Couponing Practices: Tradition Trumps Technology

September 4, 2014September 4, 2014 Phillip Nones Advertising, Branding, Business, Marketing Communications, Media, Sales Advertising, Consumer Advertising, Consumer Marketing, Couponing, Coupons, Experian, Marcomm, marketing, marketing communications, Simmons National Consumer Study

With big changes happening every day in the way that consumers are interacting with brands and products, a big question is how quickly they’re changing their habits when it comes to the use of coupons.

Perhaps surprisingly, the results of a new 2014 Simmons National Consumer Study conducted by Experian show that “traditional” couponing activities remain far and away the most prevalent consumer activity.

First of all, the proportion of U.S. households that uses coupons of any sort is right around three-fourths (~74% according to the recent Simmons survey).

And we all know the single biggest reason why people use coupons: to save money. That rationale dwarfed any other among the survey respondents:

I use coupons to save money: ~64% of respondents mentioned
I use coupons to try new products: ~23%
Coupons incent me to try new stores: ~7%

But then the data points begin to deviate from where marketers may think their consumers’ minds are at (or where they might wish them to be).

Consider how many of the following popular couponing practices are distinctly “old school”:

I use coupons from in-store/on-shelf coupon machines: ~55% of respondents cited
I take advantage of rebates on products: ~50%
I use free-standing inserts from newspapers: ~46%
I use on-package coupons: ~37%

Compare that to the far-lower engagement levels with “new school” couponing practices:

I use coupons delivered by Internet or e-mail: ~30% of respondents cited
I use my smartphone to redeem coupons at the store: ~17%
I have used a smartphone coupon app in the last 30 days: ~9%

These results show that if companies decide to embrace coupons as part of their marketing effort, they’ll need to pay as much attention (if not more) to traditional couponing methods than to newer practices.

Old habits die hard … at least in this arena.

Groupon’s Slow-Motion Train Wreck

March 3, 2013June 9, 2013 Phillip Nones Uncategorized Andrew Mason, Couponing, Coupons, Daily Deals, Groupon, marketing, Nones, Nones Notes, Online Coupons

I’ve blogged before (several times, actually) about the problems with Groupon’s business model and the difficulties it’s encountered since going public.

It seems that the twin whammies of new competitors plus merchants’ increasing unwillingness to take a bath on offering deep-discounted products and services to ultra price-sensitive consumers have been enough to send Groupon’s business into a financial tailspin.

One key takeaway from the Groupon couponing experience: Consumers who are attracted to bottom-of-the-barrel pricing have absolutely no brand loyalty thereafter – unless they’re offered a similarly extreme price discount the next time around.

Understandably, merchants aren’t much interested in marketing practices that boil down to being creative ways to divorce profits from sales.

And now, with yet another quarter of dismal financials just released, Groupon’s board of directors has done the inevitable: separating CEO and founder Andrew Mason from his company.

As the famously quirky Mason, who was once a student of music at Northwestern University, put it in a letter to Groupon employees (which he also released publicly “since it will leak anyway”):

“After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today. If you’re wondering why … you haven’t been paying attention.”

And then Mason goes on to summarize the ugly facts: two quarters of missing the company’s own financial expectations, along with a stock price that’s baely one-fifth of Groupon’s listing price when the company went public ~18 months ago.

Business observer and talk-show personality Jeff Macke has been merciless in his condemnation of Groupon’s recent business performance. He writes:

“In its short, ignominious history as a public company, Groupon crushed the hopes of more true believes than Santa Claus and Jim Jones combined. From its closing level on the day of its IPO in November 2011, GRPN shares have lost more than 80%, driven by accounting scandals, an ill-conceived international expansion and generally poor execution of a not-very-smart business model … What is fresh information is the company’s hideous earnings miss … when it reported a 12-cent loss versus expectations of a 2-cent gain.”

Late moves by the company to staunch the bleeding – such as taking a smaller cut of revenue on daily deals during the latest holiday season in an attempt to attract and keep merchants – haven’t been very successful and haven’t reassured investors.

In late 2012, Andrew Mason was dubbed “Worst CEO of the Year” by CNBC’s Herb Greenberg. But not every business journalist and analyst has been completely critical of CEO Mason. In an interview with the New York Times, Stifel Nicolaus’ Jordan Rohan remarked: “I view Mason as a visionary idea generator. Few would argue with how impressive the Groupon organization was as it grew.”

But Mr. Rohan went on to report, “However, at some point it became the overgrown toddler of the Internet – operationally clumsy [and] not quite ready to make adult decisions.”

For many of us in the marketing field, peering at Groupon from the outside was like seeing a slow-moving train wreck in the making, so the latest news is pretty much what we expected.

But perhaps the biggest surprise is how similar it all looks to the ill-starred Internet pure-plays of the dotcom bubble a decade ago.

Consumers and coupons: The latest stats are in.

February 12, 2012 Phillip Nones Uncategorized Advertising, Business, Consumer Marketing, Coupon Trends, Couponing, Coupons, Digital Coupons, marketing, Online Coupons, Retail Marketing

Coupons are big business in the USA. According to the latest Coupon Facts Report published by NCH/Valassis, a whopping $470 billion worth of coupons were offered by consumer package goods marketers in 2011.

Of this, an estimated $4.6 billion in coupons were redeemed. That represents more than 3.5 billion individual coupons at an average value of ~$1.30 per coupon.

It’s not surprising to learn that the offering of coupons by manufacturers spiked during the recessionary period that began in late 2008, when shoppers were more value-conscious than ever.

But by 2011, manufacturer behavior changed. In fact,this past year saw the first decrease in coupon offerings since 2008 (the drop was 8%) … although the volume hasn’t declined anywhere close to the volume of coupons consumer goods manufacturers offered back before the recession started:

 2007: $373 billion in coupon value distributed
 2008: $379 billion
 2009: $445 billion
 2010: $511 billion
 2011: $470 billion

Not every consumer category behaved similarly in 2011. Grocery product marketers reduced the total quantity of coupons they made available during the year, while marketers of health and beauty products showed no such decline.

With the increased popularity of digital couponing, one would expect that the growth rate in this segment would significantly outpace that of traditional coupons.

That turns out to be correct: NCH estimates that ~11% more print-at-home and paperless coupon offers were distributed in 2011 compared to the previous year.

But digital couponing still represents only a very small fraction of the total coupon landscape, which continues to be dominated by the free-standing inserts that are found in nearly every Sunday newspaper published in America. Here’s how FSIs dominate:

 Free-standing inserts: ~89% of U.S. coupon distribution in 2011
 In-store handouts: ~4%
 Direct mail: ~2%
 Magazines: ~2%
 Coupons inside or on product packaging: ~1%
 Digital couponing (paperless or print-at-home): ~1%

One other interesting study finding is that even though manufacturers reduced the volume of their coupon offerings during 2011 … consumers themselves showed no inclination to reduce their participation.

In fact, coupon redemption was up more than 9% in 2011 versus 2010. Clearly, many people are still thinking in “recession mode” when it comes to squeezing every ounce of productivity from their shopping dollar.