Couponing Strategies in Competition between a National Brand and a Private Label Product

33 Pages Posted: 19 Dec 2018

See all articles by Christoph Bauner

Christoph Bauner

University of Massachusetts Amherst

Edward C. Jaenicke

College of Agricultural Sciences, Department of Agricultural Economics and Rural Sociology

Emily Yucai Wang

University of Massachusetts, Amherst

Ping-Chao Wu

Asia University

Date Written: October 16, 2018

Abstract

This paper explores the couponing strategies in competition between a national brand name product and a private label product by discussing three different kinds of coupons: manufacturers' coupons, retailers' national brand coupons, and retailers' private label coupons. We show that the positioning of the private label product in terms of quality (vertical differentiation) and feature differentiation from the national brand (horizontal differentiation) play an important role in determining the manufacturer's coupon and retailer's national brand coupon. In particular, a larger degree of feature differentiation drives the manufacturer to increase its coupon value, and the retailer responds by decreasing the value of its own coupon for the brand name product. In contrast, with an increase in private label quality, the couponing strategies taken by the manufacturer and the retailer depend on which segment of consumers is in the market for the private label product. Additionally, the retailer's private label coupon value is only impacted by the difference in consumers' willingness to pay but not by private label positioning. Empirical results on the effect of feature differentiation on national brand and private label coupon values are consistent with our theoretical predictions.

Keywords: coupons, national brands, private label brands

JEL Classification: L66, L11, M31

Suggested Citation

Bauner, Christoph and Jaenicke, Edward C. and Wang, Emily Yucai and Wu, Ping-Chao, Couponing Strategies in Competition between a National Brand and a Private Label Product (October 16, 2018). Available at SSRN: https://ssrn.com/abstract=3297060 or http://dx.doi.org/10.2139/ssrn.3297060

Christoph Bauner

University of Massachusetts Amherst

Amherst, MA 01003
United States

Edward C. Jaenicke (Contact Author)

College of Agricultural Sciences, Department of Agricultural Economics and Rural Sociology ( email )

University Park, PA 16802-3306
United States

Emily Yucai Wang

University of Massachusetts, Amherst ( email )

80 Campus Center Way
University of Massachusetts, Amherst
Amherst, MA 01003
United States
4135455741 (Phone)

Ping-Chao Wu

Asia University ( email )

Tokyo 180-8629
Japan

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