Thursday, November 3, 2011

In this CNN article, the idea of extreme couponing is portrayed. It is said that on a good day Tiffany Ivanovsky walks out of the grocerystore with shopping bags full of food, having saved 80% to 90% of the bill. The mainstream of our society are oblivious that, If used in the correct way, coupons can save you a lot of money. Ivanovsky often gets food for free or even makes money on purchases. To do that, she uses multiple coupons or stacks manufacturer coupons on top of store coupons to get bigger discountsAnd when the coupons actually exceed the value of the item she is buying, she makes money. The total revenue for the company is actually in the negatives. The elasticity of demand for these goods are high due to the help of coupons. I know stores try to work at its most efficient level of production but with people like ivanovsky its makes the business operate inefficiently. The coupons were produced so the demand of consumers would raise producing profit, but it has seemed to back fire. Hopefully entrepreneur’s owners will notice what’s going on and gain human capital. They might need to put limits on how many coupons one person can use at a time. I personally think the coupons will still be ok though because it takes a lot of time and effort into figuring out how to save that much money on groceries but for business owners you can do a promotion that drives a lot of people into the store but at the end of it all that's not good for the company if a retailer goes out of business because they didn't manage their promotional money the right way --Tre Vance

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