The effects of constrained mobile coupons in the mobile channel

Despite the popularity of constrained mobile coupons in recent years, little research has examined their effectiveness. This paper presents a hidden Markov model (HMM) framework to examine the short-term and longterm effectiveness of minimum-threshold coupons (i.e., threshold-constrained coupons) and limited-time, low price coupons (i.e., time-constrained coupons). We find that both of them boost consumers' purchase probability during the coupon redemption period. Furthermore, minimum-threshold coupons not only increase consumers' purchase quantity during the redemption period, but also improve the customer-firm relationship beyond the redemption period. By contrast, limited-time, low-price coupons strengthen the customer-firm relationship only for consumers in a higher relationship state but not a lower relationship state. This study can help marketers allocate limited marketing resources effectively, strengthen and manage the relationship between consumers and firms, and increase product sales.

Automated summary

This study uses a hidden Markov model (HMM) framework to examine the short-term and long-term effectiveness of minimum-threshold coupons and limited-time, low price coupons. It finds that both types of coupons increase consumers' purchase probability during the coupon redemption period. In addition, minimum-threshold coupons not only increase consumers' purchase quantity during the redemption period, but also improve the customer-firm relationship beyond the redemption period. On the other hand, limited-time, low-price coupons only strengthen the customer-firm relationship for consumers in a higher relationship state.