Title: Online daily coupons: Understanding how prepayment impacts spending at redemption
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.
Publication Year: 2021
Publication Date: 2021-04-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 9
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