Family Codes, Coupons, and UPCs

29 Sep, 2017

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By far, the number one issue that confuses couponers is the concept of coupon family codes. There is an urban legend that suggests you can determine whether a coupon is going to work just by looking at the product’s UPC symbol. That is just not possible.

The product UPC has four groups of numbers. The first number is smaller by itself, then you have a set of five numbers followed by a second set of five numbers and then a final small digit. In fact, one of the inventors of the UPC system was one of my professors at Wharton.

Let’s use our friends at P&G as an example. P&G’s traditional household products are sold with the manufacturer number 037000. Every package of Tide, Gain, Cascade, Charmin, Dawn, and so on that is manufactured by P&G has that same first six numbers on the UPC.

The second set of five digits identifies the SKU. That means with 5 numbers you have 100,000 possible permutations of SKUs for the 1 manufacturer code. That sounds like a lot, but for a large manufacturer like P&G with so many different products, sizes and scents, it is constraining. It means they must use every available number so it is not as organized as people might think.

For example, let’s say they want to launch Chocolate Tide. The brand group would need a UPC assigned for Chocolate Tide, and so someone within the organization searches for available numbers and assigns the UPC.

Now let’s go back to coupons and coupon family codes. Back in the 1980’s stores were still entering coupons manually. Eventually, someone had the bright idea of putting UPC codes on coupons to take advantage of the scanner technology. However, the coupon barcode had to have the manufacturer number, a save value, and some way to indicate the products. So they decided to use two digits for the save value which left 3 digits on a coupon to match to five digits on the UPC. Those 3 digits were named the family code. As a result there are only 1,000 possible family codes for the typical 6-digit manufacturer code.

That means for each manufacturer code, you have 100,000 possible products that have to be referenced by less than 1,000 coupon family codes.

For some manufacturers a family code might match to one UPC or it could apply to 100,000. The cool thing about the family code system is that if you wanted to, you could set up a family code that applies to all Chocolate Tide or you could set up a family code for all 20 count packs of Chocolate Tide, or both.

UPCs are important. They are used for production, shipping, pricing, etc. via a central database that the retail industry accesses. Coupon family codes are used only for coupons, and they are not registered in GS1 so it is not publicly available information.

Type in a UPC on the internet and you can find the product. Try and do the same with a coupon family code and the information doesn’t exist.

Because UPCs are fixed, they don’t ever change unless a brand is sold to a different manufacturer. Manufacturers cannot afford to have different products with the same UPC so there are long delays in reusing a UPC. However, with coupon family codes, if a company wants to change one, they can. There is a clearinghouse that takes care of family codes. P&G tells this one company and then that company sends the information to Walmart, etc.

The system was set up such that it was never intended that consumers would be able to know what coupon family code a product is in. And of course, now we have the GS1 databar which was an entirely new encoding system for coupons. It gives manufacturers up to 70 digits to use to explain their coupon. But that is still not enough to include the information on potentially 100,000 different product UPCs. So they stuck with the three digit coupon family code. The only significant change in this regard is that they made it impossible for the consumer to look at the coupon barcode and know would coupon family codes are included unless you have a tool like QSeer.

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