Online daily coupons: Understanding how prepayment impacts spending at redemption

Ali Besharat, Gia Nardini and Anne L. Roggeveen

Journal of Business Research, 2021, vol. 127, issue C, 364-372

Abstract: Online daily coupons (ODCs) (e.g., Groupon) differ from conventional coupons, in that they require customers to make a prepayment for a product or service to receive a substantive discount at a later point in time. Drawing from escalation of commitment literature, this article examines how ODCs’ unique prepayment structure might affect customers’ spending upon redemption. The results reveal that a high prepayment enhances redemption spending, but only if the temporal distance between the prepayment and the redemption is small. A high prepayment also can enhance redemption spending if the consumer purchases the ODC (versus receives it as a gift). In combination, this evidence reveals a joint impact of the prepayment amount and redemption spending on the revenue generated for the ODC provider.

Keywords: Online daily coupons; Prepayment; Redemption; Spending decision; Revenue; Escalation of commitment (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296321000540
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:127:y:2021:i:c:p:364-372

DOI: 10.1016/j.jbusres.2021.01.047

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().