The Lowly Coupon: Hot Potato, Reminder, Offer and Contract
American shoppers love deals. We love bargains. We love to save money.
We love coupons.
Those free standing inserts (FSIs) loaded with discount—or “cents-off”—coupons that clog our newspapers every Sunday and give hernias to the delivery people are there for a reason: They move merchandise.
In 2006, 270 billion coupons were distributed—roughly 2,500 for every household in the U.S.
Wait in line at any supermarket checkout counter and you will see shoppers happily redeeming them. Kristina Davis of Marietta, Georgia, told Steve Lohr of The New York Times that by clipping coupons from the Sunday paper and redeeming them at the supermarket, she saves 30% to 40% every month on groceries.
Department store customers also love coupons that offer 15%, 20% and more off merchandise. They expect to receive them and traditionally respond. So when Terry J. Lundgren—the hotshot new CEO of Macy’s who engineered the buyout of the Federated Store chain of 410 sites and changed them all into Macy’s—decided to send out lots less coupons, he broke three cardinal rules of marketing:
Rule #1: “Test everything.”
Rule #2: “See Rule #1.”
Rule #3: “If it ain’t broke, don’t fix it.”
The year was 1894. Asa Candler, a partner in the fledgling Coca-Cola Company of Atlanta, dreamed up the idea of promoting his “Ideal Brain Tonic” and “Delightful Summer and Winter Beverage” by couponing—offering a free glass of Coca-Cola. Coupons were sent through the mail, printed in newspapers and handed out on street corners. Local soda fountains were supplied with free syrup, so they would not be out-of-pocket.
Coke and couponing took off like rockets. (At the end of this story are illustrations of early Coca-Cola coupons.)
Fast forward a century and hear what a former chief marketing officer of Coca-Cola proclaimed: