Coupon Basics Part 1: Intro to Coupons

I feel like I'm about to revisit September 2011 and eat my blogging words.

When I started this blog, I was pretty positive that it wasn't going to be a how to coupon tutorial. It was meant to be a place where I would simply share a few good deals that I thought others might like to know about.

I am so pleased with the positive feedback I've received about the blog from so many of you, through comments, e-mails, and conversations. It seems like the information has helped some of you save money, if even in a small way. I'm realizing, though, that many of you are just starting out with your own money saving adventure, and that at least a basic coupon tutorial might be helpful, so for the new year, I'm beginning a multi-post series about the general ins and outs of couponing.

Todays topic: Intro to Coupons

What are coupons??

• Simply put, coupons are discounts offered by manufacturers and stores, that can be redeemed by consumers for money off products and services. When the coupon, either paper or electronic, is redeemed by a shopper, the company that has offered the coupon discount is responsible for paying the coupon amount. For example, when a customer shops at Kroger and presents a coupon for $0.25 off Kraft Mac & Cheese, it is Kraft that is responsible for paying Kroger the $0.25 difference in price.

Why do companies offer coupons?

• By offering coupons, companies are banking on some predictable consumer habits. The typical coupon user receives an insert of coupons and clips just a handful of them, those for products he already buys or for new products he hasn't seen before. This typical shopper will head to the store and redeem the coupon without waiting for a sale, happy with a small discount. He is very likely to keep buying the same product at full price, not using coupons or discounts in the future. The company wins because they have a loyal, full-price paying customer. A savvy coupon user shops differently, though (that's what we're learning about :) ). 

Are stores getting ripped off when you use coupons?

• Absolutely not! When coupons are used correctly by shoppers (more on this another time), stores are reimbursed for the full value of a coupon by the product's manufacturer. This is the case even when a shopper gets a product for free using a coupon. If a product costs $1.00, and you correctly use a legitimate coupon for $1.00 off, the store WILL NOT lose money. 
• But what about doubling coupons?? When a store, like Kroger, offers to double a coupon, the doubled amount is a discount that is covered by the store instead of the manufacturer. This is a marketing idea the store has implemented as a shopper incentive. This is not taking advantage of the store.

Next Lesson: Where to Find Coupons