In a grab for market share, sometimes people will try anything. Take Asa Candler, Atlanta businessman and co-owner of Coca-Cola for instance. In 1894, he used handwritten tickets for a free glass of Coca-Cola to help market his new soft drink. Spotting this success one year later, grocer C.W. Post began using coupons to help sell groceries. His coupon gave people a one cent discount on his new breakfast cereal, Grape Nuts.
During the 1930s, coupons were characterized as a “necessity” to help families make ends meet during difficult economic times. ( http://www.couponmonth.com/pages/allabout.htm)
Fast forward to today – the tactic of using coupons to increase distribution and created trial for marketers has been used effectively for the last 70+ years. In fact, recent data suggests usage is tracking upward, and has been since 2007. Believe the hype, consumers like (and rely on) them:
- http://www.msnbc.msn.com/id/25500262/
- http://www.reuters.com/article/pressRelease/idUS118086+03-Sep-2008+MW20080903
- http://promomagazine.com/research/ads-resonate-coupons-instore-1218/
This relevance though (great as it is) increases redemption, and increased redemption means increased (but uncertain) costs, and increased costs are in direct contrast to marketing budgets that (for good or bad) are often on the front lines of budget cuts.
So what’s a marketer to do?
Abandon or limit a tactic that that seems to be resonating in the market?
Roll the dice and hope that incremental sales can soften blow of increased budget impact?
I am not sure it is ever a sound idea to go into a promotion with off budget liability hanging out, but in the climate of shrinking marketing budgets and every expenditure receiving extra scrutiny…why take the risk?
Promotional Risk Underwriting and redemption coverage fixes exposure on coupon offers, so marketers know their costs to the penny, prior to the coupon ever hitting the market. Call me old school, but I think marketers are best when they create and execute, not when they are sweating the cost implications of tail end promotional redemption.
As a tool, promotional risk coverage caps the exposure that can accompany redemption-type (i.e. COUPON) progams. No underspend, no overspend, no lingering worries about coupon redemptions 9 months after the fact.
So, if you’re ready to cash in on the coupon’s resurgence as a marketing tactic, but not interested in wearing your “accounting hat” as much as your “marketing hat”, I don’t blame you. Check into promotional risk, or redemption coverage – your budget will be happy you did.