Promotion Methods in Consumer Sales : Coupons

Coupons

A coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product.

Introduction

Coupons are hot and the state of the economy has much to do with their popularity. Article after article about saving money mentions using coupons. And consumers are following their advice.

You don’t have to look any further than the Promotion Marketing Association (PMA) Education Foundation, Inc. for proof that coupons work for consumers. Their figures show that in the first half of 2011, consumers saved a whopping $2 billion though the use of coupons.

The NCH Vice President of Marketing backs up this figure. According to him, coupon redemption volume continued to show a marked increase in the first half of 2011.

Why Consumers Love Coupons: It’s in the Definition

A coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Coupons offer instantly redeemable savings on certain products. That means that consumers get an instant reduction on the price at the point of purchase. They don’t have to send anything to the manufacturer, they don’t have to enter any type of contest. They walk away from the store with the satisfaction that they have saved money.

Origins of Coupons

In 1887, the Coca-Cola Company was incorporated in Atlanta with Asa Candler as one of the partners. He transformed Coca-Cola from an insignificant tonic into a profitable business by using innovative advertising techniques. The key to this growth was Candler’s ingenious marketing, which included having sales representatives distribute complimentary coupons for Coca-Cola.

Coca-Cola Coupon: Believed to be the first coupon ever, this ticket for a free glass of Coca-Cola was first distributed in 1888 to help promote the drink. By 1913, the company had redeemed 8.5 million tickets.

Coupons were mailed to potential customers and placed in magazines. The company gave soda fountains free syrup to cover the costs of the free drinks. It is estimated that between 1894 and 1913 one in nine Americans had received a free Coca-Cola, altogether totaling 8,500,000 free drinks.

Marketers’ Love / Hate Relationship with Coupons

Why would a company let consumers walk away paying less for their product than the displayed price? Peer pressure may be one reason. Coupons are an inexpensive form of marketing. Due to this fact, almost half of all retailers say that they use some type of coupon program. If a company’s competitors are doing it, the company will most likely consider doing it as well.

That’s not the only reason, however. Coupon programs offer a host of benefits. They can:

• Increase the number of new customers – A customer may try a product just because they have a coupon for it and like it enough to continue to buy it.
• Help move a specific product
• Build brand awareness – A consumer sees the brand name on the coupon even when the coupon is not redeemed.
• Reward current customers – Customers are delighted when they receive the gift of savings from the manufacturer of a product that they buy regularly.
• Entice former customers to return
• Create the opportunity for the marketer to up-sell a more profitable product
• Provide the marketer with a highly measurable marketing program

The idea behind a coupon program isn’t simply to get consumers to buy your product. You want them to notice your brand. Well-designed coupon programs accomplish that goal. In addition, retailers will benefit from such programs as it will drive traffic to their store.

Coupons, though, can have both advantages and disadvantages. The optimal scenario for marketers is that coupons create brand awareness without consumers using the coupon. In fact most coupons are never redeemed. This makes marketers happy as there is no reduction in revenue. A reduction of revenue, however, is just one of the disadvantages of a coupon program. Others include:

• Mass-cutting
• Counterfeiting
• Misredemptions.

How Coupons are Distributed

You probably run across coupons on a daily basis. Open your mailbox and you’ll see direct mail containing coupons. Look on the Internet and you’ll see coupons that can be distributed electronically. A product that you buy may actually have a coupon on the package or you might go shopping and be happily surprised to find a pad on the shelf containing product coupons.Creating Effective CouponsEven though marketers may be happy to not have coupons redeemed, that is not the objective of issuing coupons. You do want to lure consumers to redeem the coupon. That’s how you get noticed in the sea of other offers.To accomplish that goal coupons must be created with clear, precise text that shows the:

• Face value
• Product image
• Bar code (if needed)
• Legal copy
• Expiration date
• Company name and address.

Measuring Effectiveness of Coupon Programs

You will not be able to judge the effectiveness of your coupon campaign without testing and measuring it. Tracking codes let retailers know not only who redeemed the coupons, but also where the coupons were found. This data can help you decide which coupon is best for your target audience.