Recently I visited a popular grocery chain in Eastern North Carolina. I was buying ibuprofen to relieve a nagged headache I had all morning. I waited not-so patiently in the checkout line, and was relieved when the old lady in front of me finally picked up her last bag.
When I approached the register, the clerk asked for my discount card. I said I did not have one and I did not need one at the moment. The clerk looked at me dumbfounded and informed me that I could get a discount if I had the card. At this point, I was close to tearing open the ibuprofen and slugging down three or four. Just take my money so I can get the hell out of here!
Most grocery stores and pharmacies offer discount cards to their frequent shoppers. Some stores are determined to give their cards out to everyone. If they wanted to offer discounts to everyone, why not lower the prices on products?
One reason is Walmart’s policy of comping add prices. Any customer can bring in a circular from another store, and Walmart will give them that price. Members’ cards prevent this because Walmart’s policy excludes member savings.
Another reason stores are pushing their discount cards is a market strategy called Segmentation. Market Segmentation recognizes trends in different consumer groups. Members’ cards allow a store to access your buying history, and market to you based on what you purchase (NetMBA 2012 Par 1).
Market Segmentation is a popular advertising method today. Smartphones, store cards, and social media provide businesses more information about their customers. Based on that info, they can tailor advertisements to your tastes. Do you notice how Facebook recommends products to you? This is segmentation in practice. Segmentation has potential benefits for the consumer as well. Advertising is less annoying if it is products you enjoy.
Many people do not care that their purchases are monitored. Consumers are more excited for the savings. Do discount cards really give you a good deal? The answer may surprise you. The NBC 10 Consumer Alert conducted a survey of six grocery chains on the east coast. They found the non-discount card stores were $22 cheaper than stores that offered member benefits (Montaldo Par 4).
The discount cards are not as straightforward as they seem. A store can charge higher than normal prices for most goods, then offer “sale” prices to their card members. We forget those grocery stores are businesses that are primarily interested in making a profit. As consumers we should never trust businesses to offer their best prices. Would you pay sticker price on a new car just because the salesmen said it was a good deal?
Many people have members’ cards for their favorite stores. There are three stores I frequent in my neighborhood, and I have members card to all of them. Market Segmentation be damned, sometimes you have to do what you can to save money.
Montaldo, Donna L. 2012. About.com. “The Truth Behind Grocery Store Discount Cards.” Retrieved on March 10, 2013 from http://couponing.about.com/od/groceryzone/a/disccards.htm.
NetMBA Business Knowledge Center. 2010. “Market Segmentation.” Retrieved on March 10, 2013 from http://www.netmba.com/marketing/market/segmentation/.