Penney Testing Mobile Coupons

Discussion
Sep 25, 2009
George Anderson

By George Anderson

Paper coupons may soon be a thing of the past for at least some of J.C. Penney’s customers in the Houston metro area.

The department store announced it is running a mobile coupon pilot that allows consumers to download discounts to their cell phones that can be scanned by a special reader at the checkout.

"We’ve always made it easy for our customers to save money," said Mike Boylson, executive vice president and chief marketing officer for J.C. Penney, in a press release. "These mobile coupons are the ultimate in customer convenience, because there’s no need to clip or carry around a printed coupon, and they can be instantly scanned from a cell phone. It’s another way we’re innovating to enhance the customer’s shopping experience."

To automatically receive coupons, Penney shoppers register with Cellfire, which continually updates offers specific to their geographic area.

Penney plans to promote the coupon program with mobile and online advertising as well as an email campaign to JCP Rewards’ members. If successful, Penney may rollout its digital coupon program to its roughly 1,100 stores nationwide.

According to a study earlier in the year by Information Resources and Platform-A, roughly 40 percent of consumers go online to download coupons. That’s roughly half the number of consumers getting their coupons from FSIs and other print sources.

An article in The New York Times, citing Inmar, reports digital coupon redemption is up 25 percent in the first half of this year versus last. The roughly 10 million digital coupons redeemed for the first six months represented less than half a percent of all coupons in circulation, according to the company.

Discussion Questions: Do you expect J.C. Penney’s mobile coupon test program to be a success? Are there obstacles in the way of more rapid adoption of mobile couponing technology? What must merchants like Penney and others do to realize the full potential of mobile coupon programs?

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10 Comments on "Penney Testing Mobile Coupons"


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Dick Seesel
Guest
11 years 7 months ago

To some extent, this is a smart move by JC Penney because it reaches customers through “new media” that probably don’t pay much attention to “old media” anyway. Newspaper readership is falling fast, especially among the generation of consumers being targeted for a more interactive sales promotion like this one. Coupons by phone, text messages about sales events…all the wave of the future provided that the customer doesn’t view it as a disruption or invasion of privacy.

My only caveat to JCP is the overuse of coupons in the first place. Running sales events with a constant overlay of coupons on top of sale prices that might not be so compelling in the first place is not getting Penney the type of comp sales increases it is looking for.

Doug Stephens
Guest
Doug Stephens
11 years 7 months ago
Given the newness of mobile coupons as a vehicle “success” can be a little subjective and I think it depends to a large extent what Penney’s internal goals are for the program. There’s little doubt, in my opinion anyway, that this is the future. So, for Penney to make an early start is wise, not only from the standpoint of getting a jump on learning how to use the technology but also because it brings a contemporary dimension to their brand that they so desperately need. I think the risks and rewards are much greater in mobile than in conventional coupons distribution. Tthe reward in mobile is the element of “permission” to market, that paper coupons or unaddressed direct didn’t have. Because the customer is signing up, they are willingly entering into a relationship with your brand. The flip-side however is that the customer can just as easily disconnect from that relationship and you’ve lost them for good. I think the key lies, as it usually does, in delivering real benefits and value. Discounts, promotions,… Read more »
Bill Emerson
Guest
Bill Emerson
11 years 7 months ago

This should be a big win for JCP.

The strategy plays directly into three growth curves – increasing sophistication in both phones/PDAs and end users, the relatively big jump in use of social media and technolgy by JCP’s target market, and the need to provide customers with a smoother shopping experience.

Add in the reduced cost of producing/distributing coupons along with making the checkout process cleaner and simpler for the stores and what you have is a brilliant use of technology.

Expect to see this become an industry standard over the coming months.

David Dorf
Guest
11 years 7 months ago

If you’re going to use coupons, then mobile coupons are the way to go. As I described in this post, Kroger went a step further and associated the coupons with a loyalty card.

Kenneth A. Grady
Guest
Kenneth A. Grady
11 years 7 months ago

With newspapers dying, cell phones/PDAs becoming the universal mobile tool, and customers becoming more tech-friendly, eCoupons will be the norm for the future. However, to avoid too heavy reliance on promotions, other loyalty building or traffic building models based on e-delivery would be better.

Andrew Hale
Guest
Andrew Hale
11 years 7 months ago

While this may theoretically and initially entice the consumer and perhaps save them time (not printing a coupon), I believe the “vapor coupon” will very quickly become a nuisance on the cell phone, ultimately have less of a draw than a physical paper coupon and die a quick death. There’s so many benefits of a printed coupon (from newspapers, magazines, the internet, etc.) which will be lost with a “vapor coupon” such as the significant value of ladies who share physical coupons with their friends (44%).

Also, I’m curious what the cost is to implement and manage this program…in the long-run does the added revenue outweigh the cost of the program? How does it compare to an Internet-based loyalty program which does the same thing through consumer-printed coupons received through their email?

James Tenser
Guest
11 years 7 months ago

I’m a big advocate of mobile coupons, and this is a very forward-looking experiment, but I have some reservations about how big an impact they will have at a department store chain like JCPenney.

On the positive side, a mobile application that displays the scan-able bar code on the cellphone screen one at a time is more likely to be practical in a department store environment than in a supermarket environment, where multiple coupons may be redeemed at one transaction. And I believe this test will play well with younger shoppers, especially, who use their phones like Swiss Army Knives.

Since we don’t know the nature of the offers yet, it’s hard to say how much more effective they will be via mobile phone, versus the coupons now found sometimes on the cover of the JCP newspaper circulars. One possible scenario is that transaction counts don’t rise very much, but that the percentage of coupon transactions does.

I suspect these will be transitional technology and promotional method, not lasting ones. But time and experience will tell.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
11 years 7 months ago
This is a great move by JCPenney as long as they have a plan of action for how they will distribute their electronic coupons. If they use the same approach as putting an ad in the paper that everyone receives and they are pleased with 1-3% redemption the program will not last long. In fact the results could be very negative and threaten to turn shoppers away. I remember when Fax machines became common in the office and sales people began to use them as another vehicle for getting their message out to prospects. That quickly ended as consumers pushed back and complained that it was a waste of their paper, ink and time. The same will happen with cell phone delivered coupons if they are not targeted and the shopper has not given you permission. Once you have that permission treat it like gold. If JCPenney can find ways to mine their shopper data and create campaigns that are very targeted and almost shopper specific, there is no question it will roll out nationally… Read more »
Joel Warady
Guest
Joel Warady
11 years 7 months ago

In a talk that I gave at Natural Products Expo yesterday, I advised a group of brand CEOS that mobile coupons are the future, Period! If you are not preparing to deliver your coupons via mobile, handle coupons on the register via mobile, and transact via the mobile device, you will be left behind.

In Finland, the banking system has no program in place to handle personal checks. It is not that they are outlawed, they simply do not exist. All transactions can be handled by the mobile phone, and that includes coupons. 5 years from now, we will wonder why we were discussing this issue because it will be so ubiquitous.

Mobile digital coupons is a must execution, and all companies should be figuring out how to move forward on this initiative.

Gene Detroyer
Guest
11 years 7 months ago

Internet coupons have been found to be very, very effective. One of the real values was the ability to build a customer list through email addresses.

Can there be any question that mobile coupons are the future? However, they will restructure programming, because they will be so well targeted and accepted, redemption rates will be very high. Since companies count on “breakage” (a consumer who intends to use the coupon, but ends up buying the product without the coupon in any case) in the coupon budgeting process, the efficiency of the mobile coupon will force coupon values down or limit the number of coupons distributed.

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