This error has two possible causes:
1. The coupon is set to require a product that is not in the cart
To correct this condition, edit your coupon and change the required product setting to match the product you are trying to use the coupon with (or set to any product).
2. The product you are trying to use with the coupon is not marked as coupon eligible
DPD allows you to mark specific products as not coupon eligible. This is useful for when you want to discount older products but not a new release, etc. However, often times vendors forget they set a product as not coupon eligible and then try to use a coupon with it, producing the error.
To check if a product is coupon eligible and change its status:
Method A: Edit the product and check the "Coupon Eligible" box.
Method B: Bulk edit your products and check the eligiblity status of all your products in a store at once.
Go to bulk edit in the left menu:
On the bulk edit page, check the coupon eligiblity of all your products by looking at the coupon eligible column:
Check or uncheck the box to toggle the coupon status.