The effects of cross-ruff coupons on sales and profits

Cross-ruff coupons are obtained at the time of purchase of a carrier brand and may be redeemed at a later date on a target brand. These coupons therefore have the ability to link consumer purchases across different brands as well as shopping trips. We model the effects of cross-ruff coupons on consumer choice behavior and derive the conditions under which cross-ruff coupons can lead to higher sales and profits than other types of package coupons. The model also provides insights into the selection of appropriate carrier and target brands, and on how the choice of an appropriate carrier or a target brand is affected when the categories that these brands belong to are demand complements or substitutes. We conduct an empirical analysis using data from 195 different cross-ruff coupon campaigns observed in grocery stores in a major U.S. city over a three-month period. The data are consistent with the key insights provided by the model.