Marketing From the Grocery Aisle: Smart Couponing

A week after a quickie civil wedding, my husband loaded up a moving van, put a large bird cage in the front seat with his four squawking birds, and moved to Austin, Texas. If I didn’t have a wedding ring on my finger, I probably won’t have followed six months later.

During our separation, he would tell about the wonders of Texas and how I was going to enjoy living there instead of in my picture-perfect house in Sherwood, Oregon.

A few days before I was to fly to Texas to sign the paper on a house I’d never seen, he called and gloated he’d bought a gallon of ice cream, and got for free a can of whipped cream, jar of maraschino cherries, bag of pecans, and jar of chocolate syrup. I was convinced he was lying.

Not only wasn’t he lying, but the grocery store, H-E-B, promoted similar offers every week. Some were better than others. Often we ended up with “free” items we never used. Four years later, I still have a package of cornmeal for coating and frying catfish.

Nevertheless, every week, we looked forward to the weekly “meal deal.” This week, when you purchase boneless, skinless chicken breasts and H-E-B shredded cheese, you get H-E-B ready to bake white or whole wheat French rolls, H-E-B pasta, and H-E-B alfredo sauce.

Or you can pay $14.97 for a cast iron pan (regularly priced at $17.97) and get a choice of pork, chicken or season beef for fajitas, along with vermicelli, and H-E-B chunky salsa (right). HEB offer

No doubt, H-E-B makes little or no money on these deals, but they bring customers into the store, who undoubtedly leave with more than the “meal deal.” Of course with aisles, shelves, and displays of foods, it’s easy to coax shoppers into purchasing more than the weekly deals.

The opportunity to entice customers into expanding or upselling their purchases is more challenging for retailers and restaurateurs. A coupon from a fast food joint for a free sandwich when you buy one will most likely spur users to tack on a couple of drinks and fries.

However, a coupon for $50 worth of food for $25 at an up-scale restaurant probably won’t motivate diners to order appetizers, drinks, and desserts if an entrée costs $25 or more. The same is true for other products and services where the incremental costs of purchasing additional items exceeds the discount.

The criticism surrounding Groupon, is while it can attract new customers, many of these new customers never return or don’t follow the Groupon rules, using multiple Groupons for a single transaction or tipping based on what they owe rather than the undiscounted bill.

Coupons and offers, whether a 50-cents savings on a box of tissues or 50% discount on a $300 helicopter ride, can result in customers caring more about the discount than the product or business.

The challenge is to arrive at a happy medium, taking into account business and marketing goals, and the ability to overcome a loss of revenue due to the redemption of a popular coupon. Retailers have the option of limiting the number of coupons available, reducing the discount, or requiring customers to purchase multiple items in order to qualify.

A few weeks ago, Groupon introduced Groupon Reward, which ties a regular Groupon deal to a rewards program, which requires customers to spend a certain amount of money before their reward is unlocked. This loyalty program is designed to drive repeat business.

Weighing into a company’s decision to offer coupons and offers is the potential long-term repercussions or benefits.

While a company might take a “hit” for a successful Groupon, and might not initially see repeat business, it’s hard to gauge over time the number of people who return or recommend to friends, family, and associates the company and its goods.

In the case of H-E-B, their meals deals built goodwill. Four years later, I still think fondly of the store. When summer approaches, I recall the thrill of buying a gallon of ice cream and getting for free all the making for a sundae. If I ever visit Texas, I’m sure to visit an H-E-B.

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