Online daily coupons: Understanding how prepayment impacts spending at redemption

Ali Besharat, Gia Nardini, Anne L. Roggeveen

Research output: Contribution to journalArticlepeer-review

5 Citations (SciVal)

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.

Original languageEnglish
Pages (from-to)364-372
Number of pages9
JournalJournal of Business Research
Volume127
Early online date8 Feb 2021
DOIs
Publication statusPublished - 30 Apr 2021

Keywords

  • Escalation of commitment
  • Online daily coupons
  • Prepayment
  • Redemption
  • Revenue
  • Spending decision

ASJC Scopus subject areas

  • Marketing

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