Do Coupon Expiration Dates Affect Consumer Behavior?

Abstract

Expiration dates are used by couponers to limit their financial liability temporally. Traditional wisdom assumes that coupon redemptions are greatest in the period immediately following the coupon drop and decline monotonically. Using regret theory, the authors predict that expiration dates induce a second mode in the redemption pattern just prior to the expiration date. They test this prediction by extending an existing coupon redemption model to incorporate an expiration effect and then estimating both the existing and the expiration models using weekly coupon redemption data for spaghetti sauce from A.C. Nielsen panels in two cities. Results are consistent with their prediction. Implications for practitioners and researchers are discussed.