In-Store Coupon Effectiveness: A Large-Scale Field Experiment

69 Pages Posted: 26 Jan 2023 Last revised: 12 Apr 2024

See all articles by Sebastian Gabel

Sebastian Gabel

Rotterdam School of Management, Erasmus University Rotterdam

Duncan Simester

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Artem Timoshenko

Kellogg School of Management, Northwestern University

Date Written: January 25, 2024

Abstract

New coupon technologies enable customers to search for promotions while in the store, using mobile apps, kiosks, and displays. Compared to at-home promotions, in-store coupons have lower hassle costs and can be redeemed immediately. This increases redemption rates, and refocuses attention on a fundamental tradeoff: Do in-store coupons yield sufficient incremental sales to offset discounting? To address this question, we measure coupon effectiveness for 143 grocery brands, in a large-scale field experiment conducted using in-store kiosks in 147 physical stores. Coupons dramatically increase purchase rates, from 0.35% to 1.85%, but these purchases are made at a discount. The net effect on revenue is still positive for 141 of the 143 brands, with an average revenue increase of €30.31 per thousand coupons (from €6.98 to €37.29). The revenue increase is largely attributable to category expansion rather than just brand switching, and in-store coupons do not merely cannibalize from future sales. We further show that coupon effectiveness varies considerably across brands, customers, stores, and the timing of store visits. For example, incremental effects are three times larger for customers with versus without prior category purchases. Our findings are consistent with the interpretation that in-store coupons stimulate impulse purchasing.

Keywords: Retail Media Platforms, Treatment Effects, Machine Learning, Field Experiment

Suggested Citation

Gabel, Sebastian and Simester, Duncan and Timoshenko, Artem, In-Store Coupon Effectiveness: A Large-Scale Field Experiment (January 25, 2024). Available at SSRN: https://ssrn.com/abstract=4335525

Sebastian Gabel (Contact Author)

Rotterdam School of Management, Erasmus University Rotterdam ( email )

Netherlands

HOME PAGE: http://https://www.eur.nl/en/people/sebastian-gabel

Duncan Simester

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Management Science
Cambridge, MA 02142
United States
617-258-0679 (Phone)
617-258-7597 (Fax)

Artem Timoshenko

Kellogg School of Management, Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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