Study Psychology—Not Marketing—Before You Even Think About Killing Coupons

JCPenney's (NYSE:JCP) missteps on killing coupons may not have been merely a lack of understanding of customers. It may have reflected a lack of understanding of psychology and how it affects shopper emotions. Tracie Fobes said the lack of coupons killed the fun of shopping. "It may be a decent deal to buy that item for $5," said Fobes, who runs Penny Pinchin' Mom, a blog about couponing strategies. "But for someone like me, who's always looking for a sale or a coupon — seeing that something is marked down 20 percent off, then being able to hand over the coupon to save, it just entices me," she said. "It's a rush." Alexander Chernev, a marketing professor at the Kellogg School of Management at Northwestern University, assumes that consumers have some context for how much items should cost. But they don't. "J.C. Penney might say it's a fair price, but why should consumers trust J.C. Penney?" he asked. "At the end of the day, people don't want a fair price. They want a great deal." Consumers infer that they get a great deal based on the reference point provided by the higher, presale price. Social scientists refer to this idea as anchoring, and it applies to all sorts of consumer behavior and expectations. Without that anchor, consumers have trouble determining whether the store is actually giving them a good price. Story