Stretching tight budgets with discount coupons

Tariq Jaffar, an expatriate from Pakistan, was in a dilemma last month. His wife wanted to buy some new clothes, but pay day was still days away and his pockets were almost empty.

Jaffar didn't want to disappoint his wife, but his meagre salary was just not enough to cover such extra expenses. Luckily, he found some vouchers tucked away somewhere and decided to make use of them.

"So, I went to a mall in Deira where I found two pieces of readymade garments worth over Dh150. Incidentally, the vouchers I got were worth Dh150, so I ended up spending only between Dh15 and Dh20 for the two items. I saved a lot," says Jaffar.

One of the tricks to maximising your budget is to use discount coupons when shopping. These are part of the marketing campaigns by retailers, manufacturers and other establishments, and are usually given to consumers as a form of reward for their loyalty or for patronising a particular brand. As consumers are spending wisely and watching their money, the use of discount coupons is gaining popularity in certain markets.

According to a new research from Inmar and The Nielsen Company, coupon use in the US is on the upswing. In the third quarter alone, year-to-date coupon redemption was up 26 per cent to 2.4 billion. Food coupons seem to be popular, though non-food coupons for general merchandise, household items and personal care drove the growth in the third quarter, up 45 per cent over the same period last year.

Huge potential

Inmar, which provides logistic management solutions to retailers, wholesalers and manufacturers in the consumer goods and health care markets, is also forecasting that 3.2 billion coupons will be redeemed this year.

But while consumers in the West are apparently embracing coupons and vouchers as a way of life, there are not too many people in the Middle East who, like Jaffar, are as receptive to the concept yet.

"Vouchers as a concept is something that UAE consumers are not as familiar with. That's not something that's culturally ingrained here… [They] have an image of being ‘no real value'.

"Often, when the consumer wants to use a coupon, he is told it is not valid for a variety of reasons. It is not valid on weekends. It is valid only if you purchase a certain value and so on," notes Himanshu Vashishtha, Nielsen's director for consumer research, Middle East, North Africa and Pakistan.

There is also a significant segment in the market to consider, the affluent consumers, which are traditionally viewed as impervious to bargain-based marketing schemes.

"I think that's the segment of consumers that probably will not get into coupons," he says.

"But coupons or vouchers have a huge potential because a lot of consumers have become more value-conscious. Though he does not want to compromise on the quality of goods that he is getting, the consumer is looking for options and shopping a little more," Vashishtha adds.

In order for vouchers to appeal to more UAE consumers, Vashishtha says, there's a need to establish credibility of the coupons being offered. They have to be designed, marketed and packaged in a way that they actually offer real value and should be convenient for consumers to use.

"These are big criteria in how popular a voucher becomes and how much people use it. Voucher is not about just the first-time purchase. That's the easy part, because you can easily convince a consumer in one setting that they can make some savings. It's how frequently they use it that makes the difference," Vashishtha says.

Colin Beaton, managing director of Watt International, says it requires mass distribution to make coupons to be effective. In fact, while the number of used coupons is rising in the US, the percentage of redemption is still a bit dismal.

"In North America, redemption of coupons and vouchers distributed via newspapers and flyers is very low, in the two to four per cent range," he notes.