Mike Anthony @ engage consultants

Mike Anthony on Shopper Marketing

Extreme Couponing – They have to be mad (the manufacturers, not the shoppers)

with 3 comments

A friend recently introduced me to the fabulous show Extreme Couponing. For those that don’t know it’s a US show which introduces real people who take couponing and discounting to an extreme (hence the title). In THIS CLIP Joyce manages to bag over two hundred dollars of groceries for less than seven bucks.

Who pays for all these discounts?


Who is paying for all of this? The friendly retailer? Unlikely. Most, if not all, of the discount was paid for by the manufacturers – manufacturers who are leaping for Joy (rather than Joyce), that their latest marketing “strategy” has paid off. “Just look at the uplift”. Well – how much of the uplift is down to people like Joyce?
Of course, Joyce is an extreme, right? Normal people don’t shop like that do they? Whilst she is most definitely extreme, data we see shows that often 80% or more of discounted products are sold to what we might call “deal shoppers” – people who focus on promotions in-stores. Aisles are full of them – shoppers choosing brands because it’s on deal this week.

And what is wrong with that? A few simple thoughts:

The deal is available to everyone, so people who are loyal to your brand, who were going to buy it anyway, get the discount too. How much did that cost?

People get used to paying a low price, and some start to stockpile. Sales go down after the promotion and before too long we’ll need another deal to get us back on target.

Brand value is eroded in the minds of shoppers. How good is this brand if they can sell it so cheap.

The total cost is almost never accounted for. Evaluations of promotions normally include the cost of discounting, and some may cover the cost of lost sales after the promotion, but how about the overtime in the factory, the extra trucks, the downtime in the factory afterwards, the premium paid to get extra materials in on time?

Promotions cause out of stocks. In a recent survey in-store we found that over 90% of the products which were out of stock were promoted lines. So shoppers (maybe those loyal ones) can’t buy it. And maybe they’ll try a competitor instead this time. And maybe they’ll like it.

Shoppers like Joyce are extreme for sure, but the industry needs to stop this madness.

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Written by Mike Anthony

August 19, 2011 at 9:22 am

3 Responses

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  1. Like you, I am amazed at the discounts being offered to shoppers. Yesterday, I went to Staples to get some printer ink. I had $52 in rebates from turning in old cartridges and buying new ones (which I needed any way). Between that and store sales, I got $63 worth of stuff and paid out $1.58 in cash PLUS will be getting $34.50 in additional rebates from what I bought yesterday.

    After that, I went to Walgreens and bought a few things. I purchased ONLY things that were on sale (which is rare because I usually get sucked into buying full-price stuff because it’s convenient). I checked out with $22 worth of stuff and paid $6.96. They certainly made no profit on me on this trip!

    I stopped at my favorite craft store and bought a book and a crafting tool with the 50% off coupons I had (one was mailed, one emailed). Total savings: $13.49.

    I had to pick up some dog food so I went to PetSmart and used the $9 rebate sent to me for buying flea medication there. I also had a coupon for a free can of Purina One dog food so I figured I’d try that out. Total value of the purchase: $13.58. I paid $1.81 in cash.

    Then I was thirsty from all this smart shopping so I stopped at McDonald’s and got a free frozen strawberry lemonade with a coupon that came in the mail.

    Oh, and last week, I bought a Ninja “kitchen system” that retails for $169 but was on sale for $149 at Kohl’s. I had a coupon for an additional 30% and $20 in Kohl’s cash earned from a prior visit. So I paid $84 for this $169 item.

    Now, would I have bought some of these things if they hadn’t been on offer? Probably not (particularly the Ninja). But I can tell you that I am shopping more frequently at Walgreens instead of CVS, and do not always just buy the sale items. I also now go to Target instead of Walmart because of the RedCard program which gives me 5% off my purchase, thus making it often less expensive than Walmart (and a far more pleasant shopping experience). And I shop at Staples instead of Office Depot because they give me rebates AND are very friendly and helpful!

    Just thought I’d share my own Not-So-Extreme-But-Still-Satisyfing Couponing experience. Having read your post, I admit to a degree of guilt for contributing to crippling the consumer goods’ companies’ bottom line but if they want to continue to pay me to shop, I’m buying!

    Sue Publicover

    August 24, 2011 at 10:00 pm

  2. Hi Sue,
    Thanks for this – and I guess it goes to show one implication possible not mentioned in my blog – that one major consequence of all of these deals, is that perhaps we are increasing the number of deal buyers. If that was happening on a large scale, my guess is it will have a massive impact on brands and profitability in the short AND long term.

    Thanks for the comment!

    Mike

    Mike Anthony

    August 25, 2011 at 7:43 am

    • The retailers and manufacturers are breeding the deal buyers with so many price cuts. It certainly doesn’t seem like a sustainable strategy.

      Sue Publicover

      August 25, 2011 at 7:54 am


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