Last week, readers frustrated with the increasing number of low-value coupons shared their views. One said that if a coupon doesn’t make a large enough dent in the price of a national name-brand item, she doesn’t use it. She buys the retailer’s store brand instead. Will this emerging “boycott the 25-cent coupon” approach encourage marketers to offer better coupon values?
There’s not much data to support the theory that low-value coupons prompt shoppers to increase their purchases of private label products, but several studies note that sales of store-brand groceries are on the rise. With the economy still sluggish, many of us shop primarily on price. Since many store brands offer little difference in quality compared to their national name-brand counterparts, price remains king for a lot of shoppers.
Some 64 percent of shoppers regularly fill at least half of their grocery carts with store brands, according to a July 2012 study from Accenture, the New York-based management consultancy. Because shoppers have developed strategies to spot deals and buy at the best prices (and those shoppers are my kind of people!) more than half of them have a specific criteria as to when they’ll buy a national brand versus a house brand. More than half – 51 percent – of the shoppers surveyed said that a name-brand product would have to match the price of the competing store brand in order to get them to switch. “Consumer goods companies must respond to the threat of increasing competition from store brands,” the study concluded.
How should brands respond to an audience that is extremely value-oriented, has cut down on impulsive buys and is often shopping solely on price? A marketer of a national brand has two options: continue offering promotions to make the prices of their products more attractive (using sales, coupons or both); or try to convince shoppers that the name brand is of better quality or is more unique than the store brand.
Based on its study of the rise in store brands, Deloitte LLP warned manufacturers that “excessive promotions train consumers to wait for deals and shift the focus from product attributes to price,” and urged them to lessen their reliance on price promotions. Some of the recent drops in the value of coupons may be the result of marketers attempting to shift shoppers away from buying solely on price and instead pushing the quality of their brands.
The quality argument is interesting. There certainly was a time when store brands weren’t quite up to the standard of some of the name brands, but that’s changed for many products. While a house-brand paper towel may not be as thick or absorbent as a name-brand variety, other items, such as frozen vegetables or bottled juices, are likely to be of equal quality.
Worth noting, too, is the increase in coupons for retailers’ house brands. My local supermarket recently featured a $5 ecoupon offer for its brand of vitamins when a shopper spent $15 minimum. A 60-count bottle of daily vitamins was on sale for $5.99, buy one, get one free. I bought six bottles for $17.97; the $5 coupon then cut the price to $12.97, or $2.16 per bottle. That deal obliterated the price of the name-brand vitamins. In my book, vitamins are vitamins. I’m not brand-specific, and I know my “buy” price points like the back of my hand.
As a coupon shopper, my goal is always to reduce an item’s price in half by combining a sale and a coupon. If a manufacturer that has consistently offered great coupon values for a product I like suddenly stops, would it affect my purchasing habits? It certainly could, especially if the price difference is significant. If shoppers continue to buy more store brands versus national brands, manufacturers will need to decide how to lure those shoppers back.
For me, the ideal lure is rectangular, made of paper and carries a value of $1 or more.