TARGETED DISCOUNTS SCRAP PAPER COUPONS

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MILWAUKEE-The first electronic paperless coupon system to offer manufacturer discounts based on a shopper's buying habits was unveiled June 6 in 12 Mega Marts grocery stores in the Milwaukee area.

The stores, under the Pick N' Save Mega Food Center name, offer at least 36 manufacturer discounts through a list printed for shoppers by a kiosk. Micro Enhancements International, Spokane, Wash., developed the system in cooperation with AT&T Global Information Solutions, which uses kiosks near store entrances.

"All the other kiosk systems [in place] generate coupons, and they are not targeted because they don't know who the consumer is or what their purchase patterns are," said Carleen Thissen, president of Retail Systems Consulting, a Chicago retail grocery consultancy. "To my knowledge, this is in fact the first [couponless] kiosk that is tied into customer purchase data."

The Milwaukee store system uses a computer program that registers the bar code on the shopper's Advantage VIP membership card at the kiosk, which searches a database for previous purchases. The kiosk then generates a printed list of manufacturer discounts, which are automatically deducted at the checkout.

Oak Creek, Wis.-based Mega Marts President Gary Fryda said he anticipates 100 local and national manufacturers will participate. No advertising is planned, and Mega Marts will promote the system only through in-store tables manned by employees.

"We see this as user-friendly," Mr. Fryda said. "They don't have to wait for the mail or newspaper. We have a kiosk, which is available for them as they walk in the store. There will be new offers every time they shop, and yet we also have the benefit of massaging offers around their usual shopping patterns."

He said the stores will continue using free standing inserts and direct mail until mid-1995. By then, it's hoped all 35 Milwaukee area stores will be equipped with kiosks and eliminate the need for coupons.

At another Wisconsin chain, paper coupons are still being offered but their processing is being streamlined. Catalina Inc., St. Petersburg, Fla., on May 23 began testing electronic coupon clearing at four Dick's supermarkets. A special bar code allows coupons to be counted only once, saving clearinghouse fees.

Mega Marts' couponless kiosk alternative uses a computer program that's part of the Share Builder service that Micro Enhancements International developed. Shoppers get 12 manufacturer offers based on purchase habits and at least 24 backup items. The manufacturer can also receive a marketing analysis about those who use the kiosk.

"The manufacturer can define what type of customer they want buying their product," said Noel Ilberg, president of Micro Enhancements' micromarketing division. "The incentive offer will vary based on census purchase data, which are everything that they buy, to form a purchase profile. Then, the manufacturers can define their promotional offers. If a manufacturer knows who his loyal customers are, he will use an offer to award patronage of his brand."

Manufacturers buying into the program have exclusive rights to feature discounts in their category. Mr. Fryda said he doesn't see that limiting shoppers' interest.

"Most coupon shoppers are category shoppers and not brand shoppers," he said. "Customers who don't coupon are often loyal to a brand, but those are not the type of customers we're talking to."

Mr. Ilberg said more than 500 stores have expressed interest in the kiosk approach. From a manufacturer's perspective, he said, this system can eliminate as much as 20% of the cost of FSIs.

Mr. Ilberg said Micro Enhancements is talking with FujitsuICL, Dallas, and IBM Corp. Those companies plus AT&T Global command 85% of scanning systems nationwide.

"If you had all stores with these kiosks, then the manufacturers could actually shift money and reduce their spending on free standing inserts, but you have to have that critical mass to do that," Ms. Thissen said.

Mr. Ilberg is confident the time will come when coupons are eliminated.

"It's a clear-cut issue that manufacturers are very receptive [to this], and they appreciate and understand the unsuccessful nature of the FSI," he said. "They really want to move product and relate to the consumer and [the FSI] really doesn't do it."

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