What Happened to the Coupon Clippers I. Introduction Coupons have been a major component of manufacturer and retail trade promotion of products on the shelves of America's grocery stores for most of the past three decades. From 1970 to 1985 the number of coupons distributed increased from 16 billion to 200 billion, at a compound annual growth rate ("CAGR") of over 17 percent. However, from 1985 to 1992 the CAGR for coupons dropped to under 7 percent, and in 1993 and through half of 1994 the CAGR for coupons was negative, at -3 percent. Manufacturers have made a major investment in coupons as a promotional vehicle for their products. How have consumers reacted to this investment? Consumers have reacted by clipping virtually the same number of coupons every year, regardless of how many coupons the manufacturers throw at them. During the period 1985 to 1993 the consumer redemption rates for coupons dropped virtually every year, from 3.25 percent in 1985 to 2.28 percent in 1993. Over the same period the real number of coupons being redeemed has remained static around 7 billion each year. With the flood of coupons on the market why aren't consumers clipping like they used to? Have the traditional channels for delivering coupons been flooded to the point where consumers just can't take any more? Throughout this stagnation period the average face value of coupons has been increasing nearly twice the rate of inflation from 30.4 cents in 1983 to 59.5 cents in 1993. In the past three or four years manufacturers begun to shorten the duration of coupons, to increase their ability to evaluate the performance of coupon programs. Even with a shorter coupon life, there are many more dollars on the table to attract... ... middle of paper ... ...nufacturers to control the distribution and redemption cost of coupons. A continuing threat to manufacturers will be the growth of Private Label. Consumers are continuing to move toward these products as the quality of the products improves and the prices stay down. However, the electronic solutions offer the manufacturer the first real opportunity to control their costs. Consumers in the future will not have to expend the time and effort required to clip coupons today. Consumer behavior will remain unchanged, most will still take a bargain when it is placed in front of them, but the manufacturers and retailers have finally begun the development and implementation of new appeals to give the consumer what that have always wanted, the easiest bargain available. Bibliography: Nielsen Market Research Nielsen Clearing House Roundy's, Inc.
The average American spends $151 a week on groceries; adding up to $604 a month which is taken out of the hard earned pay check of the household. It is not a mystery why shoppers would want to use coupons to attempt to bring down this cost. Efficient shoppers understand the value of spending the time to meticulously plan each trip to the grocery store to fit in as many coupons as possible. Joanie Demer quit her job in order to spend her time maximizing the benefits from couponing. When couponing, the best way to save is doubling up the coupons to utilize the voucher to its fullest extent; extreme couponers will hoard several copies of a newspaper or magazine in order to stock up on the coupons so they can double up and have enough for the overstock they need to hold over until the next sale on that product. Jamie VanSicker gathered 185 copies of the Sunday paper in order to save big on the deals at her local grocery store, sadly to find out the paper didn’t have any coupons to clip. Religiously sticking to couponing may not be the healthiest choice, there are not many coupons are available for meat or produce, but the saving are worth the products given up. Couponing can create a few problems but overall takes the stress off the women when they know they have saved usually at least $15 off their total bill.
The threat of new entry for the industry is low, as considered by high costs and intense price competition, which make the industry’s profit margins very low. In the United States the market is concentrated, where the 50 top firms, including: Wal-mart, Kroger, Safeway
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
Threat of New Entrants – In the food industry, consumers’ attitudes are based on their brand loyalty and preference. Although the capital for the new entrants could be low, the brand loyalty is difficult to establish in the short-run; therefore, the threat of new entrants is low.
In Exhibit A scenario 3, the retailer gets the same margin, we get a 3% increase in the margin and clients get a 5% discount, a win-win-win scenario. I also believe that, since we’re controlling the message and communication, unit sales will increase more than the 7% we saw in the Staples test to at least 10% as we will have creative control and will be able to communicate with the customer directly and
... brands and reducing their reliance on the larger brands. In addition, retailers such as Wal-Mart and Target are increasingly offering private label premium goods at affordable prices. A huge advantage with private label brands is that they can be positioned as a lower cost alternative for national and international brands. Increase in demand for the private label products provides better margin and would generate more business for the group.
Duhigg evokes that “Target began building a vast data warehouse that assigned every shopper an identification code-known internally as the ‘Guest ID number’-that kept tabs of how each person shopped” (187). Every time one goes shopping, they share intimate details about their consumption patterns with retailers. Many of those retailers are studying those details to figure out what consumers like, what they need, and which coupons are most likely to make them happy. Sports Authority provides this “Guest ID” method by offering their consumers to join free rewards program called “The League”. They encourage them to create this membership and give them benefits such as coupons and update them on the newest discounts. Also, the rewards program is based off a point system and when one has earned a certain amount of points they send them a gift card to spend however they wish. Though, what the consumers don’t know is that by applying for their free rewards program is that their collecting data and constructing analysis to make them into loyal
Over the last decade, product marketing and ways through which communication takes place between manufacturers and consumers has changed tremendously (Belch & Belch 2004). Due to the technological revolutions and the rise of innovations such as the mobile phones and the internet, control over information has shifted apparently from the manufacturer's hands to the hands of consumers (Belch & Belch 2004). The market environment has also changed due to globalization of marketing strategies, loss of confidence in media advertising, increased reliance on targeted communication methods, and media fragmentation and so on (Belch & Belch 2004).
Dixit, A. (2000). Growth of discounting in the airline industry: Theory, practice, and problems. (Order No. 9978379, Georgia Institute of Technology). ProQuest Dissertations and Theses, , 330-330 p. Retrieved from http://search.proquest.com/docview/304592352?accountid=8364. (304592352).
Consumers are motivated to spend more when there are incentives presented in the form of discounts and special promotions. Their satisfaction in spending less to buy a desired item indicates how incentives work by influencing an individual’s decision making ability. The fact that the item was on a discount enabled the individual to buy it as the reduction in the price of the item was a strong economic incentive. The concept of incentive is present in everyday life situations as it basically impacts the actions of every individual. Incentives are efficient tools used to manipulate the human behaviour in order to achieve desired outcomes.
The “Top Challenge Trend” is likely that of “Faster Pace of Innovation” causing increased competition due to lower barrier of entry. (Carpenter, Bauer, & Erdogan, 2012) With the increase competitors from both major competitors like PepsiCo vs generic branding of sodas at cheaper rates. The market is flooded with new flavors and new competitors all the time.
However, recent overdraft and swipe fee regulations have resulted in a mini-exodus from debit cards, driven primarily by the near-extinction of debit card rewards. This means a significant opportunity exists for credit card companies to add valuable new accounts to their rewards portfolios. The key to addressing the aforementioned consumer concerns is a combination of auto-pay plans, customizable limits, and education about the relative merits and risks of both credit cards and debit cards. Marketers can thereby ensure that rewards are the deciding factor in people’s minds.
First of all, there are many advertising can easily grab the consumers’ attention with something like ‘price appeals’. For instance, some of the advertiser like to create a sense of urgency with limited time offers to manipulate consumers. It basically explains that people are more emotionally attached to lose out on something than gaining it because no one likes to lose out on an amazing deal that is limited time offer. If the product is not bought before the end of the limited time offer, there is no other opportunity to purchase the product for lower price. Everyone loves sale price. If the products come out with lower prices such as buy six only for 20 dollars, the consumers would not satisfy just to buy six, conversely, they would feel more comfortable and satisfy, if they buy more than six. Therefore, they all would buy more and more than they should like grabbing all the things home. That is called crazy shopping. Besides, advertising something like ‘buy one get one free’ is also known as amazing deal that can control consumers’ desire to buy even more. This promotion is way too attractive to the consumers to get into it because it is interesting and catchy if there is something free. Nobody can ...
...nt were to put up interest rates, our consumers will be less likely to spend. Therefore we could change our pricing strategy for a short period of time so that consumers feel that they will not be able to get this ‘bargain’ again therefore they will buy. We could use promotional pricing, which is lowering our prices for a short term to increase sales and gain market share.
The shifting of the consumer’s taste of simple products to high quality branded products is not sudden. It grew out in the middle of the 20th century and the companies selling various products needed a new way to differentiate their products from the others giving it a unique identity.