High finance coupons

In , Coca-Cola distributed the first-ever coupon. Little did the company realize how important the concept would be in shaping the future of commerce. With the Coca-Cola voucher, recipients could redeem one free glass of Coke at any dispensary. Coke, which was introduced a year earlier, benefitted from this marketing strategy as it encouraged both consumer and vendor adoption.

Families would visit their local pharmacies to get their free Coke and give it a try. In turn, pharmacy owners would tap Coca-Cola to replenish their supply as demand grew. The manufacturer's coupons worked, and it was just the beginning of something much bigger. According to Coupon Sherpa , "Between and , an estimated one-in-nine Americans had received a free Coca-Cola, for a total of 8,, free drinks.

By , Coca-Cola was being served in every state.

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Today, Coke is the world's best-selling carbonated beverage thanks to more than a century of clever marketing strategies including coupons, deals and markdowns. Now, nearly every brand and retailer uses discounts or other promotions to grow their businesses too.

Companies that understand the psychology behind special offers create a favorable brand image, deliver happiness to new and returning customers, and boost long-term profitability and sales. Below are several studies that reveal how consumers react to coupons and how strategic brand discounts and freebies can contribute to a company's success.

In , Coupons. Paul J. Zak, professor of Neuroeconomics at Claremont Graduate University, to learn how coupons impact people's happiness, health and stress. Furthermore, their respiration rates dropped 32 percent, heart rates decreased by 5 percent and sweat levels were reportedly 20 times lower than their peers. Consequently, they felt more relaxed and less stressed. Though shoppers now practically demand deals, they still find delight and joy in receiving an exclusive offer. Often, a cause for celebration is an unexpected coupon from a favored brand that rarely doles out discounts.

Sometimes, the welcome surprise of a promotional sale in a customer's inbox is enough to spark an excited shopping spree. Last year, consumers redeemed 2.

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Crafty customers know when and where to find a good deal, and brands that issue special offers create win-win scenarios for shoppers who save money and retailers who grow their sales. Big brands are increasingly adding coupons to their marketing mix to boost their bottom line. Knowing that their customer base will include shoppers who happily pay full price and buyers who eagerly wait for a new coupon to appear, smart brands deliver special deals to different segments of their contact list to encourage everyone to complete their next purchase.

When was the last time you purchased something new from an unfamiliar brand without a coupon? For most shoppers, buying something for the first time at full price without having any personal experience with the item or peer reviews to lean on can be intimidating. But even a slight discount can change a buyer's attitude towards a risky purchase. Statistics from VoucherCloud reveal that 57 percent of shoppers are motivated to complete a first-time purchase when they are able to redeem a coupon. In the absence of a special deal, customers would otherwise abandon their carts; some shoppers feel a first-time buyer discount is a prerequisite for brands looking to acquire new customers.

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That is because 62 percent of consumers invest two or more hours each week scouring the web for promotions. Fortunately, retailers can rest assured that any coupons issued may still attract loyal, lifelong customers. In fact, 91 percent of buyers who redeem coupons say they would visit the same retailers again. As long as shoppers find value in your offerings, coupon clippers may even purchase your products again later at full price.

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A global survey by RetailMeNot, found that of its 10, participants, 51 percent agreed that they were influenced by deals, discounts or sales when shopping online. In the U. Think of discounts and promotions as an easy way to soft sell shoppers. Many times when a coupon is available, customers may spend more of their energy and time convincing themselves not to purchase. Sample- or trial-size products cost little-to-nothing to produce, yet they are a major revenue driver for retailers online and offline.

Brands offer a risk-free proposition to consumers who can try something new, which they may even like, for free. The stores that do manage to impress shoppers with their samples earn consumer loyalty and trust and generate profitable sales due to our natural desire to reciprocate goodwill.

China's Evergrande sells US$3b in bonds; coupons top 10%, Banking & Finance - THE BUSINESS TIMES

Retailers, too, have their own reasons to love sampling, from the financial samples have boosted sales in some cases by as much as 2, percent to the behavioral they can sway people to habitually buy things that they never used to purchase. Stores that give away free value start new customer relationships off on the right foot.

Over time, the retailer's perceived "generosity" makes it more likable and that also leads to positive brand associations, which may improve customer referrals and sales. According to academic and behavioral scientist Dan Ariely, zero is a special price. To many, it is worth a lot more than its face value.

In the interim, investors clip no coupons and receive no periodic interest - hence, the name zero coupon. But at maturity, they receive a lump sum payment representing the principal they have lent the issuer, usually a large corporation, plus the interest that has accrued on the bond.

The hitch is that although investors will receive no cash during that period, for tax purposes they will nonetheless be considered to have received the money and thus will owe taxes on this invisible interest. Treasury bills work the same way, except that their maturities are far shorter, and they are therefore issued at much smaller discounts. Also, the interest is exempt from state and local taxes. Because investors in zero coupons have to pay taxes each year on interest income they will not receive for several years to come, most financial advisers recommend these investments only for taxadvantaged investors.

This effectively limits the individual market to I. On the institutional side, public and private pension funds, which are tax exempt, and their managers and investment advisers such as bank trust departments, are prime buyers of zerocoupon bonds. Why would someone purchase a zero coupon and choose to forgo receiving interest for five or 10 years, rather than invest in, say, a money-market fund where the person could earn current income?

One reason is that the reinvestment rate on interest income from the zero coupon is fixed for the life of the security, whereas the rate on a money fund can vary daily. Even with a conventional bond, the effective yield can be less than the stated yield if rates decline after the bond is bought. That's because the buyer will not necessarily be able to reinvest the coupon payment at the same high rate. Zero coupons also give the investor what professionals term ''call protection. Although companies theoretically could call zero coupons, they are much more unlikely to call in bonds on which they do not have to pay current interest.

Of course, the investor pays a price for such peace of mind, and that price is a lower yield. The yield on medium-term zero coupons is generally one-half to a full percentage point below conventional bonds of the same quality and maturity.

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THERE are also some risks with zero coupons, similar to those of h igh-coupon bonds. For one thing, the investor is gambling that i nterest rates will not rise. If rates subsequently soar, he has l ocked in a yield that will not be competitive with other i nvestments. If, on the other hand, rates fall, he can pat himself o n the back. When purchasing a zero-coupon bond, the investor is also counting on the fact that the corporation that issued it will still be around and able to pay up when the bond matures. Buying a zero coupon from a shaky company is ''like giving a loaded gun to a two-year-old,'' Carol B.

Einiger, a vice president with the First Boston Corporation, said. View all New York Times newsletters. Thus, it is no accident that the issuers of zero coupons comprise a blue-chip roster, and include such companies as the Allied Corporation, the BankAmerica Corporation, the J. Penney Company, Pepsico Inc. Credit Corporation. Roy Quarve, manager of the Bank of America's executive financial counseling office in New York, contends that the transaction costs associated with buying zero-coupon bonds for an I.

There are several ways to invest in zero-coupon bonds.