WO2001042970A2 - Method and apparatus for performing coupon-type advertising - Google Patents

Abstract

A method of advertising coupons. According to this method, a list is first created, this list comprising advertising information comprising at least one discount announced by a merchant to a consumer. Then a uniquely identified discount card is created, then the list of advertising information is given to the consumer as well as the uniquely identified discount card. The last step occurs when, when paying for a purchase from a merchant, the consumer presents his discount card and he benefits at the point of sale from the discount announced by the merchant.

Description

Method And Apparatus For Performing Coupon-Type Advertising

BACKGROUND

Retailers are always searching for ways to promote their wares or

services and bring foot traffic into their establishments. One traditional

means of encouraging consumers to purchase particular goods is the

coupon. For years, merchants have placed advertisements in newspapers

that included coupons intended to be clipped by customers and redeemed

at retail establishments. Many a Sunday morning has been spent by

frugal consumers sitting at a table and clipping coupons from the local

paper. However in today's hectic and rushed world, many people simply

do not have the time to pour over the newspaper searching for useful

coupons amongst articles and advertisements of little interest to the

coupon prospector. In addition, merchants that place coupons within

newspapers and other similar circulars must bear the full up-front cost of

placing the coupons regardless of the return on their advertisement

investment as represented by the redemption rate of the coupons. In an effort to alleviate the "searching and clipping" problem of

newspaper advertise nents, coupon distributors have developed

cooperative mailing programs such as Val-Pak™, Supercoups™, and

Money Mailer™. In these programs, coupon distributors solicit coupon

advertisements from a variety of merchants which they bundle together

into a single mailing to consumers at their homes. Like newspaper

coupons, merchants bear the full up-front costs of placing coupons

within the mailers regardless of the redemption rate of the coupons.

Merchants often pay in excess of $400 a month to have a coupon placed

in a mailer to a community resulting with a standard coupon redemption

rate estimated by some at less than 2%. In addition, consumers have to

flip through a thick stack of coupons to find the coupons that may be of

interest.

Regardless of the distribution form in which coupons arrive in a

household, newspaper or cooperative mailing, there is another drawback

of coupons. The psychology of using coupons often makes them

unattractive to consumers. The fact that 98% of coupons are thrown out

rather than redeemed may be based in part on consumer's reluctance to

present coupons at various establishments. Often, consumers,

particularly men, feel that there is a negative connotation associated with

the use of a coupon that somehow degrades their status as a breadwinner

for the family. In addition, by their very nature, printed coupons are limited to a

single use. A purchase made using a coupon requires the coupon to be

given to the merchant in order for the consumer to redeem the coupon.

This single use nature of the printed coupon makes them unattractive to

merchants who are attempting to get repeated use of their advertising

expenditures.

In order to eliminate all of the above drawbacks of traditional

coupons and coupon distribution methods, merchants and marketers have

sought out alternatives. One type of alternative is the use of a card,

carried by the consumer, to attain discounts at merchants.

For example, U.S. Patent No. Re. 36,1 16 to McCarthy discloses a

centralized system for tracking consumer transactions at participating

merchants on a consumer-by-consumer basis and for crediting each

consumer's account on the basis of merchant-defined discounts or on the

basis of traditional coupons presented to the merchant at the time of sale.

The system allows merchants to distribute coupons using traditional

channels and allows consumers to receive credits in their centralized

system accounts when they use the coupons and provide the merchants

with their account information. However, the merchant does not provide

the discount at the time of the transaction. Also, customer anonymity is

compromised by the tracking that can occur in the use of such a system.

In addition, market penetration of such a system is compromised by the requirement that consumers be registered with a central database to

receive the credits.

U.S. Patent No. 4,982,346 to Girouard et al. discloses the use of

computers in kiosks in malls or stores which display ads and accept

magnetic cards for various promotional purposes. In one embodiment, a

consumer could be encouraged to visit the kiosks, and thus the stores

being promoted by the computer at the kiosk, by providing prizes,

discounts, or rebates to the consumer each time he inserts his card.

However, the discounts are not directly related to the actual purchase of

goods or services from participating merchants. Also, merchants must

pay up front for the establishment and maintenance of the kiosks before

ever receiving any benefit from their advertising dollar.

U.S. Patent No. 5,056,019 to Schultz et al. discloses a marketing

method and system for tracking the purchases of member consumers

through the use of membership cards and in a central system and

periodically providing rebates to the member consumers when particular

purchase requirements have been met. Purchase incentives are compiled

into a reward booklet and distributed to consumers, but the incentives are

created by manufacturers. Further, consumers using the Schultz system

are not rewarded with a discount at the time of purchase. In

implementation, these types of systems often require consumers to pay

up front for their membership cards. U.S. Patent No. 5,305,197 to Axler et al. discloses a coupon

dispensing machine for use in a retail location. A consumer may review

information about the products for which coupons are available and then

receive selected coupons upon request. However, the system distributes

coupons to consumers only once the consumer is on the premises of the

retail location. Further, the Axler system provides traditional coupons to

consumers to be presented at the time of purchase.

U.S. Patent No. 5,638,457 to Deaton et al. discloses an automatic

check and credit card reader coupled with a database for storing

shopping information about consumers which is collected on the basis of

the consumers' check or credit card numbers. The system may be used to

target potential consumers more effectively by providing coupons and

other purchase incentives to consumers on the basis of their past

shopping history. However, the system does not allow a merchant to

advertise coupon-type discounts to consumers to be redeemed merely by

presenting a card. In addition, as in other systems of this type, consumer

anonymity is compromised by the registration requirement. Also,

consumers must pay by check or credit card in order to receive the

benefits of this system.

U.S. Patent No. 5,710,886 to Christensen et al. discloses a method

and apparatus for electronically distributing coupon information to

consumers. Using appropriate software, the consumers can use the information to print coupons having personalized information on them.

When collected, the coupons provide demographic information about the

consumers and their shopping habits. However, the method disclosed by

Christensen requires paper coupons to be carried by consumers, provided

to merchants and verified by merchants by hand.

U.S. Patent No. 5,749,075 to Toader et al. discloses a system for

the distribution of cards redeemable for prepaid long distance service or

Internet access. If Internet access is chosen, the redeemer is first taken to

the sponsor's website, where he is required to take a survey which

provides the sponsor with demographic information about the consumer.

Thus, the system uses long distance calling cards to provide a marketing

incentive to consumers. However, the cards are not used to provide

discounts on goods or services provided by the sponsor.

U.S. Patent No. 5,761,648 to Golden et al. discloses a system for

electronically distributing coupons to consumers. The system allows

each coupon issuer to provide the coupon information to a service

provider, which then makes all of the coupons available for display by

consumers. Consumers select coupons and can either download and

print them, or transmit them electronically via a computer network.

However, in order to receive an advertised discount in person at a retail

merchant, the consumer must present a paper coupon at the time of

purchase. U.S. Patent No. 5,806,044 to Powell discloses a system for

electronically distributing coupons via a computer network to a

consumer's computer, where the coupon information may be downloaded

onto the consumer's "smart card." The system allows coupons to be

verified electronically. However, the system requires coupons to be

encoded electronically on a "smart card" and decoded and verified at the

point of sale. In addition, merchants must have the dedicated smart card

terminals at their point of sale, and consumers must have capable

computer systems in their homes or readily at their disposal to use this

system.

U.S. Patent No. 5,822,735 to De Lapa et al. discloses a coupon

system for enabling coupon-related transactions to be tracked more

closely and for consumer demographic information to be gathered more

accurately. The system allows coupons to be provided to consumers

with printed information on the coupons identifying the individual

consumer receiving and using the coupons. However, the De Lapa

system merely addresses identifying information on traditional paper

coupons and does not contemplate the use of cards to redeem coupons.

Therefore, a system is needed for utilizing identifiers, as may be

found on printed cards, to perform coupon-type advertising. Furthermore, a system is needed that provides consumers with a

list of merchant-defined discounts redeemable through the use of an

identifier.

Furthermore, a system is needed that electronically verifies that a

5 consumer has used an identifier to receive a discount.

Furthermore, a system is needed that will provide a consumer with

a discount upon the presentation of an identifier and charge the merchant

who takes the identifier a fee based on the purchases made with the

identifier, whereby the merchant pays only for results of his advertising.

l o SUMMARY OF THE INVENTION

The present invention is related to an electronic coupon system

and method for facilitating coupon-type advertising by more efficiently

apportioning merchants' advertising costs. The electronic coupon system

includes a discount list which is distributed to consumers, a plurality of

is unique identifying devices, identifying cards, a plurality of unique

programmed card terminal/printers, and a host computer.

The operation of the system is managed by a central agency. The

central agency distributes as many of the unique cards as possible to

consumers, free of charge. The central agency also provides each

0 participating merchant with one of the programmed card

terminal/printers or the software to program an existing terminal at the

participating merchant, and the merchant provides the central agency with its advertising information, which includes details about providing a

discount to anyone using one of the identifying cards when buying from

the merchant. The central agency collects all of the advertising

information, formats it, and distributes it to the consumers.

The consumers may consult the advertising information, including

the discount information, and be persuaded to patronize the advertised

merchants. In conjunction with making a purchase, which may be by

any conventional means including cash, personal check, credit card, or

the like, the consumer temporarily provides his unique identifying card,

or identification number, to the merchant or his representative. The

merchant swipes the card through the programmed card terminal/printer,

or enters the identification number into the terminal, or faxes the

consumer's identification number. The advertised discount is then

applied to the transaction, resulting in immediate savings for the

consumer.

The transaction is recorded by the programmed card terminal and

forwarded to the host computer at the central agency via a network such

as the public switched telephone network (a "PSTN") or a private data

network. Each participating merchant is then charged by the central

agency on the basis of the number of transactions reported to the host

computer. Thus, each merchant pays for the advertising provided by the

central agency only in proportion to the number of times consumers see and heed the advertising and patronize the merchant. This results in each

merchant's advertising costs being more efficiently apportioned on the

basis of the advertising's actual results.

Additional features of the present invention include the ability for

the magnetic encoded card to be used as a "calling card," with the card

being credited with additional minutes of calling time each time the card

is used, thus providing each consumer with an additional incentive to use

the card and to make sure that the merchant actually swipes the card in

conjunction with each transaction.

In another feature, the advertising information may be distributed

to participating consumers using print media or electronic media such as

the Internet or via a PSTN.

In yet another feature, the transaction information which is

forwarded to the host computer from each terminal or facsimile machine

may be collected and held at the merchant's location until a particular

time each day, at which time the entire daily set of recorded transactions

may be forwarded at once. This eliminates the need to make a separate

call at the time of each transaction, and, by scheduling the delivery of the

recorded transactions for an "off-peak" time, a merchant's telephone line

need not be tied up during business hours. In still another feature, the per-transaction charges may be

automatically charged to a merchant's credit card or debited from the

merchant's bank account.

In another feature, the information recorded for each transaction

may be expanded to include the amount of the transaction, the time of the

transaction and other details. The details may then be reported back to

the merchant to aid the merchant in analyzing the effect of the

advertising in order to better make use of the advertising.

In another feature, the cards contain a unique distribution number

that may be traced to a particular merchant or organization that originally

distributes the card. Using this information uploaded to the central

agency, the central agency may pay a fee or give a credit to the merchant

or organization that originally distributed the card, thus providing the

original distributor with incentive to saturate the marketplace with cards

or providing a fund raising means for various charitable organizations

that may distribute the cards to their members or the public.

FIGURES

The construction designed to carry out the invention will

hereinafter be described, together with other features thereof. The

invention will be more readily understood from a reading of the

following specification and by reference to the accompanying drawings forming a part thereof, wherein an example of the invention is shown and

wherein:

Figure 1 illustrates a diagram of the system of this invention.

Figure 2 illustrates a flow chart of the overall operation of this

invention.

Figure 3 illustrates a flow chart of the operation of the discount

application feature of this invention.

DETAILED DESCRIPTION

This invention is related to a system and method for facilitating

coupon type advertising. Figure 1 illustrates a diagram of the system of

this invention with respect to a consumer 100. Consumer 100 has a list

of advertising information 110 and a discount card 120. The list of

advertising information, or list, 110 comprises a listing of merchant

advertised discounts. The list 110 has been distributed to the consumer

100 either in hard copy form through facsimile or mail, or in electronic

form through a web site or through email. The discount card 120 is a

device encoded with a unique card identifier to distinguish this discount

card from other discount cards that have been distributed to other

consumers. In the preferred embodiment of this invention, the discount

card 120 is a magnetically encoded plastic card. It may also be, for

example, a device with an imbedded electronic chip (smart card), an

object including a unique bar code or any other device encoded with a suitable unique identifier (color, sound, digital indicators, etc.). This

discount card 120 may be initially distributed to the consumer 100 along

with the list 110 through the mails. As will be discussed later, the

discount card 120 may also be distributed to the consumer 100 in person.

The discount card 120 permits the consumer 100 to redeem the merchant

advertised discounts at the merchant's location.

Consumer 100 presents the discount card 120 to a merchant who

utilizes a terminal 130 with a unique terminal identifier or facsimile

machine with a unique identifier to read the unique card identifier from

the discount card 120. Terminal 130 may be a traditional point of sale

terminal such as a cash register or a computer acting as a point of sale

terminal. The merchant applies the advertised discount to the

consumer's transaction, and the terminal 130 transmits the unique card

identifier to a host computer 140. The host computer 140 receives the

unique card identifier and the unique terminal identifier, associates the

unique terminal identifier with the merchant who performed the

transaction, and charges the merchant a fee for the transaction. Fees may

be a predetermined fixed fee or a fee based on a percentage of the

transaction. In this manner, merchants who advertise through this system

only incur advertising cost when an advertisement results in an actual

transaction by the consumer. While this invention discusses the many

features of a host computer 140, it will be appreciated by those skilled in the art that the functions residing on the host computer may be spread out

among a number of different computers in communication with each

other.

An example will assist in understanding the features of this

invention. Bill's Pizza Parlor (Bill's) places an advertisement with the

provider of this invention for 10% off the cost of a pizza. This merchant

advertised discount is included along with other merchants' advertised

discounts in a list of advertising information that is sent to consumer's

homes along with the discount card encoded with the unique card

identifier. The consumer, intrigued by the discount offer, goes into Bill's

Pizza Parlor, orders a pizza, and presents his discount card at the time of

payment. The cashier swipes the discount card through the terminal and

deducts 10% from the cost of the pizza. The terminal contacts the host

computer and transmits the terminal identifier and the unique card

identifier. The host computer associates the terminal identifier with

Bill's Pizza Parlor and charges Bill's Pizza Parlor the predetermined

transaction fee. Notice that Bill's Pizza Parlor only pays for the

advertising costs at the time that the consumer redeems the discount and

Bill's Pizza Parlor gets the benefit of the advertising.

Figure 2 illustrates a flow chart of the overall operation of this

invention. In 200, a list of advertising information is created. This list

consists of merchant advertised discounts that have been solicited from merchants in a given geographic region. The listing may be distributed

to consumers via mail, email, the World Wide Web, or in person. As

merchant advertised discounts change or new merchant advertised

discounts are solicited, the listing may be updated from time to time and

made available to consumers.

In 210, a number of uniquely identified discount cards are

generated by a central agency. The discount cards have associated

Personal Identification Numbers (PINs) that are used when the discount

cards are used by consumers as long distance calling cards, a feature that

will be discussed later. The cards are identified by a unique card

identifier. In addition, the discount cards may have a distribution

number embedded within the card that specifies a particular lot of cards.

This distribution number is used for a feature of the invention, which will

be discussed later, that allows distribution agents to receive moneys for

the use of cards that they have distributed. While the distribution

number may be encoded on the card, it is also possible to have a

distribution number associated with a sequence of card numbers and for

the distribution number and associated card identifier to be stored on the

host computer.

In 220, the discount cards are provided to the consumers. The

method of distribution of the discount cards may vary. In the preferred

embodiment the discount cards are mailed along with the list of advertising information to consumers. In another feature of this

invention, distribution agents may distribute the cards with each

distribution agent being given a lot of cards each of the cards having the

same distribution number. The host computer associates the distribution

number with the distribution agent. Distribution agents may include

merchants themselves who distribute the cards to their customers or fund

raising organizations like churches and schools. Distribution agents will

receive funds each time a transaction occurs using a discount card

bearing the distribution agents distribution number. For example, if a

local PTA distributes the discount cards to its members, every time a

PTA member uses the discount card proceeds will flow to the PTA.

Merchants are encouraged to pass out discount cards to customers so that

if their discount cards are used at its own place of business or at other

merchants the distributing merchant will receive a credit against its bill.

This distribution agent feature of the invention will facilitate saturation

of a given market with discount cards.

In 230, a participating merchant, one who provides merchant

advertised discounts to consumers, receives the discount card from the

consumer at the time of a point of sale transaction.

In 240, the merchant swipes the card, enters the identification

number, or facsimile's the identification number and provides the

consumer with the advertised discount. Figure 3 illustrates a flow chart of the operation of the discount

application feature of this invention. Block 240 is further explained. In

300, the merchant swipes the card through a terminal at the point of sale.

In 310, the unique card identifier along with the unique terminal

identifier is transmitted to the host computer. The host computer

associates the unique terminal identifier with the merchant in 320 and

charges the merchant the fee for the transaction. Fees may be a

predetermined fixed fee or a fee based on a percentage of the transaction.

The merchant may have his account with the provider of this system

debited to be billed at a later point; the merchant may have his bank

account debited; or the merchant may have a credit card charged.

In 330, another feature of the present invention is described. The

discount cards serve a dual role as prepaid telephone calling cards. As

consumers use the cards at merchants, credits in the form of minutes of

talk time or dollars of phone charges are credited to the discount cards.

The host computer communicates with a long distance telephone

provider to credit the discount cards. The number of minutes credited

varies with each transaction. This feature has the dual purpose of

incentivizing customers to participate in the program through purchasing

through merchants having merchant advertised discounts and serving to

ensure that discount cards are swiped by the terminal at the time of the transaction because consumers will insist upon it in order to get their

telephone credits.

In 340, the process records the transaction record to a transaction

record database. The transaction record can include any type of

information about the transaction including, but not limited to, purchase

date and time, amount of purchase, and store location. By archiving the

transaction records, the host computer is able to generate numerous

reports for merchants to indicate the efficacy of their advertising

campaign.

In 350, in order to provide further incentive to consumers to use

the card, at the time of every transaction the consumer may randomly

win a prize. The randomizing routine runs on the host computer and

should a prize be generated, that prize is indicated on the terminal or

printer. The consumer will then send in his receipt, indicating the prize,

to the central agency for payment.

In 360, the host computer enters the unique discount card number

into a monthly drawing for a prize. This also serves to provide

incentives to the consumer to use the discount card.

In 370, the host computer credits the distribution agent, if any, for

the transaction. Distribution agents are paid a fee every time the

discount card that they distribute is used by a consumer. Fees may be a

predetermined fixed fee or a fee based on a percentage of the transaction. From the foregoing description, it will be appreciated that the

present invention describes a system and method for facilitating coupon-

type advertising. The present invention has been described in relation to

particular embodiments which are intended in all respects to be

illustrative rather than restrictive. Alternative embodiments will become

apparent to those skilled in the art to which the present invention pertains

without departing from its spirit and scope. Accordingly, the scope of

the present invention is described by the appended claims and supported

by the foregoing description.

Claims

1. A method for facilitating coupon-type advertising comprising the

steps of:

creating a list of advertising information including at least one

merchant advertised discount to a consumer;

creating a uniquely identified discount card;

providing the list of advertising information to the consumer;

providing the uniquely identified discount card to the consumer;

receiving, at the time of a point of sale at a merchant, the discount

card from the consumer; and

applying the merchant advertised discount to the consumer at the

time of the point of sale.

2. The method of claim 1 wherein the steps of creating a list of

advertising information and creating a uniquely identified discount

card are performed by a central agency.

3. The method of claim 2 further comprising the steps of:

recording the receipt of the discount card at the time of the point of

sale at the merchant in order to create a transaction record;

and

uploading the transaction record to the central agency.

4. The method of claim 3 further comprising the step of charging the

merchant a fee by the central agency for each transaction. Fees may be a predetermined fixed fee or a fee based on a percentage of

the transaction.

5. The method of claim 4 further comprising the step of deducting

the merchant fee from the merchant's bank account.

6. The method of claim 4 further comprising the step of charging the

merchant fee to the merchant's credit card.

7. The method of claim 3 further comprising the step of crediting the

consumer, by the central agency, with a bonus for each transaction.

8. The method of claim 7 wherein the bonus comprises a number of

free minutes of long distance telephone time.

9. The method of claim 7 wherein the bonus comprises a random

monthly drawing for a prize.

10. The method of claim 7 wherein the bonus comprises an

opportunity for an instant prize at the time of the transaction.

11. The method of claim 1 wherein the step of providing the uniquely

identified discount card is performed by a central agency.

12. The method of claim 1 wherein the step of providing the uniquely

identified discount card is performed by a card distribution agent.

13. The method of claim 12 further comprising the steps of:

recording the receipt of the discount card at the time of the point of

sale at the merchant in order to create a transaction record; uploading the transaction record to the central agency; and

crediting the card distribution agent for the transaction.

14. The method of claim 13 wherein the merchant performs the

function of the card distribution agent.

15. A system for facilitating coupon type advertising, comprising:

a list of advertising information comprising at least one merchant

advertised discount distributed to a consumer;

a discount card encoded with a unique card identifier distributed to

the consumer;

a terminal with a unique terminal identifier operable to:

read the card identifier from the discount card; and

transmit the card identifier and terminal identifier; and

a host computer operable to:

receive the card identifier and terminal identifier from the

terminal;

associate the terminal identifier with a merchant; and

charge the merchant a fee for each time the card is read by

the terminal.

16. The system of claim 15 wherein the card has an associated PIN

code and the card is operable as a long distance calling card.

17. The system of claim 16 wherein the host computer is further

operable to provide long distance calling credit associated with the

card when the host computer receives the card identifier.

18. The system of claim 17 wherein the long distance calling credit is

in the form of a number of minutes of long distance calling time.

19. The system of claim 17 wherein the long distance calling credit is

in the form of a number of minutes of long distance calling dollars.

20. The system of claim 15 wherein the terminal is further operable to

receive data from the host computer and the host computer is

further operable to generate a random instant prize at the time the

host computer receives the card identifier and transmit the instant

prize to the terminal.

21. The system of claim 15 wherein the host computer is further

operable to record the card identifier and generate a random,

monthly prize winner drawn from a plurality of card identifiers

received and recorded by the host computer.

22. The system of claim 15 wherein the terminal is operable to send

the card identifier and the terminal identifier in a distribution mode

at a user determined time each day.

23. The system of claim 15 wherein the terminal is operable to send

the card identifier and the terminal identifier at the time the card is

read by the terminal.

24. The system of claim 15 wherein the card further comprises a

distribution number, the terminal is further operable to read the

distribution number and transmit the distribution number, and the

host computer is further operable to: read the distribution number from the terminal;

associate the distribution number with a card distributor; and

credit the card distributor each time the card is read by the

terminal.

25. The system of claim 15 wherein the host computer is further

operable to charge the merchant's fee against the merchant's credit

card.

26. The system of claim 15 wherein the host computer is further

operable to charge the merchant's fee against the merchant's bank

account.

27. The system of claim 15 wherein the terminal is further operable to

transmit transaction details, and the host computer is further

operable to receive transaction details from the terminal and

generate transaction reports based on the transaction details.

28. The system of claim 27 wherein the transaction details are

provided to the merchant.