Individual Case Analysis: Extreme Couponing in Marketing Strategies

This assignment is a comprehensive case study analyzing the marketing strategies employed in the context of extreme couponing. It delves into various aspects such as pricing techniques like price skimming, and promotional strategies used to attract customers, including the use of flyers and coupons. The study examines the application of loss leader strategies to build demand and the interplay between push and pull marketing strategies. Furthermore, it explores different sales promotion methods, beyond couponing, that can be implemented by retail clothing stores to boost instant sales, including discounts, 'buy one get one' offers, and flash sales. The assignment provides a detailed analysis of how these strategies work and their potential impact on consumer behavior and sales performance, offering insights into effective marketing practices in the retail sector.

Running Head: Introduction to Marketing
Introduction to Marketing
Name of the Student:’
Name of the University:
Author’s Note

1INTRODUCTION TO MARKETING
Question 1
What type of pricing is used in conjunction with coupons to create situations of extreme
couponing?
The type of pricing that is used in conjunction with the couponing technique is the
technique of skimming pricing. Price skimming can be defined as the strategy which the firm
applies by placing a relatively high price for their products at first and then after judging
customer satisfaction, lowers the price to a certain level to suit the more price sensitive customer
base.
The most common implementation of price skimming happens when a new product enters the
market. It is based in a period of low competition from other parties. The objective remains to
gather as much revenue as possible before the particular niche market in which the product is
based, starts getting saturated. Price skimming is based on demand as well, which increases
during festive seasons, for example. At the time of demand the consumers are also satisfied with
the offers that are made in the coupons in the stores. However, this does not mean that the
customers are paying an extremely low price. The couponing industry thrives on the idea that
coupons offer unlimited discounts to the point where extreme couponing takes place.
Overall, it becomes important for the new product as well as the business to realize that the
industry thrives on reliability and relevance of a product in the market and the acceptance of the
product by the public. Skimming a price helps a newly launched product achieve that goal.

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Question 2
What type of strategy is used in order to get customers to go to the store to redeem their
coupons?
The strategy which is adopted to be used is a promotional strategy because this helps to
find the appropriate target audience and target market. This then allows the company to cater to
these certain customers with all the related products and services available. The customers are
then drawn in through techniques such as offering discounts, advertising and promoting the
product.
This kind of a targeted marketing has its benefits and drawbacks. The benefits include
sale increment being more probable. It almost provides a certain guarantee that a particular
percentage of the consumer base will return to the store to purchase further products. The
drawback remains that, given the coupons are meant for certain customer bases, the ones who do
not meet the criteria might not be interested in redeeming coupons. Therefore it restricts the
attraction of a certain number of people to the store as well.
Question 3
Couponers are enticed by a store flyer’s front and back pages, where strong deals are
offered that encourage consumers to visit the store. What is this type of pricing called?
Flyers are used to promote price skimming of the company which is to lure in more
customers who are more price sensitive. The company makes sure to advertise their leading
products on the flyers and also the products which have the most discounted price. This type of

3INTRODUCTION TO MARKETING
pricing through the use of flyers to appeal to the consumer base can be considered promotional
pricing. The business uses this promotional strategy in order to display and introduce new
products as well. This is because new products have the potential to attract more consumers, who
might not already be loyal to that business. Lowering the price also helps by increasing sale
volume and in turn decreases unit costs as well. Therefore, with bringing in new market and
strengthening old customer bases, price cutting advertisements help businesses gain revenue. At
the same time, it also acts as a psychological pull factor appealing to the consumer’s logos,
stating that the lower pricing offers available for a short time makes it more feasible to buy the
product.
Question 4
Use the McDonald’s free coffee example in Figure 10.3 of M4M to describe how another
company could use a loss leader in order to build demand during slower times.
The loss leader is termed as an aggressive pricing strategy in which the business or any
retail outlet sells the selected goods below the cost which attracts consumers despite availing an
amount of loss. According to the loss leader system, the business should grab the opportunity to
make up the losses and is added with a potential of the profitable goods. This strategy can be
adopted while building demand during the slower times as the strategy is employed by the retail
business and somewhat is similar to the strategy that is sometimes employed in the process of
manufacturing. The retail store is employed in the pricing strategy as it is a part of making profit
where the goods are earmarked as a loss leader. This is why the business causes a reason which
should be pricing mechanism and can sometime attract a large number of consumers who would

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make a purchase for some other retail store. It can be said that with the emergence of e-
commerce the loss leader uses its strategy that are intended to draw the consumers.
The main objective of a loss leader is not to generate large amounts of profits. Rather the
objectives remain firstly to attract and establish a strong consumer base, secondly to establish a
name in the market and finally to neutralize potential losses that can occur as a result of people
not buying the newly launched products (because of lack of brand / company knowledge).
During slower times, therefore, loss leader can be utilized by the company to generate a higher
demand of products.
Question 5
Describe how a retailer could use a pull strategy like coupons along with a push strategy in
order to encourage customers to visit its retail store.
A push strategy is a marketing strategy that is attempted by firms where they push the products
onto their customers in order to make sales and revenue. It is also known as a push promotional
strategy. The major goal is to use various active marketing techniques to showcase their products
to be seen by customers at the beginning of their purchase. This technique is beneficial in
gaining exposure for products. The several aspect that come into play during push factors are:
a) Direct sale to consumers in showrooms
b) Point of Sale displaying
c) Trade show promotions
d) Encouraging package design

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Push strategies that work mostly in promoting a particular product or line of products,
significantly affect the sales of that product. However, when clubbed with pull factors like
coupons, they turn out to be even more effective promoters of sale. The idea behind the push
factors is to appeal to the ethos and pathos of the public. People look at a particular product and
based on its look, appeal and viability, decide to buy it. When combined with a pull factor like
coupon, it works in their favor by eliminating any potential second thoughts in the mind of the
customers.
Question 6
Choose three different kinds of sales promotion, not including coupons, and show how your
favorite clothing store could use these promotions to motivate instant sales.
There are several sales promotion processes other than coupon giveaways which could be
beneficial in promoting instant sales in retail clothing stores. These are:
a) Discounted and giveaway products
Even though the couponing system is easier, the more traditional method of instantly
increasing sales is big discounts, which could be seasonal, and giveaway offers. It would
be even more fruitful if the products given away are branded and on-trend. These offers
must be promoted well on social media and newspapers and other news outlets in order to
reach as many potential customers as possible. Most of the times the highest discounts
are offered during the seasons of festivals and celebrations. Naming these events also
play a huge factor in attracting customers. Discount events can be named after the festive
event, like the Black Friday Sale or Christmas Mega Sale etc. Discounts are offered

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mostly on products that have been lying in storage for an amount of time or even on
newer products to increase sale, yet retain minimal profit.
b) ‘Buy one, get one / more’ offers
Another lucrative sales initiative is the Buy One Get One / More strategy. This is a good
way to create sale opportunities as well as clear out older stocks which have not been sold
in the earlier season. This creates a flow of new customers in the showroom even if one is
not in any urgent requirement for clothes as this gives one the opportunity to acquire
more products for a lesser cost.
Buy One Get One / More offers are often applied on combo clothing products, meaning
that one will not be able to buy a cheap shirt and get a relatively expensive suit for free.
The products are mostly set within a limited price range and a limited type of clothing. So
it could be a pair of denims for the price of one or three shirts for the price of two. The
prospect of getting more for less is what drives the customer towards these kinds of sales
in the first place.
c) Flash sales
This is another crucial strategy to promote instant sales. Flash sales are series of
discounts or promotions that are offered for a short period of time. The discounts
provided are also bigger than regular sales. Clothing stores can utilize flash sales to huge
benefits, not only for clearing and unloading excess inventory, but also for neutralizing
the effects of potential losses. Furthermore, utilizing tactics like flash sales can also help
build brand reputation and base in the market.
Executing a perfect flash sale entails a few crucial pre requisites. Firstly, it would be
unwise to make the customers jump from product to product unable to make a choice.

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Thus simplicity is the key. Secondly, the sales should be directed towards a particular
customer category and tailored likewise. Thirdly, the sale should have a goal – either
clearing inventory or establishing awareness, which should be supported by a timely
execution during a favorable condition. Promotion and duration of the sale also plays a
crucial role in executing a successful flash sale. At the same time, the duration of the sale
also helps in bringing as many customers to the store as possible, resulting in greater
promotion.