Marketing Communications

382 CHAPTER 12 BRAND ACTIVATION

the primary objective of a couponing action. If the consumer is not price-sensitive, he or she

will probably not notice the coupon or not use it, in which case the promotion action will be

ineff ective. Finally, the co-operation of the retailer is necessary since couponing means more

work at the checkout.

Procter & Gamble is one of the largest coupon distributors. In 1992, the company announced a new strategy. It

decided to spend 50% less on couponing, and to adopt an EDLP (Every Day Low Prices) strategy, dropping retail

prices by $2 billion. In January 1996, the company launched an 18-month no-coupon test in a carefully chosen part

of the State of New York, where 90% of the shoppers were known to use coupons. The vast majority of other

manufacturers, retailers and wholesalers believed that this was a viable strategy, and some of them followed

Procter & Gamble’s lead. However, the no-coupon strategy was very unpopular among consumers. Many con-

sumers considered coupons as ‘an inalienable right’. Consumers in the test region started boycotts, public hearings and

petition drives. Signs saying ‘save our coupons’ appeared in front gardens, and the local media were flooded with

letters of complaint to editors. The protests even made it into the national media. Public officials joined the protests,

claiming that Procter & Gamble was the company of ‘profit and greed’ that hurt ‘average Joe’. A resolution was

voted to ask Procter & Gamble to abandon its strategy. Petitions with more than 20 000 signatures were sent to

the company. After only 14 months, the company pulled the plug on its no-coupon test in April 1997. A settlement

was agreed upon whereby $4.2 billion worth of coupons was distributed that could be redeemed at any super-

market in the region by any consumer or for any food item. However, Procter & Gamble did not admit any wrongdoing.

It still claimed that during the test period consumers received at least equally good value for money, without the

cost and inconvenience of coupons. Nevertheless, the sales of Procter & Gamble were flat during the test period,

while on average the use of coupons of competitors of Procter & Gamble and different product categories increased

substantially. The company’s experience has triggered new methods to distribute coupons. Instead of inserting

them in media, more and more coupons are made available through shelf dispensers at the point-of-sale, in fre-

quent buyer and loyalty programmes, in combination with free samples at the store, through direct mailings, the

Internet, or electronically at the checkout.^15

BUSINESS INSIGHT

The Procter & Gamble zero-couponing strategy

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