Extreme Couponing: Why Sales & Marketing Need To Better Coordinate Discounts

  • American specialty cable channel TLC started reruns this week of  “Extreme Couponing” which highlights the lifestyle and couponing tactics of shoppers who dedicate huge amounts of time and resources to using supermarket coupons to deliver huge savings (up to 98%) for their family.

    It is intriguing television, but for those of us in the CPG world it is the equivalent of watching a car accident over and over again.

    To give you the premise of the show, these “Extreme Couponers” collect huge numbers of coupons, strictly plan and coordinate their shopping trips and stockpile products that they have been heavily discounted, free, or in some cases actually paid the shopper money to take them out of the store.

    In the first episode, I watched there was a lady with 400 two litre bottles of Mellow Yellow in a bedroom closet and one woman with a custom made “coupon vault” for storing her coupons worth hundreds of thousands of dollars.

    Shopping trips are often family affairs with several carts filled with hundreds (or thousands) of dollars of groceries that after all is said and done cost the shopper only a fraction of their shelf price.

    From a retailer perspective this causes huge supply chain issues, like when a shopper buys 150 boxes of pain reliever, wiping out the whole supply in-store, leaving none for other shoppers.

    As well, retailers in the US often “double” manufacturers coupons creating a financial drain on the category that can be quite significant. Many retailers are now revising their coupon policies in wake of “Extreme Couponing”.

    Of course, the United States has been more of a coupon-driven market than here in Canada, but the combination of economic pressures, a trend towards discount retailing and the rising prices of commodities could drive more and more Canadians to pick up on this “Extreme Couponing” trend.

    Internet forums like Smart Canucks and Red Flag Deals are full of opportunities for Canadian shoppers to combine aggressive coupons and in-store discounts to get FREE products.

    In fact, this week, even without these sites, I scored a $6.00 yoghurt product for $0.64 due to aggressive ad matching at my local retailer and a $2.00 manufacturers coupon.

    The only person who made any money on this deal was me. Not the retailer, not the supplier.

    We have to be honest. We created this mess through sloppy planning, poor internal coordination and a little bit of bad timing and luck.

    That’s why CPG company’s need to have better coordination and visibility on the pricing activity that is taking place on a brand / product. This includes sales team driven on-shelf discounts and marketing driven coupon programs (on-shelf, on-line, FSIs or magazines).

    It is a given, under Competition Policy Law, that the domain of retail pricing is solidly in the hands of the retailer.

    However, CPG suppliers spend too much time and resources building strong brands which shoppers are willing to part with their hard earned money to buy.

    In order for the suppliers and retailers to be profitable and cover the increasing commodity costs across the store, we need shoppers to be paying a higher price per unit. Uncoordinated trade discounts and consumer coupons that devalue the brand / product only train the consumers to pantry load and buy only the products that are on-sale and couponed that week.

    The result is less money to invest behind brand building activities like consumer advertising and brand innovation that are the true success factors in our industry.

    What do we need to do?

    1. Full visibility within CPG supplier organizations of retail price discounts offered in the marketplace, across customers and across various formats.
    2. Equally robust visibility of planned coupon programs in the marketplace and their effective dates.
    3. Reduced redemption periods for coupons measured in weeks, not months.
    4. Blackout periods during aggressive coupons or trade discounts.
    5. Detailed analysis of trade promotion deal depth and effective coupon discount rates.

    Let’s hope that this does not catch on here in Canada – but let’s be prepared to minimize its impact on our bottom line and brand equity if it does take off north of the border.

    “Extreme Couponing” Airs On TLC, Wednesdays at 7:00 PM and 7:30 PM.

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