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Belch: Advertising and
Promotion, Sixth Edition
V. Developing the
Integrated Marketing
Communications Program
16. Sales Promotion © The McGraw−Hill
Companies, 2003
efficiently. Yet another factor may be the everyday low-pricing strategies that have
prompted companies such as Procter & Gamble to move away from coupons and other
price promotions in favor of samples. Many marketers are finding that sampling meets
the complementary goals of introducing consumers to their products and getting retailers
to support their promotional programs.
Couponing
The oldest, most widely used, and most effective sales promotion tool is the cents-off
coupon. Coupons have been around since 1895, when the C. W. Post Co. started using
the penny-off coupon to sell its new Grape-Nuts cereal. In recent years, coupons have
become increasingly popular with consumers, which may explain their explosive
growth among manufacturers and retailers that use them as sales promotion incentives.
As Figure 16-2 showed, coupons are the most popular sales promotion technique
as they are used by nearly all the packaged-goods firms.
Coupon distribution rose dramatically over the past 30 years. The number of
coupons distributed by consumer packaged-goods marketers increased from 16 billion
in 1968 to a peak of 310 billion in 1994. Since 1994 coupon distribution has been
declining, and it dropped to 239 billion in 2001. According to NCH Promotional Services,
a company that tracks coupon distribution and redemption patterns, nearly 80
percent of consumers in the United States use coupons and nearly 25 percent say they
always use them when they shop. The average face value of coupons distributed
increased from 21 cents in 1981 to 83 cents in 2001. The average face value of the 4
billion coupons that were redeemed in 2001 was 74 cents. 28
Adding additional fuel to the coupon explosion of the past several decades has been
the vast number of coupons distributed through retailers that are not even included in
these figures. In most markets, a number of grocery stores make manufacturers’
coupons even more attractive to consumers by doubling the face value.
Advantages and Limitations of Coupons Coupons have a number of
advantages that make them popular sales promotion tools for both new and established
products. First, coupons make it possible to offer a price reduction only to those consumers
who are price-sensitive. Such consumers generally purchase because of
coupons, while those who are not as concerned about price buy the brand at full value.
Coupons also make it possible to reduce the retail price of a product without relying
on retailers for cooperation, which can often be a problem. Coupons are generally
regarded as second only to sampling as a promotional technique for generating trial.
Since a coupon lowers the price of a product, it reduces the consumer’s perceived risk
associated with trial of a new brand. Coupons can encourage repurchase after initial
trial. Many new products include a cents-off coupon inside the package to encourage
repeat purchase.
Coupons can also be useful promotional devices for established products. They can
encourage nonusers to try a brand, encourage repeat purchase among current users,
and get users to try a new, improved version of a brand. Coupons may also help coax
users of a product to trade up to more expensive brands. The product category where
coupons are used most is disposable diapers, followed by cereal, detergent, and
deodorant. Some of the product categories where coupons are used the least are carbonated
beverages, candy, and gum.
But there are a number of problems with coupons. First, it can be difficult to estimate
how many consumers will use a coupon and when. Response to a coupon is
rarely immediate; it typically takes anywhere from two to six months to redeem one. A
study of coupon redemption patterns by Inman and McAlister found that many
coupons are redeemed just before the expiration date rather than in the period following
the initial coupon drop. 29 Many marketers are attempting to expedite redemption
by shortening the time period before expiration. The average length of time from issue
date to expiration date for coupons in 2001 was 3.2 months, for grocery products.
However, coupons remain less effective than sampling for inducing initial product
trial in a short period.
A problem associated with using coupons to attract new users to an established
brand is that it is difficult to prevent the coupons from being used by consumers who
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Chapter Sixteen Sales Promotion