Back in another lifetime, I worked in advertising & marketing. Everywhere we go every single day, we're constantly surrounded by suggestions on where to shop and what to buy, and for the most part marketers have 'how to get people to buy their shit' down pat. It's part psychology, part math, and part voodoo, really, but - let's face it - it works. Marketing works, especially when it's done right.
Businesses don't offer sales and manufacturers don't issue coupons because they're nice. They do it to make money. Nothing more, nothing less; sales and coupons are a form of marketing and the whole point of marketing is to sell product.
When Rite Aid decided to "give away" their store-branded paper products this week, it was likely for one of two reasons. Either they wanted to get their product out there in order to entice folks to buy it at full price after the sale is over, or they planned on it being what's called a loss leader.
A loss leader is an item that is advertised at a crazy cheap price for the sole purpose of getting customers in the door where they will generally buy additional items since they're at the store already. When your grocery store offers meat for $1.49lb marked down from $3.29lb, that's a loss leader. Shoppers will rush to the store to get the inexpensive meat, and since they're in the store anyway they're more likely to buy other items - whether it's grabbing a candy bar at the checkout or loading a basket with some ice cream and rolls and soda.
Many times a manufacturer will introduce a new product to the market by organizing big sale with the stores and issuing a coupon on top of it. The goal is to get the new product into the market (we're the market, if you didn't know) and, hopefully, consumers will discover they like the product and not only buy it again, but tell their friends and family about this great new product. It even works on me: CVS had Evolution of Smooth lip balm free after ECB with a limit of one some weeks back. I got my lone EOS lip balm and discovered that's it's pretty damn awesome. I even commented to Andy that I'd totally pay full price for this stuff once my existing balm was gone.
Well, Rite Aid's plan worked - whether that plan was to introduce their product to more consumers, get shoppers into the stores, or a combination of both.
People went apeshit over free TP. I've seen reports around the blogosphere about shoppers waiting in line before stores opened and running to the paper products to sweep everything they could into their carts. Shoppers went from store to store to store to scoop up literally hundreds of the free TP and facial tissue. There have been tantrums and screaming fits and lots of angry, disappointed customers who weren't able to find a single roll of TP anywhere in their area. Come Monday morning Rite Aid quickly imposed a limit of one paper product per Wellness card; after a sea of complaints, they raised it to a limit of three items per card for the remainder of the sales week.
So while the plan worked, it also backfired horribly. Rite Aid made a glaring mistake: they made it way too easy to get free necessities.
Toilet paper is expensive. Everyone needs toilet paper. In this terrible economy, a lot of families are trying to cut back and save money wherever they can, and when it comes to toilet paper you're effectively flushing money down the sewer.
It doesn't take a genius to figure out that you could rush to Rite Aid, load up your cart, pay for ten rolls of TP in cash and use the +UPs you get to pay for the next ten, and the next ten, and so on, effectively only shelling out $10 at the beginning of the day to get a vanload of paper products and still having $10 in store credit at the end to grab some milk or cold medicine.
Manufacturers issue coupons because the vast majority of the coupons that get used are redeemed one or two at a time. If you want to get 10 free widgets by using coupons, you have to jump through a few hoops to get there. You've got to either buy 10 newspapers, beg extra coupons from friends & family, buy coupons from a clipping service, or scrounge up discarded newspapers. The effort involved deters what I'd guess to be 99% of the consumer base from getting multiple items. Most folks will take their lone coupon from the Sunday paper and get one free widget because there are too many hoops to jump through to get more.
The big three drug stores almost always have at least one "free" item each week that you don't need a single coupon to get. There are hoops, though.
At CVS, you're only able to get one or two per card. Most people won't go through the trouble of signing up for 5 cards to get 5 free widgets and keeping the ECBs straight (since they can only be used with the card they were issued to). Hell, I don't want to go through the trouble of multiple CVS cards and I love me some free stuff! I can't imagine someone like my Grandma (aka your average coupon shopper) doing it.
At Walgreens you can get as many "free" items as you want, but you can only get one per transaction and you can't use the Register Reward from one transaction to pay for another "free" item. For the average shopper who doesn't shop the sales weekly, this winds up meaning a big cash outlay at the beginning and a fistful of store credit coupons that they generally won't redeem before they expire. As above, this is not something my Grandma would do to get a deal.
At Rite Aid, the outright "free" items are almost always handled through the Single Check Rebate system. You pay for the item upfront, go online to submit your receipt information, and at the end of the month they send you a check. These are, like at CVS, limited to one or mayyyybe two items per person. Again - Gram wouldn't bother.
With the paper products fiasco, Rite Aid didn't install any hoops along the way. There were no coupons to acquire, no waiting for a rebate check, no restrictions of any sort. Anyone who looked at the sales ad could head to their local store and pick up a stack of TP for nothing but a a buck or five in cash and little time out of their day. While my Gram didn't do this particular deal, I can definitely see her stocking up on a few packs of TP or tissues because there was no hassle involved in doing so.
I cannot, for the life of me, figure out why the folks in Rite Aid's marketing department didn't pause to consider that this might be the outcome - that they'd wind up giving away literally thousands and thousands of their paper products. In the various firms I've worked with in my old life of (business to business) marketing, every campaign had some sort of restriction, or "hoop," involved - free items only came with an additional purchase, certain items were excluded from percent-off specials, a minimum purchase was required for dollars-off campaigns, or promotions were limited to a certain number per company/person.
I hate to say this, but limiting promotions in some way is, like, first-grade marketing. It's the most basic part of effective marketing. Yeah, you want to get your product out there or get people to come shop in your store, but you can't just hand out cartfuls of toilet paper and expect to make money.
What might have worked out a little better in this case? A hoop or two.
1. As much as I, as a coupon fiend, hate limits - a limit per card from the get-go, printed in the ad, would have accomplished their goal of moving product and getting folks in the door without the chaos that ensued. I understand that Rite Aid is competing with Walgreens and CVS, and that they want to make their loyalty program easier to use than the other stores, but in some cases a limit just makes sense. If I'd been limited to, say, 10 items, I wouldn't be complaining about 10 free packs of toilet paper. I'd be happy to get free toilet paper.
2. Don't give it away. Yes, I know, blasphemy. Treat it as a loss-leader. If they'd priced the items at $.50ea, or three for a buck, people would have come in to buy it at those prices and they'd probably grab a candy bar or check out the Christmas clearance while they were there. I would have picked up a few paper products for cheap. I mean, $.33 for a 4pk of TP, even if it's not the fanciest in the world? I'd be so there.
3. In a similar vein, offer a $1 +UP when you buy two. People will buy it in reasonable quantities with reasonable behavior, and not everyone will redeem their +UPs before they expire.
4. Use an in-ad store coupon of some sort. Maybe the coupon would bring the paper products down to three for a buck. Maybe the coupon would be good for two free items, or five free items, or whatever. Most shoppers won't go through the trouble of gathering up extra ads and doing separate transactions to get piles of product, but they'd stop in to get their two or five free packs of TP.
Now, don't get me wrong here. I'm not bashing Rite Aid; it's just that they happen to be behind the Great Toilet Paper Fiasco of 2011 and they got me thinkin' about sales and coupons, and how this sort of thing doesn't happen every day. They're doing a whole lot of things right these days and they're developing a very loyal customer base because of it. The other day my mom commented that she used to just run up to Walgreens - her closest drug store - if she needed to pick up soap or whatever, but now she'll drive a little more to go to Rite Aid instead because she loves their customer service and the various deals she's been getting there. I know she's not the only one, either, which tells me that they are doing things right.
It's a matter of balance, though. They can't make silly mistakes like this often and keep the momentum going. Rite Aid, your customers aren't going to hate you if you limit freebie deals like this.
No matter, I'll be back next week to my favorite store to get more loot. Just stay in business so we can keep our relationship going, okay?
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