Coupon Clipping Goes High Tech, With Electronic Dispensing System
Bargain-hunting coupon clippers may soon be able to retire their scissors now that a Los Angeles-based firm has introduced an electronic distribution system that uses computers instead of newspapers to disseminate cents-off coupons.
Developed and marketed by the Catalina Marketing Corp., the “Coupon $olution” system is a computer software program that uses universal product codes, supermarket checkout scanners and printers to more efficiently target the distribution of coupons, said Michael R. O’Brien, president of Los Angeles-based Catalina Marketing. It is currently undergoing a three-week test at two Boys markets in Los Angeles County.
The electronic system, which cost several hundred dollars to install at each checkout stand, is not just a convenience for shoppers.
It primarily benefits product manufacturers which, according to Chicago-based A. C. Nielsen Co., churned out 163 billion coupons last year. It also cuts paper work for supermarkets and drugstores, which had the unenviable task of processing 6.25 billion coupons, or 3.83% of those issued by manufacturers, according to Neilson.
The coupon system can be instructed to recognize the universal product codes of, say, baby food and infant formula on behalf of a manufacturer that has coupons for diapers. Thus, when a shopper buys baby food, the universal product code (the black bar-code on the product label) activates a printer at the cash register that, in turn, issues the diaper manufacturer’s coupon. The shopper can use the coupon next time around. The system thus reaches the target audience more efficiently, O’Brien said.
By contrast, O’Brien said, the same diaper manufacturer offering discount coupons through a general-interest medium such as newspapers would be wasting 90% of its effort, because only about 10% of all U.S. households have babies at any one time.
“The biggest benefit of the system will be in cross-category” offers, O’Brien said. “If you buy hot dogs, another manufacturer could offer coupons for mustard; Caffeine-Free Coke buyers might get a coupon for Sanka,” he said.
Although a test of the Catalina system in Rochester, N.Y., showed that consumers redeemed the electronically produced coupons at over three times the rate for all other types of coupons, Patrick Barber, director of planning for Boys markets, said it is too early to tell if the system will prove as popular here.
Barber added that no decision has been made yet about whether the supermarket chain plans to expand the coupon system to all 45 of its Los Angeles County stores. But he said he is impressed so far with the money and labor the system has saved his stores.
