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Monday, December 5, 2011

Should you offer price discounts or coupons to increase retail vegetable sales?

Coupons versus offering price discounts at retail; which is likely to be more effective at increasing consumer purchase behavior of fruits and vegetables? The USDA ERS recently asked this marketing question. The answer has implications for Jersey produce grower and retail marketing strategies.
-Jack Rabin

They find coupons are better than price discounts. Coupons influence consumer behavior through a price-discount effect and an informational/advertising effect.
Because of this dual effect, the use of a coupon to increase fruit and vegetable purchases is more effective than a pure price-discount policy or other non-coupon promotion. Assuming a coupon usage rate of 10 to 50 percent, lowering prices through a “10 percent off” coupon would increase average weekly fruit and vegetable quantities purchased by 2 to 11 percent, as compared with a 5- to 6-percent effect for a pure price discount.
This agrees with grower experiences that discounting wholesale or retail prices of perishable produce does not increase purchasing. Discounting is in response to wholesale supply and demand.