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Concern over wastage and misredemptions of coupons in the UK is growing, and not surprisingly. According to recent research (Marketing, March 12, 1992) last year about 7.5 billion of the eight billion coupons that were issued were not redeemed. And at least a quarter were misredeemed.
With such wastage and inefficiency, the industry is due for a shake-up. And there is one coming, from across the Atlantic. In the US, the potential benefits of a link between coupons and barcodes are being realised.
In the UK so far, it seems to be widely believed that the simple introduction of barcodes on coupons will solve or at least ease the problem of misredemption. But barcoded coupons were introduced into the US many years ago and there has been no reduction in the misuse (or abuse) of the coupon.
Quite often, for example, when shopping in the US I've been confronted with stacks of local papers where shoppers or even checkout staff can search for coupons. Shoppers request coupons on their selections and staff will occasionally actually cut out the coupons.
Usually the customer had already bought the product before he or she even knew of the offer: it was brought to the attention of the customer by staff who have learned the lessons of customer care well.
The simple barcode solution to misredemption fails to address the core problem, which is to incentivise existing and new customers to buy more of the brand in question.
But now, in the US, retailers and manufacturers are tackling both questions of incentivisation and misredemption with one system--a system that uses databased techniques to target the households with tailor-made offers.
The system works like this. The shopper goes up to the machine which is offering promotions on a range of products. The shopper is asked to tap in a number such as their phone number (or postcode, or Shopper Club ID number). The shopper can then choose from a range of products selected for promotion by pressing a button. (The promotions concerned are paid for by participating manufacturers who treat the system as another advertising medium for the communication of their offers. There are also manager specials, which change day by day or even hour by hour according to sales.)
Say the consumer chooses 5p off a can of beans. A coupon is printed out, plus another coupon, say from the retailer promoting an affinity product--own-label frankfurters, for example. Both manufacturer and retailer have something to gain.
But the system is more sophisticated than that. Since the type of neighbourhood is known from the phone number or postcode, the likely purchasing habits of the shopper allows the coupon machine to make new offers. If it is a heavy drinking area, a consumer choosing a coupon on a salted snack, may be given a second coupon offering money-off on a selected beer.
And, unlike the Catalina system (Marketing, March 19 1992) which is being tested in Asda, the coupon is issued only to consumers who ask for it, rather than being issued willy nilly at the checkout.
But the real trick is datacapture. The machine issues different coupons to each individual. Individual barcodes can be laser printed on each one. So, all the information can be recorded when the consumer finally ends up at the scanning till.
The details of each individual's coupon redeeming habits are then stored on a database. Retailers can analyse the information to build up knowledge about the buying habits of particular catchment areas and they can target future promotions more accurately as a result.
Ideally, in the future the data will be fed back into the couponing machine creating more finely targeted promotions for each cycle.
The machines need not be in-store. They can be in car parks, at bus stops, in shopping malls. This opens the way for partnerships between non-competitive retailers who use the system to generate cross-visits and store traffic.
The new systems being tested in the US reduce the risk of wastage and the expense of door drops, and avoid the upfront commitment to printed coupons. What's more they are more effective than traditional systems. The machine responds with the right proposition to the right household at the right time.
With that sort of offer, the coupon will soon rise out of its currently debased status to become a key database driven promotional tool of the 90s.
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