In order to issue coupons for the shop they first must be enabled (Shop --> Settings --> Base settings --> Checkout --> coupons_enable: yes.)  Coupon codes are entered by the customer on the first page of the checkout process. If your shop system does not have a coupon field, then most like coupons are not enabled.

The coupon tool is found in Shop --> Price --> Coupons. Use the Coupon Add tab to add a new coupon.

Explanation of fields:

Name - This is just a label so the admin knows what the coupon is for
Coupon Code - This is the code that the customer would enter to get the discount
Standalone Coupon - Can this coupon be used with other coupons, yes/no?
How to Expire: you need to pick one of the below methods to expire the coupon

•     By Date:  The coupon can be used by anyone, any number of times, between the Coupon Start/End dates.
•     By Number of Uses: You are issuing a set number of coupons that can be used by anyone, any number of times until the count in Number of Uses field is met.
•      By Date & By Number Of Uses: Similar to By Number of Uses but add a date expiration as well. The coupon will expire when either setting is reached first.
•     By Customer:  This is the one coupon per user option but the customer must be logged in, in order for this coupon to be used so that the system can track who used it. If you no longer want to offer this coupon, you will need to either delete it, or change it be expired By Date and set the end date to a past date.

Type of Amount Off: You can choose that the customer either gets a percentage off or a set dollar amount. Fill in the appropriate box directly below.
     Dollar Amount: Only applies if you choose the Type of Amount Off as Dollar Amount.
     Percentage:  Only applies if you choose the Type of Amount Off as Percentage.

Amount Off Applies To: This is used to set that the cart value must be a certain minimum in order for the discount to apply. If you set it to Entire Order there is no minimum but if it's set to Order Over Specified Amount the discount will only be applied if the cart meets/exceeds the value in the Order Amount to Apply field directly below this.

Apply Coupon To: Specifies if a customer needs to purchase a certain product or category of product in order to get the discount.
   All Products: There are no specific products that need to be purchased in order for the discount to apply
   Selected Categories: If you select this option, then they must have a product in one of the checked categories in their cart for the coupon to apply.
   Selected Products:  If you select this option, when you click the orange Add Products button in the selected Products section,you will get a pop up of all your SKUs, check the ones that you want the coupon to apply to.

NOTE:  When you apply a coupon to either selected products or selected categories, if you chose Dollar Amount for your Type of Amount Off, they will get that dollar amount off their total cart value.  If you choose Percentage Amount for your Type of Amount Off, they will get that percentage off for each product that is in their cart.  For example, if you offer $10 off a product and they have 3 of that product in their cart, they will receive $10 off their order if they apply the coupon code. However if you offer 10% off a product and they have 3 of that product in their cart, they will receive 10% off each of those 3 products.