How Coupons Work | Why Do Product Manufactures, Retailers and Consumers Use Coupons?
History of Coupons | Coupon Trivia

All About Coupons

How Coupons Work

Consumers enjoy quick, easy savings with coupons. But who else is involved in the coupon flow?

First, companies that manufacture all kinds of food products, beverages, household and personal items get coupons started. They design the coupons, which are placed in people's hands through the local newspaper, or in your mailbox or at the store where you shop. Once you make your shopping list and select the things you want to save money on with coupons, you take them to where you shop. After that, your coupons are sent to a retail clearinghouse, which sorts and counts them. The clearinghouse figures out how much is owed to the retailer. The dollar value of your coupons is sent by the clearinghouse on behalf of the manufacturer to the retailer where you bought things using coupons.

Coupon Flow Chart


Why Do Product Manufactures, Retailers and Consumers Use Coupons?

Product manufacturers use coupons to increase sales of their products. Often, they are used as one part of a bigger marketing plan, which may also include advertising or free samples.

Coupons work well for consumers because shoppers like to save money at the checkout and find coupons easy to use. Coupons allow consumers to receive discounts on staple items as well as new products.

Coupons are a very powerful and flexible marketing tool. By placing them in local newspapers or mailing them, manufactures can offer special bargains to certain communities to boost sales of particular products. They are also a way to generate excitement and sales of a new product. People are more likely to try something new if they get money off. (It is worth looking for these coupons because they often give bigger discounts!) And new methods of coupon delivery, such as coupons printed at the checkout when you buy a competitive product, are designed to get you to try a different brand.

In addition, coupons in newspapers and magazines double as print advertisements. Even if you do not actually clip and use a coupon, you see the advertisement that contains the coupon, which helps build brand and product recognition.

Stores also benefit from coupons. In addition to its face value, the store receives an eight cents fee for handling each manufacturer's coupon. Stores sometimes double or triple manufacturers' coupons as a way of attracting shoppers on traditionally low sales days (often Tuesday or Wednesday), or as a competitive edge. Usually, the store bears the cost of the doubling or tripling. Stores also offer their own coupons as a way of attracting shoppers.

Coupons have been around more than 100 years because they benefit manufacturers by increasing sales, retailers by bringing in more customers and consumers by offering great bargains.



History of Coupons

1894: Coupons are born! Asa Candler, the druggist who bought the formula for Coca-Cola for $2,300, gives out handwritten tickets for a free glass of his new fountain drink.
1895: Next stop, the local grocer! C.W. Post distributes the first grocery coupon worth one cent towards his new health cereal, Grape Nuts.
1930's: Coupons are a staple in American households because of the Depression. Everyone needs to save money wherever possible, and clipping coupons clips weekly grocery bills.
1940's: Supermarkets sprout across the country and continue the coupon tradition that had begun in neighborhood groceries.
1957: The Nielsen Coupon Clearing House becomes the first clearing house devoted to coupon redemption. Coupons have created a new industry.
1965: One-half of Americans are now coupon users.
1975: Coupon popularity continues to grow. Over 35 billion coupons are distributed and 65% of American households clip!
1997: Consumers save $2.9 billion by redeeming 4.8 billion coupons. An astonishing 83% of Americans now use coupons.


Coupon Trivia

Coupon users broken out by age:

Age:   % using coupons:
18-24   73%
25-34   87%
35-44   79%
45-54   86%
55-64   88%
65+   83%

* Coupon users broken out by income:

Income:   % using coupons:
$15,000   79%
$15-$25,000   91%
$25-$40,000   78%
$50,000+   83%

Sources: NCH NuWorld 1997 Consumer Behavior Study CMS 1997 Coupon Usage Trends Study