Topic: Do Consumers Always Spend More When Coupon Face Value is Larger?

Exploring the Inverted U-Shaped Effect of Coupon Face Value on Consumer Spending Level

Speaker: Prof. JIA He, University of Hong Kong

Host: Prof. CHEN Xi

Tim: 13:30-15:00 December 21st, 2016 (Wednesday)

Venue: Room 702

Abstract: It is quite common that a coupon can be applied to one of several different products sold at different prices within the same product line of a brand. With such a product-line coupon, consumers need to decide what specific product to buy, resulting in different levels of consumer spending. It is important, yet under-researched, how coupon face value influences consumer spending level in such a context. One field study and three lab experiments demonstrate that the relationship between coupon face value and consumer spending level may not always be intuitively positive and instead could take an inverted U-shape under certain circumstances. The authors identify conditions for the inverted U-shaped effect of coupon face value on consumer spending level and show that this effect occurs when the price level of products is high, when consumers have a strong saving orientation, when the information related to products is not excessive for consumers to process, and when consumers are inclined to engage in thorough product comparison.