To Coupon or Not to Coupon: The Debate that Continues

The coupon has evolved and is possibly a “sexy” idea to marketers today with the possibilities that exist with making them available to consumers on the internet or even when they are mobile.

Coupons have always been viewed as a potential way to drive short term revenue for an issuer, and in a way where the revenue or unit sales lift from coupon issuance has been measurable. The ability to track and record ROI from coupon oriented campaigns has been seductive since the days when the main vehicles for distribution were FSI, direct mail and in person distribution.

The dark side of achieving this quantifiable bump (hopefully) has always been the fears of brand loyalty and equity erosion. Mass Marketers have always recognized that this form of promotion yielded more benefit to participating retailer partners than actually accrued back to the manufacturer.

There were also concerns that this erosion extended beyond the brand, and often to the category in general. Retaliation by competitors also led to no win situations, and further crippled the product category, especially if there were reasonable substitutes in place. In some markets (breakfast cereals come to mind), many consumers would only buy a cereal brand that was issuing a coupon, stock up on those that were, and not buy in shopping weeks where none were available. To add insult to injury, couponing provides discounts to customers who would likely remain loyal, and pay full price without the coupon that came their way.

So back to the start. According to Michelle Wicmandy in the February 2010 issue of Website magazine (also available at http://www.websitemagazine.com/scripts/sub/digital.aspx?issue=25), “coupons are experiencing a renaissance” and that Internet print at home distribution is up 41%. The article goes on to cite many of the benefits to the consumer of online and mobile coupons (convenience, 24 hour a day browsability, no need to buy those messy newspapers…). The biggest advantage for the marketers would seem to be reduction in cost of distribution.

However, even this article, which waxes poetic about the wonders of eCouponing acknowledges that consumers are significantly less likely to purchase, either a specific product or from a specific outlet without a coupon being available. So that while I suppose that brand independence appeals to the bohemian, I owe nothing to any company, no brand owns me mentality, as marketers we should be pondering life without brand equity and whether we are making classic economic text book  theories into a reality.

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