Analyzing Incremental Sales from a Direct Mail Coupon Promotion

A mixture likelihood approach for generalized linear models

“…This segment was designated as value conscious, as the usage of coupons in this segment appears to be predominantly value-based: price has a significant positive effect as higher priced brands offer larger savings (Narasirnhan 1984), while the coefficient of income is over two times that of its closest rival (Segment 1). A given face value of a coupon is more important to a low income household than to a high income household because of the decreasing utility of increasing income (Bawa and Shoemaker 1989). Interestingly, the coefficient of home-ownership (HOMEOWN) in this segment is opposite to the hypothesized direction: consumers with rented houses use more coupons.…”

“…Shimp and Kavas (1984) noted that although research that demonstrated the effects of coupons on sales had been abundant (cf. Nielsen 1965;Ward and Davis 1978;Dodson, Tybout, and Sternthal 1978;Bawa and Shoemaker 1989), little research had addressed the issue of consumers' response to coupons in attempts to understand couponing behavior itself.…”

“…These variables were included in our analysis given the literature on coupon redemption reviewed above, where they had been hypothesized to affect coupon usage behavior. The total volume purchased (TOTVOL) is hypothesized to have a positive association with coupon usage, as heavy users of yogurt are more often in the market and take more advantage of coupons (Narasimhan 1984;Bawa and Shoemaker 1989). Price (PRICEOZ) should also have a positive association with couponing, as higher priced brands offer higher savings per unit through coupons (Narasimhan 1984).…”

“…Price (PRICEOZ) should also have a positive association with couponing, as higher priced brands offer higher savings per unit through coupons (Narasimhan 1984). Since homeowners have lower storage costs, home ownership (HOMEOWN) is hypothesized to result in higher coupon redemption (Blattberg et al 1978;Bawa and Shoemaker 1989). INCOME should have a negative association with couponing, as higher incomes tends to decrease leisure time (Narasirnhan 1984;Bawa and Shoemaker 1987), while economic theory suggests that lower income households may be more price sensitive (cf.…”

“…INCOME should have a negative association with couponing, as higher incomes tends to decrease leisure time (Narasirnhan 1984;Bawa and Shoemaker 1987), while economic theory suggests that lower income households may be more price sensitive (cf. Blattberg et al 1978;Bawa and Shoemaker 1989). Average working hours of female and male household heads (FHAVHRS respectively MHAVHRS) are hypothesized to be negatively associated with coupon usage, as time spent working negatively affects the time available for handling coupons (Blattberg et al 1978;Narasimhan 1984;Bawa and Shoemaker 1987).…”