A Pooled Cross‐Section Time Series Model of Coupon Promotions

Abstract

Abstract Coupons influence consumption through both a price‐discounting and advertising effect. These effects have been measured using consumer panel data on the retail consumption of frozen orange juice. Two cross‐sectional time series models, estimated with a variance components procedure, show the effectiveness of coupons, assuming habit and nonhabit persistence along with consumer demographics. The response from coupons is shown to be conditioned by the container prices as well as with the characteristics of the redeemer.