University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange

Masters Theses Graduate School

8-1960

A Study of Trading Stamps in Memphis

Walter P. Gorman III University of Tennessee, Knoxville

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Part of the Marketing Commons

Recommended Citation Gorman, Walter P. III, "A Study of Trading Stamps in Memphis. " Master's Thesis, University of Tennessee, 1960. https://trace.tennessee.edu/utk_gradthes/4410

This Thesis is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Masters Theses by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council:

I am submitting herewith a thesis written by Walter P. Gorman III entitled "A Study of Trading Stamps in Memphis." I have examined the final electronic copy of this thesis for form and content and recommend that it be accepted in partial fulfillment of the equirr ements for the degree of Master of Science, with a major in Business Administration.

E. Dille, Major Professor

We have read this thesis and recommend its acceptance:

E. E. Garrison, Charles P. White

Accepted for the Council: Carolyn R. Hodges

Vice Provost and Dean of the Graduate School

(Original signatures are on file with official studentecor r ds.) August 2, 1960

To the Graduate Council: I am submitting herewith a thesis written by Walter P. Gorman III entitled "A Study of Trading Stamps in Memphis.n I recommend that it be accepted for nine quarter hours of credit in partial fulfillment of the req ,irements for the degree of Master of Science, with a major in Marketing.

We have read this thesis and recommend its acceptance:

Accepted for the Council:

chool A STUDY OF TRADING STAMPS IN MEMPHIS

A Thesis Presented to the Graduate Council of The University of Tennessee

In Partial Fulfillment of the Requirements for the Degree Master of Science

by

Walter P. Gorman III August 1960 TABLE OF CONTENTS

CHAPTER PAGE

I. INTRODUCTION • • • • • • • • • • • • • • • • 1

Stat ement of the Problem. • • • • • • • • • 2 Importance of the Study • • • • • • • • • • 4 Definition of Terms • ...... 6 Scope •••••••• •••••••• ••• 7 Review of Related Li terature•• . . . • • • 8 Methods of Proce dure and Sources of Data •• 16 An alysis and Organization ••••••••• 17 II. HISTORY . • • • • • • • • • • • • • • • • • 19

Beginnings of the Industry . • • • • • • • 19 The Fi rst St amp Cycle • • • • • • • • • . . 21 The Spread of Stamps Through the Nation • • 23 Reverses Due to War and Depression • ••• 25

Postwar Prosperity • • • • • • • • • • • • 27

History of the Memphis Area. • • • • • •• 30

A New Look at the St amp Cycle. • • • • • • 36

III. LEGAL DEVELOPMENTS • • • • • • • • • • • • • 38 Introduction • • • • • • • • • • • • • • • 38

Legal History Until 1955 • • • • • • • • • ,38 1955, A Key Year in Stamp Legal History. • 46 Legal History Aft er 1955 • • . . • . . . • 48

47048:1. iii

CHAPTER PAGE Laws Today ...... 51 Tennessee Legal History. • • • • • • • • • • 52 IV. .OPERATIONS • • • • • • • • • • • . • • • • • 58 Introduction • • • • • • • • • • • • • • . . 58 Organ ization of a Typical Stamp Company. • • 59 Sellin g Procedure and Merchant Contact . • • 61 Consumer Contact • • • • • • • • • • • • • • 68 Altern ative Plans. • • • • • • • • • • • • • 70 Atypical St amp Plans • • • • • • • • • • • • 72 V. EXTRA STAMPING IN MEMPHIS • • • • • • • • • • 78 Introduction • • • • ...... 78 Methods of Procedure and Sources of Data . • 80 The Eff ects of Extra Stamping·. • • • • • • 83 Conclusion • • ...... • • • 106 VI. APPRAISAL • • ...... • • • • • • • • • • 108 Merchant Appraisal ...... • • • 109 Consumer Appraisal ••• ...... 122 Effects on Advertising ...... 128 Trading Stamps and the American Economy. • • 129 VII. SUMMARY AND CONCLUSIONS . • • • • • • • • • • 135 History • • • • • • • • • • • • • • • • • • • 135 Legality ••••••••••• ••• ••••• 136 iv

CHAPrER PAGE Operations • ...... • . • • • 137 Extra Stamping . • • • • • . • • • . • • • 139 Appraisal • • • . • • • • • . • • • • • 141 Subjective Conclusion • . . . • • . . • • 143 BIBLIOGRAPHY • • • • • • • • • • • • • • • • • • • 147 APPENDIX A • • . • . • • . • • • • • • • • • • • • 154 APPENDIX B • • • • • • • • • • . • • . • . • • . 157 LIST OF TABLES

TABLE PAGE

I. Anti-Trading Stamp Legislation Box S core • • • ...... 47 II. Number of Retail Grocers Who Extra Stamped

Items in Ad dition to Those Appearing in

Their Chains 1 Newspaper Ads • • • • • • • 85

III. Number of Grocers Who Thought the Result s

of Extra Stamping Had Been sati sfactory. • 86

IV. Number of Grocers Who Fa vored the Intro­ duction of a New Food Product, a 50 Cent Seller, by Newspaper Coupon Worth 50 Extra Stamps Rather Than a Newspaper Coupon

Worth 11 Cent s T award Purchase of the New Product ••••••• ...... 87 V. Estimated Merchandise Movement Caused by 50 Extra Stamp Coupons in Newspaper Expressed

in Per Cent of Average weekly Sales as

Estimated on Average Item by Retail Grocers

Interviewed . • • • • • • • • • • • • • • • 88

VI. First Choice s of Retail Grocers Interviewed

of the Product They Would Prefer to Extra St amp • • • • • • • ...... 93 vi

TABLE PAGE VII. Movements at Wholesale of Individual Products During and After Extra Stamping Expressed in Percentage Relationship to Average Movement. (Five Weeks Average Before Extra Stamps is Represented as 100 Per Cent). • • • • • • • • • • • • . . 94 VIII. Movement at Retail (John Gray's Food Store) of Products During Extra Stamp ing Expressed in Relat ion to Average (Estimated) Movement ••• ...... 95 IX. Movement at Reta il (Pie Pac Food Store) of Products During Newspaper Ad vertisement Extra Stamping Expressed in Percentage Relation to Average (Estimated) Movement Without Extra Stamps • • • • • • • • • • • • 96 X. Extra Stamps (25, 50, or 100) Grocers Said They Would Put on an Average Item Selling for $.50 • •••• •.••••.• ••••• 98 XI. Extra Stamps (25, 50, or 100) Grocers Said They Would Put on an Average Item Selling for $1.00 . • • • • • • • • • • • • • • • • 99 CHAPl'ER I

INTRODUCTION

The tr ading stamp is a uniqu e promotional device used primarily by retailers to increas e sales volume. In reality, trading stamps are a form of coupon. Their use is not new, as stamps were in existence before 1900; 1 but never before have they enjoyed the distri­ bution and interest that th ey do to day. It is estimated that retailers pay some $500,000,000.00 for stamps and that over 50 per cent of famili es in the United States are saving them. 2