Coupon promotion and its cross-channel effect in omnichannel retailing industry: A time-sensitive strategy

An increasing number of retailers are allowing consumers to freely switch between online and offline and conducting coupon promotions to stimulate channel transfer. This paper develops a stylized model to investigate omnichannel coupon promotion strategies considering consumers' time sensitivity in redeeming coupons. This paper first explores the benchmark model where consumers show time-insensitive and then takes consumers’ time sensitivity into account. For each model, three coupon promotion scenarios are studied, namely, online promotion, offline promotion, and online and offline co-promotion. Results show that whether the omnichannel retailer has the motivation to provide online or offline coupons depends on retail price—a higher retail price leads to a stronger promotion motivation, thereby achieving profit improvement. Results also indicate that the retailer may derive fewer profits in a co-promotion scenario than in a unilateral promotion scenario if there is too much channel switching or coupon promotion for a specific channel is intense. This study further reveals that in a unilateral promotion scenario, the retailer is less enthusiastic to provide coupons in a time-sensitive case than in a time-insensitive case, and the opposite happens in a co-promotion scenario when the time value and time consumed in redeeming coupons are high. Even though, the retailer derives higher profits in the time-sensitive case within specific conditions. The extension model verifies the robustness of the model and further reveals that a high online perceived value leads to a weak online promotion and a strong offline promotion. The retailer is more likely to increase profit in a time-sensitive case than in a time-insensitive case when online perceived value is high.