SUPPORTING A HIGHER SHELF PRICE THROUGH COUPON DISTRIBUTIONS

Abstract
Promotional expenditures for manufacturer coupon distributions have increased rapidly during the last decade. Marketing professionals have criticized this trend. We discuss how coupon distributions allow manufacturers to price discriminate between market segments. Such discrimination should allow a firm to increase the shelf price of the brand. We find that instant coffee prices reflect this idea, and show that coupon distributions can be profitable for mature brands.

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