Coupons and Coupon Codes in Business Promotion
Free Coupons Can be Abused and even Counterfeited
Dec 15, 2008
Coupons are distributed to consumers through mail, newspapers, the Internet and now even mobile devices. Consumers always like a bargain and might buy the items even if they do not need them all that much.
Business Promotional Value of Coupons
Coupons are issued by manufacturers of consumer goods, or by stores to local prospects.
Manufacturers seek to increase the sales volume of their products through discount coupons. Consumers who receive (or print out) the coupons can get a bargain when they buy the product at their local store. Many more people will buy the product as a result. The campaign also creates another benefit in the form of increased brand-awareness.
Retailers distribute coupons to local prospects with the aim of attracting more patrons to their store. Once they visit the store, the new patrons are likely to buy other, normally priced, merchandise. The new customers might also continue patronizing that store if their first experience was a pleasing one.
Coupons thus have great business promotional value.
Distribution of Coupons
Manufacturers distribute coupons over a wider area compared to store coupons that are restricted to areas where the store has a presence. Manufacturers' coupons are redeemed at the sales outlets that sell the manufacturers' products.
Different distribution methods are adopted depending on the coverage required. Local coupons might be delivered through door to door delivery. Mail distribution is suitable both for local and wider distribution. Coupons can also be printed in newspapers circulating locally or regionally (which the recipients can cut out and use).
In the scenarios outlined above, the distribution involves significant costs. If you distribute them door-to-door or through mail, you have to print the coupons and incur delivery charges. For newspaper distribution, you have to pay advertisement costs. In the modern alternative of Internet distribution, you can save on printing and delivery costs.
Internet distribution can involve just providing a promotional code that the buyers quote when buying, or an on-line coupon that buyers can print out and present at the sales outlet.
The Issue of Coupon Fraud
Internet coupons can be misused by posting the promotional code on freebie sites, or by multiple printouts of the on-line coupon. Many retailers refuse to honor them.
Counterfeiting is another fraudulent coupon fraud. There are other methods used for fraudulent redemption of coupons. The methods are not discussed widely so that new fraudsters are not "educated" in the practice!
One report on coupon misuse says that companies are losing an estimated $500 million from coupon fraud. The Institute of Sales Promotion has published "Electronic Couponing Guidelines".
Processing the Coupons
As coupons are redeemed at retail outlets, the retailers are losing immediate cash. To compensate them, manufacturers reimburse them the coupon value plus a small handling cost.
To recover the amounts involved, the retailers have to sort the coupons by manufacturer and send each bundle to the concerned manufacturer. This work is often outsourced to specialist clearing houses that do the sorting and sending.
Issuing promotional coupons thus involves significant costs.
Coupons are a great way to increase sales and even build brands. However, you have to handle the issue of coupon fraud and budget an amount more than the value of coupons to run the campaign.
