U.S. News & World Report
As recession eats into sales, firms are trying to lure customers with one of the biggest promotion binges ever. Businesses of every type not just the traditional food and soap companies are blanketing the country with cents-off coupons, refunds, sweepstakes, rebates and cash prizes. The trend is building so fast that critics both in government and industry are warning about troubles ahead. Among the most aggressive of the promoters are new-car dealers. In some areas, they are sending coupons to previous customers, offering cash bonuses for test driving a new car model and for letting the dealer appraise the owner's present vehicle. Two auto manufacturers, Chrysler and Ford, have offered liable cash rebates to purchasers of their 1980 models. Airlines got into sweepstakes this year for the first time, with various offers to fly winners free. Restaurants especially fast-food chains are using coupons extensively. Among them, Wendy's, a hamburger chain, distributes "Buy one, get one free" fliers. Arby's, which specializes in roast-beef sandwiches, reports that 1 of every 4 of its sales involves a coupon. Coupons also are being distributed in record numbers by food firms and supermarkets. Industry officials estimate that 80 percent of American families will be using at least some of the 81 billion coupons being printed this year. If all were redeemed. the saving would come to about 13.7 billion dollars. Trading stamps, which fell out of favor during the past decade, are on the rise. Predictions are that the value of S&H Green Stamps issued this year alone will reach 450 million dollars. Coupon books for extra bargains are being tried by some retailers. Hecht's department stores in the Washington, D.C., area are mailing them to holders of the stores' credit cards and offering them to in-store customers. "Prime insurance." Games, contests and sweepstakes, which had been used sparingly because of earlier abuses, are gaining favor, with some 130 million dollars to be won this year. Also more popular art- premium promotions, in which a firm offers merchandise at a token price in return for proof of purchase of a particular product. These offers will total 8.7 billion dollars, up from 7.6 billion in 1979 and 4 2 billion five years ago. Other firms are giving away specialty items as sales inducements calendars, pencils, pens, lighters and the like. Items worth 3.5 billion dollars will be handed out this year, up from 1.5 billion dollars' worth in 1975. Says Dick Kane of the Marden-Kane consulting firm: "Promotions have exploded. In a recession-type economy, business is finding that promotions are a prime form of insurance." But opposition is cropping up now on several sides to the spread of coupons and giveaways. Esther Peterson, White House consumer-affairs director, made a major appeal on June 3 to the nation's food industry to reduce coupon distribution. Officials for Giant Food stores, a Washington, D.C., chain, agree. They argue that such offers cost consumers more because manufacturers make up for the discounts by hiking the base price for items. The chain has publicly endorsed abolishing food coupons and vowed not to issue any of its own. Some fast-food chains complained in a special report in the industry journal. Nation's Restaurant News, that couponing is getting out of hand, Said Don Smith, president of Burger King: "Couponing carried to excess ultimately cheapens the product." Added Terrance Collins, president of Burger Chef: "Couponing is like drugs. Once you get on them, it's hard to get off." Another food executive noted "It's a vicious circle. Everybody's doing it, so you have to do it, too." Big savings. As for shoppers many say they can cut their food costs by 15 to 25 percent with coupons. Susan Samtur of Yonkers, N.Y., reports she saved $1,500 in a year by using coupons. On one shopping trip, she ran up a grocery bill of $130.18 and paid just $7.07 in cash by using manufacturers' refunds and free coupons she had received from firms after submitting proof of previous purchases. One of the biggest giveaways is in the publishing business. Publishers, clearinghouse plans to award $250,000 to a single winner of this year's sweepstakes, up from the firm's previous record prize of $125,000. Readers Digest conducts four promotional sweepstakes each year and recently gave a total of more than $636,000 to its winners Says Betty Glass, the magazine's sweepstakes director: "Everybody is .anxious to get money now. More people are entering than ever before '' United Airlines giveaway of 30,000 trips to anywhere it flies may make it the biggest promoter yet Eight million entries have been tallied in what could be a multimillion-dollar tab. Most companies are moving away from merchandise prizes and toward awarding cash to contest winners. In the case of some major awards, the Internal Revenue Service provided a list of the winner, with their addresses and Social Security numbers. Whatever the technique, the promotion spree in setting records and spreading to new fields as firms seek to combat sliding sales. From all indications, consumers are jumping on the bandwagon to keep the trend rolling.
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