The Psychology of Shopping: JCPenney Coupon Case

May 10, 2013 by Kyle
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If you are a JCPenney shopper you are already aware that the company has been in turmoil lately. New CEO, old CEO, yes to coupons, no to coupons. Their recent strategies have left a lot of shoppers scratching their heads and wondering what the heck is going on. Long story short, they are back to offering coupons and what they learned through the entire process about the psychology of shopping is really interesting.

The Rush of Using a Coupon

JCPenney, a little over a year ago, decided under the new CEO, that they were going to scratch the coupon model altogether and instead just go with everyday low prices. No longer do you need to bring in a coupon or redeem an online coupon code to get the best price. The best price is now the everyday price.

This is where this gets interesting. Turns out shoppers don’t like it. Instead, people like the idea of getting the best price with a coupon in hand. So in the past couple months JCPenney has brought back coupons and tossed the “everyday low price” model under the city metro bus.

Coupon Psychology

The psychology behind this is that shoppers get a rush from saving a ton of money with a coupon. Even if they would have paid the same price with the everyday low price model, they’d rather score the deal with the coupon. If the regular price is the lowest price, it’s less thrilling and consumers don’t come in the doors to take advantage of it.

I gotta admit that I fall into this trap as well. If I go shopping for a nice dress shirt that costs $20, but the tag says it was regularly $50, I am one happy guy as I strut to the register. But if I go to another store and the same shirt is also $20 and that is the regular price, I don’t get the same thrill. And as a matter of fact, I’ll often say to myself, “I’ll come back in a few weeks and see if it’s on sale or maybe I’ll check online for a better price.”

Free Shipping Psychology

The psychology of using a coupon also transfers over to online shoppers looking for a free shipping coupon. Have you ever been shopping online and the store doesn’t offer free shipping and you’re like, “Awww. I don’t know, $6 for shipping is kinda steep.” But then if they do offer free shipping you’re like, “Oh cool. I’m buying this NOW!” But you failed to take into account that the store offering free shipping may just be boosting their prices to cover the shipping charges. But psychologically, you always think you’re getting a great deal if you get free shipping. The truth is, it isn’t always the case.

Ask the Readers: Does using a coupon to save some money give you a bit of an adrenaline rush? Do you think JCPenney did the right thing bringing back coupons? I look forward to your comments.

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Comments

6 Responses to “The Psychology of Shopping: JCPenney Coupon Case”

  1. Grayson @ Debt Roundup on May 10th, 2013 12:24 pm

    I think JCPenny were too quick to turn their backs on their original target market. They wanted to go after younger people with everyday low prices. That is Walmart’s gig. You can’t take it and expect it to work. You were known for the coupons and that is what people expected. They changed too many things, too quickly and they paid the price for it.

  2. Kyle on May 10th, 2013 12:28 pm

    Great point Grayson. Not to mention Target and Kohl’s. It will be interesting to see if JCPenney can survive the next 5 years.

  3. [email protected] on May 10th, 2013 12:49 pm

    I’m with you. Folks like a good coupon and a sale. It drives the buying. I can’t stand JCPs new model, and the store is always empty when I pass through.

  4. Kyle on May 10th, 2013 2:47 pm

    Thanks for coming by Jacob. Curious what you don’t like about the new JCP biz model? It seems bringing back the coupons has helped business recently, at least at the location in my town.

  5. DC @ Young Adult Money on May 13th, 2013 12:28 pm

    Hmm this is really interesting, because in some cases “everyday low prices” has worked (case and point: WalMart). There is definitely a psychological aspect to coupons, and I think people simply didn’t believe JCPenny REALLY had the lowest prices. Oftentimes with coupons there may be some that make you think the company is ultimately losing money it’s so good (like a half off Puma store coupon I used to get my shoes). I think people more so distrusted JCPenny’s “low price everyday” model and thought they built in more profits than with the coupon model.

  6. Kyle on May 13th, 2013 12:43 pm

    Great point DC – I definitely fell into the camp of thinking that JCP low price model was building in more profits for them. It reminds me of the car dealership that claims they have the lowest price and no haggling needed. I always, whether right or not, feel that I can get a better deal by haggling at a different dealership.

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