Coupons & Marketing Budget

Business Question

We have reviewed the data that was provided for Regork, leading us to consider how we target the appropriate customer base with the coupon marketing spend. We know that coupons drive sales, but can we uncover which market segment utilizes our existing coupon strategy in order to focus the marketing spend? How can Regork spend their coupon marketing budget most effectively?

While considering the question, we attempted to identify the profile of the specialized cohort that responds to marketing via coupons. This includes data that Regork has collected in their demographics data file and their transaction file for 2017. In order to identify this market segment, we first studied coupon redemption by age category. Then we drilled down in the category with the highest redemption rate and identified the primary income range of that cohort. Finally, to truly identify our target we looked at the overall sales values versus coupon redeemed to determine what coupon values have the highest redemption rate. By identifying the demographic most likely to use coupons, we can advise the Marketing Team at Regork how to spend their coupon marketing budget most effectively.

Analysis

To start our analysis we first graphed (Figure 1) coupon redemption by age category. As shown in Figure 1 below, the age group that redeemed the most coupons in the given year was between the ages of 45-54.

We wanted to further understand this age group of customers and identify the income range that consumes the most coupons. This will help clarify our target customer. The graph below (Figure 2) shows the results of this query. It reveals that customers between the ages of 45-54 with a reported income of 50-74K are the top coupon redeemers.

Finally, in our analysis we looked at coupons versus total sales, to understand what coupon range was redeemed and the average sales total. As shown in the graph below (Figure 3) the most frequently redeemed coupons were a dollar or less and were redeemed on items less than 10 dollars. In addition, the graph also displays Home Ownership and we can see it was mainly Homeowners that redeemed the coupons for the age group of 45-54 with income level of 50-74K.

Conclusion

After determining that customers that are between the ages of 45-54, have a reported income of 50-74K, are homeowners and redeem coupons that are less than a dollar and utilized for items less than ten dollars, the Marketing team has several paths forward:

• The Marketing Team could expand their efforts to a second target group such as the income range of 75-99K and replicate the success that they had with their targeted cohort.
  
• The Marketing Team can increase the number of coupons geared towards this cohort with the goal of increasing the total value of the transaction when coupons are redeemed. For instance, save 5% on a purchase of $20 or more. This will resonate with the targeted group and increase transaction sale amounts.
• The Marketing Team should consider targeting the delivery of coupons to additional members of the focused cohort to further increase coupon redemption and drive additional traffic to stores.

Based on our analysis, we believe that implementation of any or all of the recommendations will have a substantial positive impact on customer engagement and resultant sales.