Effectiveness of discount vouchers :a theoretical model -

Abstract

The purpose of this project is to examine the effectiveness of online discount vouchers, a marketing tool that has been gaining a lot of popularity throughout the past few years. Customers who purchase these vouchers are effectively subscribing to buy a certain product or service at a large discount. However, the discount will not be effective unless a certain threshold of subscribers is reached. The behavior of the customers is modelled taking into account the quality perception that those customers have towards the product, in addition to the distance that separates them from the seller. The model also incorporates the human interaction factor, whereby subscribers will act as sales persons and try to convince other people to subscribe as well, in order to make sure that threshold of subscribers is met, thus benefitting from the discount. Despite room for enhancement in the model, preliminary results suggest that online discount vouchers become more effective as the quality of the product increases, as well as the importance of quality in the eyes of the customers increases.