A study on the Potential of Digital Coupons:Current Status and Future Promises

OBJECTIVES

• The nuts and bolts of digital coupons • Reasons for adoption• The different digital couponing strategies and

way in which it can be sourced• Mass distribution and acceptance of digital

coupons• Future of digital coupons with different

developments affecting its adoption• The implications for Indian market

INTRODUCTION

• The concept of integrated marketing communications suggests that the company must blend the promotion tools carefully into a coordinated promotion mix

• Sales Promotion includes a wide assortment of tools- coupons, contests, cents-off, deals, premiums, and others- all of which have many unique qualities.

• Established and new brands uses coupons to encourage customers to try their products.

INTRODUCTION

• Digital coupons are electronic coupons for manufacturers’ products that are found online. They are the same as paper coupons, only without the paper.

• Shoppers select the coupons they’re interested in, save them to a loyalty card and redeem them at checkout

• The current usage of digital coupons may be termed as being in its ‘early adopter’s’ stage

GENESIS AND ADOPTION

• Coupon campaigns have been used by brands since the launch of the first ever paper coupon by Coca Cola in 1887.

• The first coupons were distributed in the street, displayed within magazines, and placed inside post boxes.

• 66 million digital coupons were redeemed industry wide in 2013 alone

DIGITAL COUPON STRATEGIES

There are three basic types of promotional strategies – • a push strategy, • a pull strategy and• a combination of the two.

DIGITAL COUPON STRATEGIES

• Push StrategyA push promotional strategy works to create customer demand for your product or service through promotion• Pull StrategyA pull promotional strategy uses advertising to build up customer demand for a product or service. • Combination StrategiesSome companies use a combination of both push and pull strategies.

DIGITAL COUPON STRATEGIES

• The key idea behind pursuing the push approach is the opportunity to trigger impulse buying among the customers who have already given permission to send digital coupons.

• In contrast, for pull strategies, customers explicitly request and show interest in the product/service from the company.

DIGITAL COUPON SOURCES

1. Email2. Blog3. Social Network4. Coupon banner5. Use Twitter and Facebook Page6. Online Banner Ads7. Youtube8. Go viral9. Social shopping site

DIGITAL COUPON DISTRIBUTION

The Digital Coupon Management Process is an eleven step process aiming to manage the full lifecycle of a digital coupon offer

DIGITAL COUPON DISTRIBUTION

The Offer Issuer creates the initial offer.The Offer Issuer communicates the coupon offer details to the

Offer Awarder

The Offer Awarder accepts to support the offer at his premises, for example at the Point-of-Sale.

The Offer Distributor publishes the offer for access by potential Offer Users

The Offer User acquires a digital coupon.

The Offer User presents the digital coupon and/or his customer account ID to the Offer Awarder.

The Offer Awarder validates whether the digital coupon is authentic and whether the purchase meets the agreed business rules for the

digital coupon.

Redeem Coupon: The Offer Awarder awards the digital coupon to the Offer User and records the redemption information in his

system.

The Offer Awarder communicates the redemption information to the Offer Issuer.

The Offer Distributor updates the status of the redeemed coupon and notifies the Offer User.

The Offer Issuer checks the awarded coupon transmissions and whether the rules were applied, and agrees on the coupons to be compensated.

Digital coupons present a huge potential for marketers as presently a limited number of people (as percentage of population) are using Digital coupons.

Usage of digital coupons is also going to be driven by technological advancements happening in mobile payment initiatives.

Future of digital coupons

Three prominent likely to impact digital couponing process are Near Field Communication (NFC), Apple Passbook, and Google Wallet.

NFC provides an innovative approach for digital coupons where retail stores can overcome the cost associated with installation of image scanner, required for scanning of two dimensional bar codes sent on mobile phones.

Future of digital coupons

Google Wallet app is another innovation which has been developed as a mobile payment mechanism which allows users to store information about their cards (debit, credit, loyalty cards etc.) on their mobile phones.

Apple’s Passbook app has also been developed as a mobile payment mechanism which allows users to store coupons

Future of digital coupons

• McDonald’s which carried out its campaign in collaboration with Passbook in Sweden in January 2013.

• Digital coupons were offered to customers with the option to save it in the Passbook app.

• If the user approached within 100 meters of a restaurant, then she received a push notification on her smart phones reminding her to redeem her coupon.

• The campaign was claimed successful as 96 percent of the users who accepted the coupon redeemed it afterwards.

Future of digital coupons

A very high chance to expand its base in India due to multiple reasons1. The demographic profile of country in which youth

forms a sizeable portion of our population. 2. Indian customers have largely been bargain-hunters,

digital coupons are likely to see good adoption.3. Indian customers increasingly opt for impulse

purchases in a number of product categories.

IMPLICATIONS FOR INDIA

Some companies have already piloted digital coupon initiatives in India and have seen very favourable results.

Snapdeal, which started as a daily deal site, • invested significant amount of money in devising its

digital coupons system • which enabled the customers to avail discounts at

different merchant outlets • without taking a printout of the voucher.

IMPLICATIONS FOR INDIA

Vodafone, in collaboration with bookmyshow.com, • launched "Buy a movie ticket and get 1 movie ticket

free" • offer which involved digital coupons.

In this offer, customer received a six digit digital coupon after she called on a pre-specified Vodafone number.

This digital coupon could be used by the customer to get one ticket free of her choice if she booked her tickets on bookmyshow.com

IMPLICATIONS FOR INDIA

P&G’s Olay Total Effects digital coupon campaign which ran for 3 months.

The goal of campaign was to drive customers into stores for a free sample of the product in order to induce trial.

It was reported that more than 27,000 digital coupons were distributed via digital medium which saw 27 percent redemption

IMPLICATIONS FOR INDIA

The success of the above-mentioned examples points that digital coupons have a very bright potential in India.

This potential of digital coupons is going to be fuelled by growth of smartphone in India which is conducive to facilitate digital coupon usage.

Recent years have seen considerable change in usage pattern of digital coupons with the introduction of smart phones.

IMPLICATIONS FOR INDIA

According to the IDC Worldwide Quarterly Mobile Phone Tracker report, by 2017, India is expected to account for 10.3 percent share of the global market behind China’s projected 30.2 percent share and USA’s 12.1 percent.

Consumer behaviour and demographic trends of Indian customers, will help in digital coupons becoming an important tool for marketers in India.

IMPLICATIONS FOR INDIA

• With the changing face of technology and an increasingly tech-savvy audience, digital coupons has just started to unravel its potential.

• The spread and reach of digital coupons has been largely linked with users of smart phones. While it has been a limitation till now, it will increasingly become less relevant with greater penetration of smart phones in the days to come.

CONCLUSION

• Getting all the elements involved in the digital couponing process - salesmen, store owner, supply chain person, customers - in synchronised action will be critical in order to ensure proper functioning of the total system.

• If the marketers get the modalities of digital coupons right and fine-tune it as per customer’s preferences and company’s objectives, it can prove to be very effective in tracking the relevant audience and getting best rate of returns on their investment.

CONCLUSION

• In the process, it can also help to build up a valuable data-base of customers, which if kept updated and refined will sharpen the focus of the marketing efforts.

• In short, digital coupon becomes an exciting and highly promising marketing-mix tool in the hands of marketers.

CONCLUSION

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Unni, R. & Harmon, R. 2007. Perceived effectiveness of push vs. pull mobile locationbased advertising. Journal of Interactive Advertising . 7(2), 1-24.

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