United States

Jura Liaukonyte

Cornell University ( email )

347 Warren Hall
Ithaca, NY 14853
United States

Geoffrey Fisher

Cornell University ( email )

Ithaca, NY 14853
United States

Kenneth C. Wilbur (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

HOME PAGE: http://kennethcwilbur.com

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