TY - JOUR
T1 - The optimal face value of a discount coupon
AU - Ben-Zion, Uri
AU - Hibshoosh, Aharon
AU - Spiegel, Uriel
PY - 1999
Y1 - 1999
N2 - The paper analyzes the decision made by firms to issue one-time coupons as a means of attracting new deal-prone customers. Given the structure of the market and the share of loyal customers, we derive boundaries for the value of the coupon, as well as the optimal face value of the coupon. The main variables which determine the coupon value are: the size of deal-prone and loyal market segments, the initial profit margin and the coupon's processing cost. We show that the optimal share of discount out of the profit margin per customer should never exceed the customer share of the deal-prone segment.
AB - The paper analyzes the decision made by firms to issue one-time coupons as a means of attracting new deal-prone customers. Given the structure of the market and the share of loyal customers, we derive boundaries for the value of the coupon, as well as the optimal face value of the coupon. The main variables which determine the coupon value are: the size of deal-prone and loyal market segments, the initial profit margin and the coupon's processing cost. We show that the optimal share of discount out of the profit margin per customer should never exceed the customer share of the deal-prone segment.
KW - Coupon face value
KW - Deal prone customers
KW - Loyal customers
KW - Price discrimination
UR - http://www.scopus.com/inward/record.url?scp=15844371604&partnerID=8YFLogxK
U2 - 10.1016/s0148-6195(98)00032-0
DO - 10.1016/s0148-6195(98)00032-0
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AN - SCOPUS:15844371604
SN - 0012-9933
VL - 51
SP - 159
EP - 174
JO - Journal of Economics and Business
JF - Journal of Economics and Business
IS - 2
ER -