A short while ago, I discovered that Brazil was not the only country where discount coupons had never “ taken off ” as a Marketing tactic. Neither China, nor India have developed this promotional tool well, to the surprise of American Marketing professors. In the United States, these slips of paper, which give the right to discounts when cut out of magazines, are worth almost the same as cash and have been a fever among ‘bargain hunters’ for decades. In Brazil, however, these have never gone anywhere.
If, on the one hand, inflation made any future discount on better known products nonviable, retailers also lacked the technological infrastructure to deal with these numbered paper slips in the tills, not to mention with their sponsors. Added to that, just two per cent of the Brazilian population regularly read the newspaper. The habit of reading magazines and journals is, however, fundamental to the effective distribution of discount-vouchers.
Thus, with the end of Brazilian hyperinflation, the promotional solution found by supermarkets and manufacturers of high-turnover consumer goods was to invest in promotional tabloid-size hand outs. In fact, these little newspapers full of promotional offers reached between 20-60% of homes, in cities across the country, depending on the social class. The higher the class, the greater the penetration.
Almost twenty years after the end of hyperinflation, the result of the insistent use of this tool is such that there has never been so much wastage of printed material. As you know, a good part of the promotional leaflets that we find on our doorsteps or in our mailboxes goes straight into the trash can, or worse, ends up in the city gutters. When they actually reach the consumer, their effective utilization is small. In a recent study, carried out by Toolbox, we followed up on more than one thousand shoppers to verify what the use of the promotional tabloid had had during the shop. And, although more than 80% of the customers approached at the point-of-sale attributed value to this newspaper full of offers, just one percent actually had this pullout or paper in question on them, at the moment of the interview.
On the other hand, as we all know, the negotiation of promotional pullouts with advertising manufacturers is a significant source of profit for organized retail. And despite complaining about the lack of return on the effectiveness of this type of action and of the high cost of advertising in national pullouts, neither retailer, nor key account managers in the industry have managed – up until now – to find an alternative to this consecrated tactic.
Would coupons be an alternative? Coupons of the “money-off ” type that appear in the adverts of American magazines would certainly not catch on here. Perhaps it’s just a question of culture. Brazilians do not believe in this type of promotion. It might well be necessary to change the format, put some intelligence into the process, integrate these marketing actions with the digital and mobile world of today.
One American supermarket chain – Kroger, and one in England – Tesco, have been successfully doing this for years. Both, wrapped up in research and analytical software such as “dunnhumby”, make deep studies of the profile of their members of fidelity programs and decided to put an end to the single brochure of offers. Kroger, for example, stopped publishing a unique national version to print more than 10,000 different versions of the
tabloid brochure directed toward its 4 million registered clients in the United States. The faithful clients of these networks now receive customized offers, specially created for their specific purchasing profile.
As all the analysis behind the creation of the promotional packages is based on the shopping history of the very same customer, it is almost impossible to misdirect the offer. With the advent of complex algorithms, and sell-out data coming from store checkouts, Tesco manages to correctly guess which products its clients need and what level of discount would be most attractive for each customer profile.
Supermarket owners are happy with the results of the generation of cash-flow for the stores, as well as for not throwing away precious cash through indiscriminate lowering of prices for all customers. Manufacturers also support the initiative, sponsoring the implementation of the system and further the consulting agency to develop the segmentation based on clients. For the first time, brands have the chance of directly impacting their heavy
users, both influencing and measuring the results of the actions.
The future of coupons is digital. In the United States, the word “coupon” is one of the most ‘searched for’ on Google and the number of searches, indeed, grew by 200% in 2010, in comparison to the previous year. Some chains, in partnership with large brands, have started to send these directed coupons to people’s mobile phones. In Brazil, the success of peixeurbano.com.br, groupon.com.br and the suchlike have shown that there is an important bracket of consumers that are interested in obtaining bargains prices for their purchases, even if one needs to enter ones personal details to get them, or access the Internet to download the money-off vouchers.
The paradigm has been broken. Brazilians also enjoy a good bargain, but we are somewhat behind on implementing these tactics into marketing. Chains such as GPA already have similar initiatives, such as “cartão mais” from the Pão de Açúcar flag. But it is the regional supermarket chains that have most to benefit from the so-called directed shopper marketing (or direct mailing). As these chains have a greater proximity to their customers and have adapted portfolios toward regional products, the chances of succeeding in converting
customers is even greater. With their measurable results, manufacturers are very interested in sponsoring this type of initiative. All the retailer needs to do is to choose their partners to put directed shopper marketing into practice.
Who knows… this could be the moment for coupons to catch on in Brazil?
Originally published at Mundo do Marketing website in 4/27/2011