Do Consumers Always Spend More When Coupon Face Value is Larger? The Inverted U-Shaped Effect of Coupon Face Value on Consumer Spending Level

Jia, He (Michael), Sha Yang, Xianghua Lu, and C. Whan Park (2018) "Do Consumers Always Spend More When Coupon Face Value is Larger? The Inverted U-Shaped Effect of Coupon Face Value on Consumer Spending Level," Journal of Marketing, 82 (4), 70-85.

50 Pages Posted: 23 Jul 2018

See all articles by He (Michael) Jia

He (Michael) Jia

The University of Hong Kong - Faculty of Business and Economics

Sha Yang

University of Southern California - Marshall School of Business

Xianghua Lu

Fudan University - School of Management

C.W. Park

University of Southern California - Marshall School of Business

Date Written: March 8, 2018

Abstract

Commonly, a coupon can be applied to one of several vertically differentiated products sold at different prices within the same product line of a brand. With such a product-line coupon, consumers need to decide on the specific product to buy, resulting in different levels of consumer spending. One field data set and four lab experiments demonstrate that the relationship between coupon face value and consumer spending level may not always be intuitively positive; under certain circumstances, it could take an inverted U-shape. The authors develop a threshold-based model to explain the inverted U-shaped effect of coupon face value on consumer spending level and show that this effect occurs when the price level of products is high, when consumers have a strong saving orientation, when they experience low information load from processing a small number of products, when they are inclined to engage in thorough product comparison, or when they have a weak preexisting preference for a specific level of product benefit.

Keywords: Product-Line Coupon, Consumer Spending, Savings Percentage, Inverted U-Shape, Threshold

Suggested Citation

Jia, He (Michael) and Yang, Sha and Lu, Xianghua and Park, Choong Whan, Do Consumers Always Spend More When Coupon Face Value is Larger? The Inverted U-Shaped Effect of Coupon Face Value on Consumer Spending Level (March 8, 2018). Jia, He (Michael), Sha Yang, Xianghua Lu, and C. Whan Park (2018) "Do Consumers Always Spend More When Coupon Face Value is Larger? The Inverted U-Shaped Effect of Coupon Face Value on Consumer Spending Level," Journal of Marketing, 82 (4), 70-85.. Available at SSRN: https://ssrn.com/abstract=3206291 or http://dx.doi.org/10.2139/ssrn.3206291

He (Michael) Jia (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Hong Kong

Sha Yang

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Xianghua Lu

Fudan University - School of Management ( email )

670 Handan Road
Shanghai
China

Choong Whan Park

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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