The endless-loop news of Groupon's financial bleeding — largely self-inflicted — brings no joy to those who thought they were on to the next big thing. As Sunday's New York Times points out, the daily-discount site was all-too recently offered a stunning $6 billion from Google, but the time-tested combination of corporate hubris, greed and flimsy accounting got in the way of all of that.
Coupons. Gift cards. Loyalty points. These tried-and-true tools of the retail trade might not be as sexy as other forms of marketing. But together they account for more than $165 billion in purchasing power.
When Apple executive alumn Ron Johnson took the helm of J.C. Penney one of his goals was to wean customers off of the concept of “sale” and “coupon”. In their place he wanted to introduce a new pricing and merchandising strategy that was all about low prices all the time. It failed miserably as J.C. Penney’s recent earnings show and now word is that Johnson is bringing “sale” back into its advertising. Johnson miscalculated, gravely, about the love affair Americans have with coupons and discounts.
The daily deal industry, still dominated by Groupon, is in the midst of rapid-fire innovation, presenting new opportunities — and some significant risks — for merchants.
Andrew Mason figured out how to inject hysteria into the process of bargain hunting on the Web. The result is an overnight success story called Groupon.
Last October, media marketing firm Greystripe released a study of working moms who use their iPhones for everything from banking to social networking to making purchases. Dubbed the "iPhone Mom," this audience segment depends on the iPhone for managing their lives to entertaining their children. Just over half use their iPhones at the supermarket, according to the study.
Invented over a century ago as anonymous pieces of paper that could be traded for discounts, coupons have evolved into tracking devices for companies that want to learn more about the habits of their customers. Although they might look similar to the ones in Sunday newspaper circulars, many of today's digital versions use special bar codes that are packed with information about the life of the coupon: the dates and times it was obtained, viewed and, ultimately, redeemed; the store where it was used; perhaps even the search terms typed to find it.
Let’s be honest, shopping isn’t always as fun as it should be. Between long lines, irate shoppers, communal fitting rooms (I’m looking at your Loehmann’s), distracted cashiers (I’m sorry, don’t let my purchase interrupt your texting), and simply having to part with your cold hard cash, it can be exhausting. Plus, you can’t always find what you want.
For decades, shoppers have taken advantage of coupons. Now, the coupons are taking advantage of the shoppers. A new breed of coupon, printed from the Internet or sent to mobile phones, is packed with information about the customer who uses it. While the coupons look standard, their bar codes can be loaded with a startling amount of data, including identification about the customer, Internet address, Facebook page information and even the search terms the customer used to find the coupon in the first place.
H.J. Heinz Co. chief executive William Johnson announced at a food-industry conference this week that consumers are firmly entrenched in a new money-saving mind-set. "This is not a temporary phenomenon, but rather a new behavior," he said. This new behavior includes a dramatic increase in couponing and preparing more meals at home. Johnson further stated that coupons are once again an "indispensable marketing tool.
The mobile phone is quickly becoming Santa’s biggest helper. Powerful software applications for devices like the Apple iPhone are making it easy for bargain-hunting consumers to see if another retailer is offering a better deal on a big-screen HDTV or pair of shoes and to use it to haggle at the cash register. Online retailers are revamping the mobile versions of their sites so consumers can make purchases without tedious typing. And offline retailers, battling for every last dollar, are sending cellphone users electronic coupons to lure them away from competitors.
The wobbly economy is contributing to a rush by millions of online shoppers to a decidedly low-tech business: coupons. The number of people scouring the Internet in search of coupons that they can print and present to retailers, or codes that provide them with discounts on retail sites such as Amazon.com, is up sharply. Leading coupon websites reported record traffic on Cyber Monday. RetailMeNot had 1.1 million visitors, up 57% from a year ago. CouponCabin was visited 400,000 times, up 65% from a year ago. And BradsDeals.com said traffic was up 174%, to 16,000 visitors per hour.
What happens to marketing if mobile phones replace credit cards as a form of payment? It's something marketers need to start figuring out now. Even as more and more tests roll out across the world, marketing strategy is lagging behind new technology. In Japan, mobile payments have been in use for about four years, and about 20% of consumers are using it. But merchants have only recently tied loyalty programs to mobile payment. McDonald's, for example, introduced a loyalty and payment program last year in Japan that lets customers choose their meals, redeem coupons and pay for purchases with their mobile phones.
Heather Hernandez walked into a supermarket with a stack of coupons last month and walked out with $160 worth of groceries, for which she paid $30. “With the economy right now everyone wants to make their dollars go further,” said Ms. Hernandez, a stay-at-home mother in Houston who clips and files coupons with the meticulousness of an accountant. “I see all kinds of people using coupons. I see teenagers using coupons. I see grandfathers using coupons.” It may be the digital age, but when it comes to pinching pennies, most consumers are opting for a method that is well over a 100 years old: the paper coupon.
Yahoo has added coupons to its online mix. This week, the company unveiled its Yahoo Deals Web site, which offers coupons, information about promotions and tips on saving money. “Frugality is the new ‘cool,’” said Greg Hintz, head of Yahoo Shopping, in a statement. “We now know that couponing and bargain hunting are losing their stigma and are now a regular habit for many people.”
For small children, there are few life changes bigger than learning how to use the toilet. It's a time when both tots and their parents can be in need of a little positive reinforcement and a morale boost. Kimberly-Clark's Huggies brand is trying to help, and engender loyalty at the same time, with an ambitious 3-week-old program that uses the mobile phone -- and points to where mobile marketing may be headed.
Anne Marie Sablock said she regularly drives past an Albertsons, a Whole Foods Market and several other supermarkets to shop at the Ralphs on Pacific Coast Highway in Long Beach.
Seeking to marry a ubiquitous device with a time-tested marketing technique in a sour economy, Unilever plans to begin a trial run Sunday of a new technology that lets consumers redeem digital coupons by having a supermarket cashier scan their cellphones.
When Peter Shipman, a franchise owner of the Qdoba casual Mexican restaurant chain, was launching his third outlet in the college town of Ann Arbor, Mich., he needed a way to draw students to the new location -- and he wanted to speak their technological parlance. So he bought ads in the campus newspaper and posted promotional posters, each with a code kids could scan with their phones to get a mobile coupon for a buy-one-get-one-free burrito.
To drive awareness of its new, lower-priced menu, Quiznos is giving away one million subs to consumers who register online for coupons.
Last month proved to be the worst November for retailers in at least 39 years, according to the International Council of Shopping Centers. Still, terrible results from Abercrombie & Fitch and Target stood out, even amid the sea of grim reports, providing case studies of marketing approaches that are simply not resonating with consumers in these dire times.