Wegman Catalina Coupons example essay topic

History Catalina Marketing Corporation was founded in 1983 by five friends, Tom Mindrum, Mike O'Brien, George Off, Mike Scroggie and Brian Yeatman, while on a boating trip to Catalina Island in Southern California. The five friends were remarkably similar, though different. All five had experience in the consumer research field. All five had strong areas (whether research, computer technology or sales) at which they excelled.

All five were looking for a new line of work that would be challenging and most importantly, paid well. The five came up with an idea to use the new scanner technology at grocery stores to gather information and print a coupon for a rival product. The five friends knew it would not be easy to found their own business. They unanimously decided to name Mike O'Brien as their first Chief Executive Officer (CEO) due to the fact that he was the only one in the group who was not currently employed and could dedicate the most time to the project. O'Brien was also the most out-going and the best salesperson in the group with the best business connections.

All knew they could trust O'Brien to keep all their interest at hand. All five contributed $40,000 (for a total initial investment of $200,000) in order to set up the company. George Off and Mike Scroggie worked together to come up with a software that could collect and analyze the information to print coupons based upon the Universal Product Code (UPC) bar code. The idea was to come up with a means of modifying the only programmable POS (point of sale) system of the day, an IBM 3650, to print coupons once given a cue.

A small family run chain in Rochester, New York (Wegman) gave Catalina permission to test it's "Coupon Solution" in their stores. The son of the owner, Danny Wegman, signed the contract for this test pilot. O'Brien got to work in using his extensive contacts to find clients to sign up for a test of the scanner-coupon idea. He signed eight clients (Coca-Cola, Coke Foods, General Mills, L'EGGS, Tropicana, Ralston Purina, Kraft and Hills Bros. Coffee, and Procter & Gamble) to make initial investments of $30,000 each for a total of $240,000.

The Coupon Solution test program finally began in early 1984. The early coupons were printed on the backs of the register tape by the stores existing dot-matrix printers. George Off would often travel to Rochester to make sure the program was running smoothly. However, when Bob Wegman, the owner of the grocery chain, returned from his winter home in Jamaica, he was doubtful of the value of the program.

Like many after him, Wegman was not impressed with the idea of giving someone a coupon for an item after they made a purchase. George Off got to work on a new concept that would validate Catalina's value. George Off wrote the first software that could scan and validate coupons in the country. Using Catalina's exciting software capabilities, Off was able to prove to Wegman Catalina coupons were valuable. By the second month of testing the coupon validation software, data showed The Coupon Solution averaged a redemption rate of fourteen percent, far better than the traditional freestanding insert coupons (they only generated a redemption rate of four percent). Wegman allowed Catalina to complete their contract as signed by his son.

Money was getting tight so O'Brien sought to expand the number of chains serviced with the help of venture capital. Since none of the five founders knew anything about venture capitalists, they went to the public library to get a list of the most promising listings. PacifiCorp in Portland, Oregon was sent videotape of the coupon-scanning system in action. That caught the eye of Diane Walker, director of PacifiCorp's venture capital arm.

After meeting with Mike O'Brien and speaking with George Off, Walker approved the financing of the Coupon Solution Program for $1.3 million. Even though Catalina Marketing now had a substantial bank account, money was tight in the early years. Catalina's employees saved money by keeping their expenses (rent, office supplies, furniture, etc.) low and limiting spending. All employees pitched in to work were needed including the CEO.

It was not uncommon for a sales person to deliver coupon paper and unload data from the PC hard drive during a routine visit (there was no such thing as modems at that time). Catalina spent all it's resources on technology and equipment for expansion stores. After proving to be successful handling popular South California grocers, Ralph's and Boys, Catalina signed more grocery chains to their list of customers. Eventually, Catalina Marketing had manufacturers calling them. A former Anaheim sales manager remembers receiving a phone call from a Proctor & Gamble representative saying", Look, I don't know what your company does, but I know our company has got to do it.

So how do I start a program?" Price Catalina Marketing clearly has the market advantage when it comes to pricing their product. Since Catalina has gone through the effort to patent their software and hardware, it is nearly impossible to compete with the services they offer. Catalina Marketing charges retailers a one fee for installation of thermal coupon printers, a PC and all hardware necessary to connect the PC to store's existing scanners. Retailers agree to use the "Checkout Coupon " program for a minimum of five years. In return, Catalina pays retailers a small fee for each coupon printed and supplies them with coupon paper at no cost. This aspect of the business is not profitable.

Catalina Marketing's main source of revenues is selling manufactures a "life cycle" on its Network. A life cycle is a non-interrupted 4-week period in which a manufacturer is purchases advertisement. A coupon or message is printed when a trigger UPC is scanned at the point of sale. A manufacturer is allowed to purchase as many life cycles they desire. For example, Coca-Cola can purchase five life cycles for Diet Coke, which means their coupon prints for 20 weeks. The manufacturer is guaranteed to be the only advertiser in their category.

Therefore, as long as Coca-Cola renews their contract, Catalina will not sell life cycles to Pepsi Co for Diet Pepsi or Pepsi One. However, Coca-Cola can set a purchase of a Pepsi Co product to be a trigger for a coupon print. Catalina Marketing also receives a fee from the manufacturer for every coupon redeemed. Since the "Checkout Coupon " program boast a high redemption rate, this is also very profitable to Catalina Marketing.

Product The main product at Catalina Marketing is the "Checkout Coupon " program. This is an evolution of the original "Coupon Solution" program. Tommy Greer, Catalina Marketing's third CEO, changed the name of the system due to the response of some retailers, stating the REAL "Coupon Solution" is to eliminate coupons. Another reason for the change in name was the change in types of products offered. The "Coupon Solution" program only sold traditional coupon space to manufacturers. Today retailers can print advertisements for their own promotions; rebate forms and even pre-paid calling certificates.

The data collected at the point of purchase is also available to retailers and manufacturers. Through patented Catalina software, information collected per basket or regular daily activity can be gathered and read effectively. Retailers and manufacturers use this information to see which items are selling and why. Redemption of Catalina and trad it iona l freestanding insert coupons are also tracked. Other services offered by Catalina Marketing Corporation include Loyalty cards, ValuPages online, Health Resource Publishing and Alliance Research. Loyalty card programs are not available through Catalina Marketing in local markets.

However, the program consists of shoppers showing a scan able Loyalty Card prior to the cashier ringing up their sale. Customers get a discount on select products and Catalina is able to track customer purchases. Loyalty Card holders also receive incentive coupons at check out to encourage their return to the store. Supermarkets Online, operating under ValuPages, is a national campaign to issue coupons prior to shopping.

Catalina has teamed up with America On-Line and i Village. com to become a featured website known as ValuPages. ValuPages allows customers to log onto their website and look at special discounts being offered in their area. The retailers featured on ValuPages are exciting "Checkout Coupon " outlets. Customers can print out a list of items they wish to purchase and will receive a discount at the point of sale. As an additional incentive, "Web Bucks" are printed after your purchase good for discounts on your next purchase.

Health Resource Publishing (HRP) is similar to its coupon programs in concept. All prescription medication has a National Drug Code (NDC) which works the same way a UPC does. Upon purchase of a prescription, a newsletter with information targeted towards that ailment. The newsletter is a success because it offers information specific to customer interest. Pharmacies found the newsletters to be such a success that most of their consumers were likely to come back to their location for their refills. The satisfied customers in turn spread the news to their friends and families who in turn became return customers.

The HRP program is currently available in over 6,000 retail pharmacies nationwide including Walgreen's. Alliance Research is a joint venture between Catalina Marketing and AC Nielsen Corporation. This is a traditional phone survey with a technological boost. Catalina Marketing has come up with software called VOCALS that digitally records customer response to questions. The tone of each voice is then measured to determine a consumer's attitude towards a product. This program began in July of 1999.

The results so far have been encouraging. Place The channels of distribution for their services are, for the most part, at the point of sale. Catalina Marketing places a thermal printer at each cash register at each terminal of each contracted retailer worldwide. To date over 13,000 national and over 3,000 international retailers are members of the Catalina Marketing Network.

Although programs vary from store to store, each retailer has voiced an increase in customer loyalty due to the Checkout Coupon program. In fact, when the program began in Europe, the ideas of coupons were so revolutionary; the retailers had to explain them the procedures on how to redeem them. When Catalina began its United Kingdom expansion by signing ASDA, they were fifth in the market (out of five major retailers). In a few short years, ASDA has risen to second in market share.

Catalina UK likes to think that bringing their "discounting" to this chain helped them gain substantial market share. Another method of distribution is the Internet. The Supermarkets Online program, Valupages, allows the consumer to customize their savings to products they use from retailers they shop from. The coupons are actually printed from the printer on the home PC. A scan able bar code prints on the top of the page listing your discounts.

Manufacturers also have access to information through the Internet. As a benefit of being part of the Catalina Marketing Network. Manufacturers have access to real time and historical transactional databases. Manufacturers can chose to view sales per day, hour or even shopper.

Over 165 million transactions a week are available to view 24 hours a day. Promotion In it's early days Catalina Marketing relied on personal selling to promote their company. Since the five founding members had great connections in both the retail market and manufacturing community, it was easy for them to get heard. However, selling the concept of printing coupons after a sale was difficult for many to grasp. By identifying themselves as a" premier targeted marketing and communications company". Perhaps the greatest promotional scheme was Catalina's first showing at the Food Marketing Institute's (FMI) Supermarket Exposition trade show in Chicago in May of 1989.

New CEO, Tommy Greer, decided Catalina had to expand their supermarket base and therefore they must attend FMI. He also thought they needed to do "something big" in a form of public relations to stand out. A public relations firm came up with three ideas: 1. Catalina would donate money from each coupon printed to help fight "The War on Drugs, 2. Catalina would promote the upcoming Las Vegas fight between Sugar Ray Leonard and Thomas Hearns, being billed as "The War II" by printing coupons reminding shoppers to order the fight through pay-per-view and 3. Staging a sparring match at the Hilton hotel ballroom between Leonard and Hearns.

Needless to say, Catalina Marketing got noticed at FMI. Today, Catalina Marketing accomplishes the majority of its promotions through trade shows. The largest trade show Catalina attends is the Convex convention, which features the latest technology in various fields, held annually in Las Vegas. Catalina Marketing also still attends FMI, although nothing like the sparring match has ever been attempted since.

Due to an ingenious idea, good management, a clear objective and hard work, a business that was ahead of its time, established themselves as the best in the business. Today, Catalina executives still like to take chances and boasts " The future of your business is limited only by your imagination". I have learned it is possible to succeed only if you are willing to take a risk. The five founders, Mike O'Brien, Brian Yeatman, Tom Mindrum, Mike Scroggie and George Off, each risked established careers and a lot of personal investment (monetary and time) to make sure they founded a company they believe in.

But true to their entrepreneurial spirits established a successful company.