Why Retailers Offer You Coupons

As a frugal consumer, you’re familiar with retailers offering coupons as a purchase incentive. Coupons and similar discounts can help you save money on an item, but always take the time to recognize exactly why the retailer is offering that coupon. Understanding its impact will help you become a savvier shopper.

Seasonal products, in particular, are tied to coupon use. A retailer might offer a coupon in an attempt to capture the largest possible market share during a peak buying season. For example, a retailer might offer a discount on snow blowers in late fall/early winter, shortly before heavy snow arrives and when most people have the purchase on their minds. Retailers hope you will choose to buy from them instead of their competitors, even though their profits shrink somewhat. With a good enough deal, the increase in total sales makes up for the loss.

Retailers also offer coupons on seasonal products at the beginning of their slow season. Doing so helps them clear space for in-demand inventory. This can also help them save money on storage and maintenance for products that would not otherwise be hot sellers. Offering coupons is a popular strategy for encouraging repeat customers. For instance, if you bought a lawnmower from a particular business in May, that retailer might offer you a coupon for a snow blower in November. Offering the coupon costs them less than paying for the advertising to bring in a new customer.

In some cases, retailers may offer coupons as a loss leader. Though the store may expect to make no profit or even lose money, they can anticipate making up for their losses on other products you might purchase during a visit to buy the discounted item. Chances are a consumer will purchase something else once they’re through the doors. Coupons, whether loss leaders or not, are generally only one piece of a retailer’s overall promotional strategy. Email or direct mail marketing are very common means of promoting particular sales or products and are an excellent way for retailers to publicize their coupons.

The most important thing to remember with coupons is that you and the retailer gain from the discount. Ideally, you’ll both be satisfied at the end of the transaction. Smart shoppers will examine exactly how much money the coupon will save them, what requirements are attached and what alternatives are available before deciding where to make their purchase.

Danielle, who blogs on behalf of Sears and other prestigious brands, enjoys decorating coupon organizers for friends and family, so they can save money just like she does. Read her work at Eat Breathe Blog.

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