Creative Destruction of Promotion

Is there anything an astute consumer can’t find a coupon, discount code or deal for? A proliferation of apps that comparison shop, website archive, or flyer scrape suggests not. We could be on the verge of creative destruction of promotional offers as we know them.

The many sites with ‘best coupon apps’ lists says it all.1Coupon apps are so abundant, we need a directory of directories to sort through them. Meaning there is nothing special about getting a coupon. Anyone with a phone has access to dozens.

Meaning there is a feeding frenzy going on as one business tries to build another business out of the business of being a lower priced business that the other business. Head spinning? Yes – that’s what I think is going on. It could be a pyramid scheme of promotions. Or a usurpting of the original purpose of the coupon.

But wait. The basic idea behind promotion is an enticement to allow consumers to experience the product and learn all its benefits. To turn lookers into buyers. Product manufacturers should benefit from the coupon apps, as their promotions reach a wider audience. Win – win – win. Apps get downloaded – consumers get deals – manufacturers sell stuff.

Why am I prophetizing the end of such promotions?

Back to the strategic importance of marketing for a moment. Retailers issue coupons to draw potential buyers’ attention (build awareness), to remind buyers of their product (attract repeat customers), or make their price competitive (low cost competition).

Currently, customer rewards, or loyalty programs, are over-running retail like bunnies during a fox-pox. Marketers are amped up on attracting repeat customers through loyalty programs. Ideally, these programs bring mutual benefits to the customer and firm, through ongoing association. Customers make their lives simpler through brand loyalty, knowing a trusted vendor to go to buy their things. Businesses enjoy the financial benefits of repeat customers, as the acquistion costs tend to be lower. Loyalty to a well differentiation brand shouldn’t need incentivation, in my opinion. If customers are really getting value from the brand they will be repeat customers, regardless of the coupon. If the only reason a customer has made a purchase is the coupon, the competitive strategy might need reconsideration.

Back to the coupon app destroying the coupon. It’s their general availability that I wonder about. Some implications:

  • First, there’s the target market. Sure, everyone wants a lower price but who do the coupons target? 1. Coupon clippers. People who enjoy spending time searching for deals, collecting them and getting satisfaction from enjoying the rewards (saving money). The apps must take this away from the market segment. There is no effort required any more. But the saving money part is intact. 2. The price conscious consumers. These apps are appealing, but so would any other low price strategy. 
  • Some coupons are offered for social benefit to people who require them. If the apps open this advantage to everyone, it’s no longer a benefit.2
  • If many retailers adopt the ‘we will price match’ tactic, this could be a route to the equivalent of price fixing. Or bankruptcy if retailers are unable to meet low prices in a way that sustains the business. Ubiquituous coupons force all competitors into an everyday low price strategy, rather than a high-low approach, which may be closer to the original intent of coupons. 

There’s a psychological appeal to the coupon. A limited time offer. A limited offer. This is the enticement. It’s special, for some reason, be it loyalty program, circumstance, timing, or target group. Generally, this would be part of the business’ goal in issuing promotions. If the goal is to compete on price, which is the outcome of making coupons broadly available, then execution through coupons is at best deceptive and at worst uncontrolled, and generally unnecessarily awkward (easier to set the low price). Coupons appeal to customers because if they have one, it makes them special. They appeal to the vendor because it’s a short term tactic, not a permanent situation.

Literally, creative destruction would mean someone got creative and destroyed something, which is what I think could happen with coupon apps run amok. The theoretical creative destruction, wherein new products create a new economic order, isn’t in effect here. The new product establishes itself and makes obsolete the previous approaches, like cars and horse-drawn carriages.

Coupon apps may disrupt the strategies of the companies that issue and honour the coupons, which may adversely effect the apps based on them. All fall down?

1For example: https://www.thebalance.com/best-coupon-apps-4160582;https://www.moneycrashers.com/best-mobile-coupon-apps-smartphone/;https://www.huffpost.com/entry/the-7-best-coupon-apps-right-now_n_57d6fa24e4b03d2d459bb3c2 and I could go on.

2This assumes that the offering company was taking a hit to offer the product at a reduced rate to specific customers in need.

Leave a Reply

Your email address will not be published. Required fields are marked *