Optimal advance selling strategies using coupons in a monopoly market

Recently many small businesses are advance selling their products or services through some coupon websites. This new advance selling coupons have the fashion of advance selling — ‘pay today, consume tomorrow’. They also have the features of traditional coupon promotion: deep discounts and a long coupon duration. Since this new selling technique has altered consumer behavior and influenced the seller's regular selling and performance. In this paper, we build the advance selling model and investigate the effect of advance selling coupons on consumer behavior and the seller's overall profits. We find that when the seller's marginal cost is moderately small, the profit gains from coupon buyers exceed the profits loss from regular selling. We provide the specific marginal cost conditions where the profitability of advance selling coupons is the biggest. We also suggest the optimal advance selling strategies in terms of optimal prices and optimal coupon duration.