In this type of promotion, the product manufacturer supplies to the consumer, by hand or by post, a coupon which offers him a price reduction of a stated amount against the purchase of the product, provided this is made within a specified time. The consumer 'redeems' the coupon by presenting it to the shopkeeper at the time he makes his purchase. The retailer obtains from the manufacturer repayment of the value of the coupon together with a small handling charge.
Coupon promotion schemes provide an incentive to the consumer to buy one's product. They are also an additional incentive to the retailer to stock it in order that he may enjoy the business to be obtained from consumers wishing to 'redeem' their coupons.
It is not surprising that the higher the coupon value the higher the redemption rate will be. There are, however, certain problems. Where a brand is already established in the market, many people will be 'redeeming' coupons who would have bought the product in any case. Each sale to a regular user, therefore, will be made at a lower price than would have occur. red if the promotion had not taken place. Another difficulty is that known as retail redemption when the shopkeeper accepts the coupon in part payment for goods other than the product for which it is intended. There are no easy answers to these problems and the ONLINE MARKETING Manager who embarks upon a coupon scheme must accept them as part of the cost of the promotion.
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