(Marketing strategy) Robert L. Webling, Procter & Gamble's senior vice presidentfor advertising and market research, would like to wean Americans ofcoupons.

His relentless cost-control efforts, which P&G began in the manufacturing area in 1993, have led to moves to eliminate couponing, increase print advertising and curb growth in P&G's mar¬ keting spending.

In fact, fewer than 2% of the 291.9 billion coupons that companies distributed in 1995 were redeemed. . . .

P&G has been plowing back savings from cost-cutting initiatives into lowering prices on most of its 300 brands. Since 1992-93, the list prices on P&G brands, excluding coffee, have declined by $1 billion. Prices on diapers and detergents have particularly declined.

In February, P&G eliminated all promotional coupons in three New York state markets—in a test that many industry watchers doubted could be successfully expanded nationwide because coupons are such an integral part ofAmerican consumer s psyche.

Until P&G came along, no company had risked eliminating all coupons in a big geographical market, despite the growing consensus among major marketers that coupons are expensive and turn brand-loyal customers into bargain hunters who select brands based on short-term price promotions.

P&G spent $3.3 billion in 1995 on advertising. Its popular brand names include Tide, Vicks, Cover Girl, and Pringles.

Cases

[SOURCE: Raju Narisetti, “P&G Ad Chief Plots Demise of the Coupon,” Wall Street Journal (April 17, 1996), pp. Bl, B5A. Reprinted by permission of The Wall Street Journal, © 1096 Dow Jones & Company, Inc. All Rights Reserved Worldwide.]

a. What costs and benefits likely were considered by P&G in its decision to consider discontinuing the use of coupons to promote its products?

b. What is P&G apparent market strategy in deciding to lower prices? Explain.

c. What risks should P&G consider before discontinuing the use of coupons nationwide?

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