In marketing, a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions.

Types and uses:

There are different types of values applied to coupons such as discounts, free shipping, buy-one-get-one, trade-in for redemption, first-time customer coupons, free trial offer, launch offers, festival offers, and free giveaways. Similarly, there are different uses of coupons which include: to incentive a purchase, to reduce the price of a particular item or items, provide a free

sample, or to help allow marketers better-understand the demographics of their customer.

Function:

Coupons can be used to research the price sensitivity of different groups of buyers (by sending out coupons with different dollar values to different groups).  Therefore, it is generally assumed that buyers who take the effort to collect and use coupons are more price-sensitive than those who do not. hence, the posted price paid by price-insensitive buyers can be increased, while using coupon discounts to maintain the price for price-sensitive buyers (who would not buy at a higher price).

Grocery coupons:

Grocery coupons come in two major types: store coupons and manufacturer’s coupons.

Store coupons are coupon-based discounts offered for a particular item or group of items. The issuing store will accept its own “store coupons”, but some stores will also accept store coupons that are issued by competitors.

Coupons issued by the manufacturer of a product may be used at any coupon-accepting store that carries that product.

Manufacturer’s coupons have the advantage of being currency at a variety of retailers, not just at one store.

Grocery coupons are incentives for people who want to save money, but manufacturer coupons are primarily intended to advertise products and lure new customers with financial incentives. They may also be used to increase the sales of newspapers or other publications. For example, people may purchase multiple copies of a newspaper or magazine in order to use the coupons contained within.

Expiration:

Most coupons have an expiration date after which they will not be honoured. For example, Christmas coupons are valid only throughout Christmas week. American military commissaries overseas honour manufacturer’s coupons for up to six months past the expiration date.

Delivery methods:

Customers may get these coupons from various sources, including national newspapers and the Internet, with web sites offering free printable grocery coupons can be printed at home and used at retail stores. Some major grocery chains also produce digital coupons that may be loaded onto the retailer’s loyalty card at home, or at a coupon dispensing machine located in the store.

Print media:

Clipping coupons from newspapers has been the most popular way to obtain coupons, though Internet and Mobile Phone coupons are gaining wide popularity.

Some retailers and companies use verification methods such as unique barcodes, coupon ID numbers, holographic seals, and watermarked paper as protection from unauthorized copying or use.

Other than newspapers, there are also coupon book publishers and retailers who compile vouchers and coupons into books, either for sale or free.

Internet coupons:

Online retailers often refer to coupons as “coupon codes”, “promotional codes”, “promotion codes”, “discount codes”, “keycodes”, “promo codes”, “surplus codes”, “portable codes”, “shopping codes”, “voucher codes”, “reward codes”, “discount vouchers”, “referral codes” or “source codes”. Internet coupons typically provide reduced cost or free shipping, a specific dollar, percentage discount or to earn cashback while some offer to encourage consumers to purchase specific products or to purchase from specific retailers. Because paper coupons would be difficult to distribute and redeem, typically secret words or codes are distributed for consumers to type in at checkout. Marketers can use different codes for different channels or groups in order to differentiate response rates.

Mobile coupons:

A mobile coupon is an electronic ticket solicited and or delivered to a mobile phone that can be exchanged for a financial discount or rebate when purchasing product or service. Coupons are usually issued by manufacturers of consumer packaged goods or retailers, to be used in retail stores as part of a sales promotion. They are often distributed through WAP Push over SMS

or MMS, through GEO Fencing technology or other mobile means. The customer redeems the coupon at the store or online. In some cases, customers may redeem the mobile coupon at the point of sale. Some retailers may choose to forward the redemption to a clearinghouse for final processing.

Mobile app coupons:

A mobile app coupon can be either a regular coupon for redemption (discounted value or discounted percentage) used at checkout distributed by the app-makers or unique, personal referral codes owned by each user to recruit new users with referral benefits. The latter form requires personal sharing on behalf of users to their personal networks.

Taxation:

Depending on the jurisdiction, coupons may or may not reduce the sales tax which must be paid by the consumer. This is often determined by who sponsors the coupon. If the coupon is issued by the retailer, the product was never offered at the original price and the coupon represents a reduction in the amount paid and the tax. If the coupon is issued by the manufacturer, the original price is still paid but some of the prices is covered by the manufacturer instead of the consumer and the full price remains taxable. This is the case with the coupon-eligible converter boxes in the United States, which compensate in part for the forced conversion to digital TV.

Trading:

Coupon manufacturers may or may not place restrictions on coupons limiting their transferability to ensure the coupons stay within the targeted market. Hence such restrictions are not universal and are difficult and/or costly to enforce, limited coupon trading is tolerated in the industry. Organized coupon exchange clubs are commonly found in regions where coupons are distributed. Often coupons are available for purchase at some online sites, but since most coupons are not allowed to be sold, the fee is considered to be for the time and effort put into cutting out the coupons.

Promotion:

Promotion is a key element in putting across the benefits of your product or service to the customers. Well-designed marketing and promotional strategies ensure long-term success, bring in more customers and ensure profitability for businesses.