When Discounts Hurt Sales: The Case of Daily-Deal Markets

References

• Alba JW, Mela CF, Shimp TA, Urbany JE (1999) The effect of discount frequency and depth on consumer price judgments. J. Consumer Res. 26(2):99–114.Crossref, Google Scholar
• Arellano M, Bond S (1991) Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev. Econom. Stud. 58(2):277–297.Crossref, Google Scholar
• Bagwell K, Riordan MH (1991) High and declining prices signal product quality. Amer. Econom. Rev. 81(1):224–239.Google Scholar
• Berry ST (1994) Estimating discrete-choice models of product differentiation. RAND J. Econom. 25(2):242–262.Crossref, Google Scholar
• Berry ST, Haile PA (2014) Identification in differentiated products markets using market level data. Econometrica 82(5):1749–1797.Crossref, Google Scholar
• Berry ST, Levinsohn J, Pakes A (1995) Automobile prices in market equilibrium. Econometrica 63(4):841–890.Crossref, Google Scholar
• Bishop RC, Heberlein TA (1979) Measuring values of extra market goods: Are indirect measures biased? Amer. J. Agricultural Econom. 61(5):926–930.Crossref, Google Scholar
• Blattberg RC, Briesch R, Fox EJ (1995) How promotions work. Marketing Sci. 14(3):G122–G132.Link, Google Scholar
• Bonifield C, Cole C, Schultz RL (2010) Product returns on the Internet: A case of mixed signals? J. Bus. Res. 63(9–10):1058–1065.Crossref, Google Scholar
• Boulding W, Kirmani A (1993) A consumer-side experimental examination of signaling theory: Do consumers perceive warranties as signals of quality? J. Consumer Res. 20(1):111–123.Crossref, Google Scholar
• Bresnahan TF, Stern S, Trajtenberg M (1997) Market segmentation and the sources of rents from innovation: Personal computers in the late 1980s. RAND J. Econom. 28:S17–S44.Crossref, Google Scholar
• Chen Y, Wang Q, Xie J (2011) Online social interactions: A natural experiment on word of mouth versus observational learning. J. Marketing Res. 48(2):238–254.Crossref, Google Scholar
• Chevalier JA, Mayzlin D (2006) The effect of word of mouth on sales: Online book reviews. J. Marketing Res. 43(3):345–354.Crossref, Google Scholar
• Chintagunta PK, Gopinath S, Venkataraman S (2010) The effects of online user reviews on movie box office performance: Accounting for sequential rollout and aggregation across local markets. Marketing Sci. 29(5):944–957.Link, Google Scholar
• Constant Contact (2013) Research survey. Accessed November 23,2015, https://news.constantcontact.com/press-release-new-constant-contact-study-links-multi-channel-marketing-small-business-success.Google Scholar
• Darby MR, Karni E (1973) Free competition and the optimal amount of fraud. J. Law Econom. 16(1):67–88.Crossref, Google Scholar
• Daughety AF, Reinganum JF (2008) Imperfect competition and quality signalling. RAND J. Econom. 39(1):163–183.Crossref, Google Scholar
• Dellarocas C (2006) Strategic manipulation of Internet opinion forums: Implications for consumers and firms. Management Sci. 52(10):1577–1593.Link, Google Scholar
• Dellarocas C, Zhang X, Awad NF (2007) Exploring the value of online product reviews in forecasting sales: The case of motion pictures. J. Interactive Marketing 21(4):23–45.Crossref, Google Scholar
• Dewan S, Hsu V (2004) Adverse selection in electronic markets: Evidence from online stamp auctions. J. Indust. Econom. 52(4): 497–516.Crossref, Google Scholar
• Dholakia UM (2011) How businesses fare with daily deals as they gain experience: A multi-site analysis of Groupon, LivingSoical, OpenTable, Travelzoo, and BuyWithMe promotions. Working paper, Rice University, Houston.Google Scholar
• Dholakia UM (2012) How businesses fare with daily deals as they gain experience: A multi-time period study of daily deal performance. Working paper, Rice University, Houston.Google Scholar
• Dholakia UM, Kimes SE (2011) Daily deal fatigue or unabated enthusiasm? A study of consumer perceptions of daily deal promotions. Working paper, Rice University, Houston.Crossref, Google Scholar
• Diamond PA, Hausman JA (1994) Contingent valuation: Is some number better than no number? J. Econom. Perspect. 8(4):45–64.Crossref, Google Scholar
• Diamond PA, Hausman JA, Leonard GK (1993) Does contingent valuation measure preferences? Hausman JA, ed. Contingent Valuation: A Critical Assessment (Emerald Group Publishing Limited, Bingley, UK), 41–89.Crossref, Google Scholar
• Dimoka A, Hong Y, Pavlou PA (2012) On product uncertainty in online markets: Theory and evidence. MIS Quart. 36(2):395–426.Crossref, Google Scholar
• Dror Y (2014) Your discounts may be killing off your sales. GeekTime (June 1), Accessed November 26, 2015, http://www.geektime.com/2014/06/01/your–discounts–may–be–killing–off–your–sales/.Google Scholar
• Dulleck U, Kerschbamer R (2006) On doctors, mechanics, and computer specialists: The economics of credence goods. J. Econom. Literature 44(1):5–42.Crossref, Google Scholar
• Dulleck U, Kerschbamer R, Sutter M (2011) The economics of credence goods: An experiment on the role of liability, verifiability, reputation, and competition. Amer. Econom. Rev. 101(2):526–555.Crossref, Google Scholar
• Edelman B, Jaffe S, Kominers SD (2016) To Groupon or not to Groupon: The profitability of deep discounts. Marketing Lett. 27(1):39–53.Crossref, Google Scholar
• Edison Research (2012) Report on daily deals. Accessed November 23, 2015, http://www.edisonresearch.com/wp–content/ uploads/2012/04/Edison–Research–Daily–Deals–Report–2012.pdf.Google Scholar
• Emons W (1997) Credence goods and fraudulent experts. RAND J. Econom. 28(1):107–119.Crossref, Google Scholar
• Erdem T, Keane MP, Sun B (2008) A dynamic model of brand choice when price and advertising signal product quality. Marketing Sci. 27(6):1111–1125.Link, Google Scholar
• Filan J (2012) Facebook ads: What are you really paying for? SearchEngineJournal (July 16), Accessed November 26, 2015, https://www.searchenginejournal.com/facebook–ads–what–are –you–really–paying–for/46194/.Google Scholar
• Forman C, Ghose A, Wiesenfeld B (2008) Examining the relationship between reviews and sales: The role of reviewer identity disclosure in electronic markets. Inform. Systems Res. 19(3):291–313.Link, Google Scholar
• Friedman J, Hastie T, Tibshirani R (2001) The Elements of Statistical Learning (Springer, Berlin).Google Scholar
• Garen J (1984) The returns to schooling: A selectivity bias approach with a continuous choice variable. Econometrica 52(5):1199–1218.Crossref, Google Scholar
• Ghose A (2009) Internet exchanges for used goods: An empirical analysis of trade patterns and adverse selection. MIS Quart. 33(2):263–291.Crossref, Google Scholar
• Gower JC (1971) A general coefficient of similarity and some of its properties. Biometrics 27(4):857–874.Crossref, Google Scholar
• Ho-Dac NN, Carson SJ, Moore WL (2013) The effects of positive and negative online customer reviews: Do brand strength and category maturity matter? J. Marketing 77(6):37–53.Crossref, Google Scholar
• Hu M, Shi M, Wu J (2013) Simultaneous vs. sequential group-buying mechanisms. Management Sci. 59(12):2805–2822.Link, Google Scholar
• Hui KL (2004) Product variety under brand influence: An empirical investigation of personal computer demand. Management Sci. 50(5):686–700.Link, Google Scholar
• Jedidi K, Mela CF, Gupta S (1999) Managing advertising and promotion for long-run profitability. Marketing Sci. 18(1):1–22.Link, Google Scholar
• Jin GZ, Kato A (2006) Price, quality, and reputation: Evidence from an online field experiment. RAND J. Econom. 37(4):983–1004.Crossref, Google Scholar
• Jing X, Xie J (2011) Group buying: A new mechanism for selling through social interactions. Management Sci. 57(8):1354–1372.Link, Google Scholar
• Jolly DA (1991) Differences between buyers and nonbuyers of organic produce and willingness to pay organic price premiums. J. Agribusiness 9(1):97–111.Google Scholar
• Keller KL, Lehmann DR (2006) Brands and branding: Research findings and future priorities. Marketing Sci. 25(6):740–759.Link, Google Scholar
• Kim Y, Krishnan R (2015) On product-level uncertainty and online purchase behavior: An empirical analysis. Management Sci. 61(10):2449–2467.Link, Google Scholar
• Kirmani A, Rao AR (2000) No pain, no gain: A critical review of the literature on signaling unobservable product quality. J. Marketing 64(2):66–79.Crossref, Google Scholar
• Lattin J, Bucklin R (1989) Reference effects of price and promotion on brand choice behavior. J. Marketing Res. 26(3):299–310.Crossref, Google Scholar
• Li H, Kuo C, Rusell MG (1999) The impact of perceived channel utilities, shopping orientations, and demographics on the consumer’s online buying behavior. J. Comput.-Mediated Comm. 5(2).Crossref, Google Scholar
• Li X, Hitt LM (2008) Self-selection and information role of online product reviews. Inform. Systems Res. 19(4):456–474.Link, Google Scholar
• Li X, Wu L (2013) Measuring effects of observational learning and social-network word-of-mouth (WOM) on the sales of daily-deal vouchers. 46th Hawaii Internat. Conf. System Sci., Maui, HI, 2908–2917.Google Scholar
• Liu Y (2006) Word of mouth for movies: Its dynamics and impact on box office revenue. J. Marketing 70(3):74–89.Crossref, Google Scholar
• Luo X, Andrews M, Song Y, Aspara J (2014) Group-buying deal popularity. J. Marketing 78(2):20–33.Crossref, Google Scholar
• Magnusson MK, Arvola A, Hursti UK, Aberg L, Sjoden P (2001) Attitudes towards organic foods among Swedish consumers. British Food J. 103(3):209–227.Crossref, Google Scholar
• Mayzlin D (2006) Promotional chat on the Internet. Marketing Sci. 25(2):155–163.Link, Google Scholar
• Mayzlin D, Dover Y, Chevalier J (2014) Promotional reviews: An empirical investigation of online review manipulation. Amer. Econom. Rev. 104(8):2421–2455.Crossref, Google Scholar
• Mela CF, Gupta S, Lehmann DR (1997) The long-term impact of promotion and advertising on consumer brand choice. J. Marketing Res. 34(2):248–261.Crossref, Google Scholar
• Mela CF, Jedidi K, Bowman D (1998) The long-term impact of promotions on consumer stockpiling behavior. J. Marketing Res. 35(2):250–262.Crossref, Google Scholar
• Miyazaki AD, Grewal D, Goodstein RC (2005) The effect of multiple extrinsic cues on quality perceptions: A matter of consistency. J. Consumer Res. 32(1):146–153.Crossref, Google Scholar
• Nevo A (2000) A practitioner’s guide to estimation of random-coefficients Logit models of demand. J. Econom. Management Strategy 9(4):513–548.Crossref, Google Scholar
• Overby E, Jap S (2009) Electronic and physical market channels: A multiyear investigation in a market for products of uncertain quality. Management Sci. 55(6):940–957.Link, Google Scholar
• Ozpolat K, Gao G, Jank W, Viswanathan S (2013) The value of third-party assurance seals in online retailing: An empirical investigation. Inform. Systems Res. 24(4):1100–1111.Link, Google Scholar
• Pavlou PA, Liang H, Xue Y (2007) Understanding and mitigating uncertainty in online exchange relationships: A principal–agent perspective. MIS Quart. 31(1):105–136.Crossref, Google Scholar
• Rao AR (2005) The quality of price as a quality cue. J. Marketing Res. 42(4):401–405.Crossref, Google Scholar
• Rao AR, Monroe KB (1989) The effect of price, brand name, and store name on buyers’ perceptions of product quality: An integrative review. J. Marketing Res. 26(3):351–357.Crossref, Google Scholar
• Rao AR, Qu L, Ruekert RW (1999) Signaling unobservable product quality through a brand ally. J. Marketing Res. 36(2):258–268.Crossref, Google Scholar
• Rousseeuw PJ (1987) Silhouettes: A graphical aid to the interpretation and validation of cluster analysis. J. Comput. Appl. Math. 20: 53–65.Crossref, Google Scholar
• Schaninger CM (1993) Social class versus income revisited: An empirical investigation. Marketing Sci. 12(1):73–87.Google Scholar
• Shivendu S, Zhang Z (2013) Economics of daily-deal websites: Advertising and sampling effects. 34th Internat. Conf. Inform. Systems, Milan.Google Scholar
• Smith RE, Vogt CA (1995) The effects of integrating advertising and negative word-of-mouth communications on message processing and response. J. Consumer Psych. 4(2):133–151.Crossref, Google Scholar
• Subramanian U, Rao RC (2016) Leveraging experienced consumers to attract new consumers: An equilibrium analysis of displaying deal sales by daily deal websites. Management Sci. 62(12): 3555–3575.Link, Google Scholar
• Tirole J (1988) The Theory of Industrial Organization (MIT Press, Cambridge, MA).Google Scholar
• Tuttle B (2012) Are daily deals dying? Or as hot as ever. Time (March 7), accessed July 12, 2018, http://business.time.com/2012/03/07/are-daily-deals-dying-or-as-hot-as-ever/.Google Scholar
• Wang J, Zhao X, Li J (2013) Group buying: A strategic form of consumer collective. J. Retailing 89(3):338–351.Crossref, Google Scholar
• Wells JD, Valacich JS, Hess TJ (2011) What signal are you sending? How website quality influences perceptions of product quality and purchase intentions. MIS Quart. 35(2):373–396.Crossref, Google Scholar
• Wolinsky A (1983) Prices as signals of product quality. Rev. Econom. Stud. 50(4):647–658.Crossref, Google Scholar
• Wu J, Shi M, Hu M (2015) Threshold effects in online group buying. Management Sci. 61(9):2025–2040.Link, Google Scholar
• Zhang J, Li H, Yan R, Johnston C (2017) Examining the signaling effect of e-tailers’ return policies. J. Comput. Inform. Systems 57(3): 191–200.Crossref, Google Scholar
• Zhang L, Chung DJ (2016) Strategic channel selection with online platforms: An empirical analysis of the daily deal industry. Working paper, Harvard Business School, Boston.Google Scholar
• Zhu F, Zhang X (2010) Impact of online consumer reviews on sales: The moderating role of product and consumer characteristics. J. Marketing 74(2):133–148.Crossref, Google Scholar