Coupon Case Study

1 Introduction： With the development of global economy, the profits of enterprises are facing tougher competition and adjustment. Then the traditional sales model was not competitive any more compared with other new alternative promotion tactics. In general, the promotion will increase the overall product sales by stimulating the purchasing intention of customers and influencing customers’ behavior. For instance, a large portion of the early entrants in the market could not survive without promotion. For those enterprises that hold certain market shares by mature products, they still need promote to gain great development and larger share of the market even more profits. Furthermore, there are various forms of promotion. But coupon became

Usually it’s a lack of actual activity information and it caused many problems on drafting exchange budget. Other considerations including the denomination of the coupon, using time, proportion of each brand, distribution method, competition situation and media selection lead to the possible exchange amount difficult o estimate. The above problems influence the whole activities and it’s hard to set the budget and allocation in the initial stage. Based on this, we can only make judgment according to the general rules, empirical rule and the previous

For new brand and the unknown products, the coupon promotion effect is not good. When consumers are faced with a product with unknown value or an unknown product, no matter what discount the coupon provides, they are unable to tell if it’s worth it to buy the products with the coupon. Furthermore, A lot of research thinks the brand loyalty has a negative correlation with the coupon’s usage rate. When consumer has high loyalty to a certain brand, it will form a relatively high replacement value (the cost they feel when they buy the brand they don’t like). This will reduce the coupon’s attraction to consumers, thus reduce the use of them. Item response theory model found consumer’s loyalty to a certain brand has a weak negative correlation relationship with coupon use. After the consumers of a high brand loyalty purchase competitive brand products using coupons, his repeat purchase rate with coupons is also lower than the repeat purchase rate of consumers of a weaker brand