While in school pursuing my marketing degree we brushed upon the subject of coupons. Coupons can have their place in the promotion of products and services. However, one of the down falls is what the text book called “Coupon Dependency”.
What is Coupon Dependency?
A consumer whose purchase relies on a coupon or special offer.
Coupon dependency is when consumers associate a product or service with a coupon and will only buy with a coupon. Coupon dependency occurs typically after a consumer becomes aware of special offers received through coupons. If the consumer perceives that these coupons are readily available then the consumer will withhold purchasing until they receive a coupon. Often times, coupon dependency, leads to a perception of lesser value than the suggested retail price.
Case Study: Sonic Drive-In
Don’t laugh, but yes, I worked at Sonic. In fact, it was my first real job. I even car hopped on roller skates. When I worked at Sonic, we would equip every tray with a coupon. One of Sonic’s regular coupons on that tray was a buy-one-get-one-free Burger. In fact, there is even a permanent BOGO Burger button on Sonic registers. Esentially 50% off retail. Sonic used these coupons for years. While working there I observed many individuals that would pull in and ask for a coupon sheet before ordering. They were coupon dependant. And if no coupons were available, some of these consumers would drive away. Heavily coupon dependent. Sonic no longer offers coupons on their trays.
In today’s online marketing race, more and more brands are competing for attention. Groupon offers what no other mass media agency in the past could deliver. They offer a customer at a fixed price. A guaranteed sale. No more guessing what the ROI will be for a mass media campaign. No more playing to the numbers and eyeballing customer conversions based on the per 1000 audience reach. Groupon takes out the complexity of marketing for the average business owner. No dice roll. A simple, you offer it at X amount, give groupon Y percent and you have a real live body for Z cost. While I am not going to argue if “Groupon’s Days are numbered“, I am going to say, please read the fine print. As a business you are gambling with the perception of value. If you rely solely on the merits of cutting your price in half then you will soon find your profits cut in half as well.
Coupons most certainly have their place in marketing and promotion, just understand the weapon you are carrying and the potential backfire it may have.