New York
CNN business
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Coupon clipping is an American pastime. A reality show dedicated to radical coupon sellers has become a sensation. However, many companies that issue coupons hate coupons.
Critics say coupons are expensive, wasteful, and inefficient advertising. Some companies have gone to great lengths to get rid of them.
It didn’t end well.
Avid shoppers love to clip coupons from newspaper brochures and, more recently, mobile phones. Many people buy products only on the offers they find.
Coupons make shoppers feel like they’ve betrayed the brand and give them something they can brag about to their friends. One study found that customers who received coupons released the feel-good hormone oxytocin and their heart rates decreased.
“If you can walk in and walk out and get paid, people will go after it,” says Jessie Alonzo, who runs coupon blog MoolaSavingMom.com and shares coupon strategies with her followers. “It’s like high.”
The grocery industry used 865 million coupons last year, according to marketing and payment services firm Vericast.
Coupons have evolved over the years since Coca-Cola became popular in the late 1880s.
According to the company, to promote Coca-Cola to the public, John Pemberton’s bookkeeper (the pharmacist who invented the Coke formula) used the city’s directory to mail coupons to Atlanta citizens.
Later, Coca-Cola Company founder Asa Candler handed out paper tickets and gave away a free glass of Coke. Within 20 years, Coke has given out an estimated 8.5 million free drink vouchers.
The use of coupons began during the Great Depression. According to the Association of Coupon Professionals, a trade group for the coupon industry, some of the early distribution methods were newspapers and women’s magazines.
Coupons became widespread as chain supermarkets expanded in the 1940s. The introduction of direct mail in the mid-20th century, including his coupons and free-standing newspaper inserts, also boosted its popularity.
By the 1970s, 65% of U.S. households had their coupons clipped, according to industry groups.
For decades, newspaper inserts were the most popular coupon, but the rise of online shopping and smartphone apps has made digital coupons more popular.
Coupons are different from merchandise on sale, price promotions or discounts in stores. A sale is possible once all customers have shopped in-store or purchased online. However, brands target coupons in emails and on websites to reach shoppers who are highly loyal to coupons.
Aimee Englert, Executive Director of Client Strategy at Vericast, said, “Coupons are important because they give brands the opportunity to reach and activate shoppers who have not yet chosen the brand based on the price they sell on the shelf. play an important role,” he said. “Coupons help put brands on your shopping list.”
Brands also hang coupons whenever they introduce new products to encourage shoppers to try them. I have.
Coupons are expected to play a bigger role for shoppers as prices remain high. According to Vericast’s online survey of more than 1,800 of his customers in July, 60% of his shoppers said they were looking for more coupons to offset price increases. .
“We are starting to see customers using coupons a little more aggressively than they used to,” Kroger (KR) Chief Executive Rodney McMullen said in a conference call with analysts on Thursday. Told.
But coupons aren’t everyone’s favorite.
Brands and retailers hate them because they encourage shoppers to buy products only at deep discounts, making it difficult for them to sell their products at more profitable full price.
Companies say that offering coupons is a waste of money and would be better spent investing in lowering prices overall or improving product quality. It is likened to a drug.
Kimberly Whitler, associate professor at the University of Virginia’s Darden School of Business and former marketing executive for David’s Bridal and PetSmart, said: “It’s taking resources away from building long-term, more sustainable brand equity.”
Coupons can also create challenges in anticipating demand and keeping products in stock. The operation to keep prices constant is much simpler and easier. Additionally, designing and creating coupons is expensive, and some customers rely on expired or fraudulent coupons.
“The first time you issue a coupon, it’s incremental, which is great,” says Whitler. “The problem is that it’s baked into your base. You have to keep that coupon.”
However, most brands have decided that coupons are a necessary evil and will continue to be part of their pricing strategy. They are afraid to eliminate them for fear of alienating customers or losing business to competitors who retain customers.
The history of retail is littered with the lessons of brands trying and failing to do away with coupons.
In 1996, Procter & Gamble (PG), makers of Tide, Crest and Bounty, offered stores the option to offer customers double or triple the value of the manufacturer’s coupons in three markets in upstate New York. We experimented with a “zero coupon test”. P&G said it would pass on the savings in marketing costs to consumers in the form of price cuts.
P&G’s then-Chief Operating Officer, Durk Jager, said: “Approximately 8 million trees are cut down annually for coupons. Approximately 40% of total coupon spending never reaches consumers. We have determined that coupons need to be phased out.”
But P&G’s move alienated the region’s loyal coupon clippers and switched to competitors.
Some of P&G’s competitors, including Clorox (CLX) and Colgate (CL), also participated in the test, and the New York Attorney General has filed antitrust lawsuits against these companies. P&G returned the coupon and he agreed to pay $4.2 million to settle the lawsuit.
Nine years later, Macy’s (M), then a federated department store, bought the area’s department store. Known for their coupons, they pulled them back in hopes of alienating customers.
But sales plummeted, so Macy’s abandoned the plan.
JCPenney had the biggest coupon misfire.
In 2012, Ron Johnson, the former head of Apple’s retail stores, Target executive and JC Penney’s new CEO, announced a radical overhaul of the chain. Central to the strategy was a plan to end coupons and discounts and replace them with “daily” low prices.
“Rather than flooding customers with a constant series of sales, coupons, rebates and retail gimmicks,” Penny has moved to “fair and fair” pricing.
The plan backfired.
Sales dropped nearly 25% in a year, and the company’s stock price plummeted. Johnson lost his job in just 17 months, and Penny quickly got his coupon back. “We didn’t realize how deeply involved some customers were. [coupons]’ said a senior official at the time.
Johnson agrees, “The coupon was a drug.”
