Reference : Can coupons counteract strategic consumer behavior?
Scientific journals : Article
Business & economic sciences : Production, distribution & supply chain management
Can coupons counteract strategic consumer behavior?
Hermel, Dror mailto [> >]
Aviv, Yossi mailto [> >]
Mantin, Benny mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) >]
Journal of Revenue and Pricing Management
Henry Stewart Publications
United Kingdom
[en] In multi-period environments, the presence of strategic consumers induces monopolist retailers to inter-temporally compete with themselves. Targeting consumers with price-discount coupons is a proposed mechanism to overcome this inter-temporal competition. Targeting consumers with coupons can counteract strategic consumer behavior, but this mechanism cannot completely eradicate the negative implications imposed by the presence of such consumers. Additionally, the quality of information available (regarding the consumers’ valuations) may play an important role in the targeting decisions. Specifically, we illustrate how the retailer may absent completely from targeting efforts when the quality of information and the proportion of strategic consumers are sufficiently low. Lastly, we consider the optimal investment in information solicitation, demonstrating the trade-off between a low investment, which result in low quality of targeting capability, and a high investment which improves the effectiveness of the targeting efforts.

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