JPS             Santella Logo.jpg (2723 bytes)   

Home Site Map Resource Directory Feedback Legal & Privacy I&MI Incentive & Meeting Media

Coupon Trend Reports

Incentive Travel and Meeting Planner Services. We can design, plan and execute sales incentive travel, corporate meetings and conferences through a network of hotel suppliers, airline partners and destination management companies to ensure that your events are a success, meet budget requirements and inspire top performers.

  Top         If you like our site, please bookmark it so it will be easy to find later.

MARKETING RELATED ARTICLES

COUPON RELATED ARTICLES

REBATE & PREMIUM FULFILLMENT ARTICLES

FREQUENT SHOPPER & RETAILER ARTICLES

SWEEPSTAKES ARTICLES

COUPON TRENDS

PRESS RELEASES

wpe4.gif (1222 bytes)        Consumers receive $4.6 Billion Coupon Savings in 2011

LIVONIA, Mich., Jan. 26, Valassis announced that shoppers saved $4.6 billion with coupons in 2011 – $500 million more than the previous year – embracing a forever frugal mindset developed during recessionary times. This 12.2% increase is among the findings revealed in the Annual Topline U.S. Consumer Packaged Goods (CPG) Coupon Facts Report for Year-end 2011, released by NCH Marketing Services, Inc., a Valassis company.

This demand for value is also evident in NCH's annual Consumer Survey where 80.6% report using coupons regularly, up 17 share points from pre-recession levels. More than one-third of the survey respondents said they used more coupons in 2011 than the prior year, a 14.3 share point increase from pre-recession levels. Additionally, the Consumer Survey revealed that nearly 91% plan a shopping list with coupons before going to the store, which has steadily increased since pre-recessionary times. "Consumer shopping behavior has been forever impacted by the slow economic recovery as savings habits have become a way of life," said Suzie Brown, Valassis Executive Vice President, Sales and Marketing. "Recognizing this increased demand, marketers continue to be strategic in their promotional strategies to deliver value while still promoting loyalty and meeting their brand objectives in a highly competitive environment."

In 2011, CPG marketers distributed 305 billion coupons, representing an 8.1% decrease from the prior year, a record-setting year for distribution. In fact, the last three years represent the highest annual volumes of coupons distributed since the pre-recession period. Overall, 2011 is comparatively strong to 2007 with 20 billion more coupons available to consumers, indicating continued strong coupon promotional investments by CPG marketers. While there were fewer coupons in the grocery segment, the health and beauty care (HBC) segment maintained a steady volume. HBC products represent seven of the top 10 categories with the highest growth in coupon distribution volume in 2011.

To manage increased consumer demand, marketers continue to modify coupon offer characteristics, as the 2011 Coupon Facts Report indicates:

§ 27% of coupons distributed require multiple purchases, up 2 points from 2010;

§ 9.9 weeks average expiration, down from 10.4 weeks a year ago; and

§ An average $1.54 face value, which remained the same as in 2010.

"We have studied the factors which influence the ultimate redemption of a CPG coupon offer, and 70% of it is directly within the control of marketers, and they are making tactical changes to control redemption liability," said Charlie Brown, NCH Vice President of Marketing. "I would characterize 2011 as a unique year in that overall CPG findings were not representative of what marketers were doing for every offer, brand, category or company. Many altered their course as the year progressed or changed their promotional strategies and coupon tactics."

Overall in 2011, 89.4% of all coupons were distributed in the free-standing insert (FSI) coupon booklet. With fewer total coupons offered, and strong consumer responsiveness, redemption rates for FSI increased 11.1% on average for grocery coupons and 25% for HBC. Digital coupons, as the newest media choice for marketers to reach consumers, grew with 11% more print- at-home and paperless offers distributed and tracked on NCH's database. According to the NCH Consumer Survey, 64% regularly search the Internet for coupon savings on CPG products, up 13.5 share points from a year ago. However, the total quantity of digital coupons don't yet exceed 1% of all coupons distributed in the United States.

wpe4.gif (1222 bytes)    Value-centric Shoppers Save $3.7 Billion in 2010 Using Coupons
Coupon Distribution Posts Record-breaking Year in 2010 

LIVONIA, Mich., Jan. 20, 2011 /PRNewswire via COMTEX/ -- Valassis (NYSE: VCI), one of the nation's leading media and marketing services companies,announced today that shoppers saved $3.7 billion with coupons in 2010, according to the Annual Topline U.S. CPG Coupon Facts Report for Year-end 2010, released by NCH Marketing Services, Inc., a Valassis company. An additional $200 million was saved in 2010, representing a 5.7% increase from 2009. 

In 2010, marketers distributed more consumer packaged goods (CPG) coupons than the prior year, reaching 332 billion - the largest single-year distribution quantity ever recorded in the United States, exceeding last year's prior record by 6.8% or 21 billion coupons. 

"Marketers are distributing more coupons in the marketplace to reach today's value-centric consumer," said Suzie Brown, Valassis Chief Marketing Officer. "For years, we have heard that the consumer is king and this rings so true today. Shopping and savings go hand in hand." 

Overall, 87.7% of all coupons were distributed in 2010 in the free-standing insert (FSI) coupon booklet. The FSI total growth was 19 billion coupons, the largest volume increase of all media, according to the NCH report. The second largest share of coupons distributed was via handout in-store media, amounting to 5.2% of the 2010 total. NCH also reported a 37% increase in the number of digital coupon offers. 
In addition, the report indicates marketers continue to modify their offering characteristics. The following offer trends reveal: 

bullet

An average $1.46 face value distributed, representing a 6.6% increase from 2009;

bullet

26% required the purchase of two or more items to obtain the offer discount; and

bullet

9.1 weeks average expiration, approximately a week and a half shorter than the prior year, a 14.2% decrease.

Redemption volume in the United States grew 3.1% to 3.3 billion CPG coupons in 2010. The increasing trend in consumer use of coupons was further supported by NCH's Consumer Survey, finding that frugal consumer shopping habits as a result of the recession continued in 2010, maintaining overall high consumer coupon use and an increasing regularity of coupon use. In 2010, the survey reveals that 78.3% regularly use coupons compared to 77% in 2009, 75.8% in 2008 and 63.6% of consumers in the pre-recession survey of 2007. 

"Consumer demand for coupons remained high in 2010 as shopping habits created during the most recent recessionary period sustained throughout the sluggish economic recovery that occurred during the year," said Charlie Brown, NCH Vice President of Marketing. "In fact, a third of the respondents in NCH's Annual Consumer Survey said that they used more coupons in 2010 than the prior year." 

SOURCE Valassis 

wpe4.gif (1222 bytes)    CONSUMERS USE OVER $3.5 BILLION IN COUPONS

01/25/2010 Press Release - Inmar reported today that annual coupon use is on the rise for the first time since 1992 and coupon distribution hit the highest level recorded since the company began tracking trends in 1988.  For the first time in 17 years, consumers used more coupons than they did the year before, with 3.3 billion consumer packaged goods coupons redeemed, an explosive 27% increase over the 2.6 billion redeemed in 2008. The rise in coupon use started in October of 2008, coinciding with news of the U.S. financial crisis.  That has led to five consecutive quarters of double-digit growth (based on percentage change from the same period of the previous year).

The increase in redemption goes hand-in-hand with an increase in distribution. Despite the tight economy, marketers invested heavily in coupons, boosting the number available to the highest level in over 30 years.  Brands issued 367 billion coupons, at an average face value of $1.44, indicating that they were committed to promotions in 2009. Manufacturers understand that in a tough economy, coupons are an effective and efficient way to spend their advertising dollar. "Brands saw coupons as a key to maintaining brand strength," adds Matthew Tilley, Director of Marketing for Inmar's promotion services division.  "If they reduced their promotional presence, they stood to lose sales to lower priced competitors and store brands, so they doubled down hoping to create brand loyalty once the economic dust settles." News America Marketing reported an increase in retailer promotion pages in its free-standing insert (FSI), driven primarily by the shift in advertising and promotion dollars to Shopper Marketing initiatives.

Online coupons also contributed to the rise in coupon distribution and redemption, with Internet distribution up 92% and consumer redemption of these coupons up over 360%. "The weekly prints from SmartSource.com are more than double what we saw a year ago, which was double what our 2007 numbers were," said Aversano. "However, in spite of the meteoric rise in online and digital couponing, the traditional newspaper-distributed FSI still accounts for 89% of all coupons distributed and over half of the coupons redeemed. As coupon numbers across the board were on the rise in 2009, brands were forced to mitigate the cost of increased redemption by maintaining face values and keeping expiration periods in check.  In 2009, face values declined by a penny, reversing a multi-year trend of increasing values.  Expiration periods were shortened by 10% last year, despite years of virtually no change.

wpe4.gif (1222 bytes)      COUPON USE HITS RECORD HIGH

As cash-crunched consumers hunt for bargains, companies hope coupons will build loyalty after the recession is over. After nearly two decades in decline, the coupon is back. Thanks to the recession, in 2009 consumers used coupons at a faster clip than they did the year before – the first increase in coupon redemption in 17 years, says a new study by Inmar Inc. Businesses issued 367 billion coupons last year and consumers redeemed 3.3 billion, a 27 percent increase from 2008's 2.6 billion, and the highest usage since Inmar began tracking trends in 1988.  

Online coupon access increased 92 percent (Google searches for "printable coupons" and "online printable coupons" more than doubled) and redemption of those Internet deals leaped up 360 percent, although the Internet still accounts for only 1.5 percent of all coupons redeemed. The Inmar's study suggests 1 in 5 people who receive an Internet coupon will redeem it. 

Traditional newspaper inserts remain the primary promotional redemption vehicle as 89 percent of coupons are distributed that way, and account for more than half of those redeemed at the checkout counter. But digital discounts, often offered through an ever-increasing number of companies devoted to mobile coupon aggregation may help you lure new customers. The Inmar study suggests companies still see the humble coupon as the way to consumers' hearts. "Brands saw coupons as a key to maintaining brand strength," says Matthew Tilley,

wpe4.gif (1222 bytes)    COUPON DISTRIBUTION INCREASED 12% AND REDEMPTION INCREASED BY 19% IN THE FIRST HALF OF 2009

NCH Marketing Services reported that Consumer Product Good marketers are taking action to the down economy by increasing coupons distributed in the first half of 2009 totaling 158 billion coupons. Coupons distributed during the first half of 2009 increased 12% while the number of coupons redeemed increased 19%. CPG marketers have progressively increased coupon distribution by 23% over the last five quarters. The distribution of HBC product coupons increased 10.4% while the distribution of grocery products increased 12.9% for the first half of 2009.

CPG marketers continue to allocate the majority of their promotional budget for coupon distribution in 2009 to FSI’s (86.2%) followed by Handouts (5%), Direct Mail (3.0%), Magazines (2.6%), In/On Pack & Cross Ruff (1.5%), Newspaper (0.8%), Internet (0.7%) Military (0.1%) and Others (0.1%). Marketers are controlling redemption liability with shorter durations. Multiple purchase coupons decreased from 28% in 2008 to 24% in 2009 while the average coupon duration decreased from 11.2 weeks in the first half of 2008 to 10.9 week for the first half of 2009. The average face value offered decreased from $1.42 in the first half of 2008 to $1.37 for the first half of 2009; however it is an increase over the $1.29 average over the full year 2008.

CPG coupon redemption volume has increased gradually over the last four quarters by 33% as 1.575 billion coupons were redeemed in the first half of 2009. CPG coupon redemption volume increased in all key retail segments led by mass merchandisers (including Supercenters) (30.2%), Grocery stores (16.7%), Drug stores (15.7%) while decreasing at Military Commissaries (8.1%) in the first half of 2009. The average coupon redemption rate for Consumer Product Goods increased by 21.4% on Instant on Pack coupons followed by Internet coupons (16.61%), Electronically dispensed (10.48%), Direct mail (3.80%) and FSI’s (1.05%) for the first half of 2009.

Source: NCH Marketing Services, Inc., Mid-Year 2009 Coupon Facts Report

Return to the top of the page  

wpe4.gif (1222 bytes)        2008 PROMOTIONAL TRENDS REPORT

Promotional spending rose by just 3.5% in 2007, to $45.81 billion, according to Veronis Suhler Stevens Communications Industry Forecast. (Their report covers P-O-P, coupons, licensing, premiums, loyalty programs, product sampling and games, contests and sweepstakes.) Only 30% of marketers expect to increase their consumer promotion budgets this year, compared with 42% in 2007 and 16% are reducing their consumer promotion budgets, which has increased from 7% the previous year. Of the total 37% was spent on consumer promotions, 32% on general advertising, 24% on trade promotions and 7% on other promotions in 2007.

CONSUMER PROMOTIONAL BUDGETS

 

2008

2007

INCREASE BUDGET

30%

42%

STAY THE SAME

41%

38%

DECREASE

16%

7%

DON’T KNOW

11%

12%

NO ANSWER

2%

1%

TRADE PROMOTIONAL BUDGETS

 

2008

2007

INCREASE BUDGET

23%

30%

STAY THE SAME

44%

46%

DECREASE

13%

6%

DON’T KNOW

18%

18%

NO ANSWER

2%

0%

HOW PROMOTIONAL BRANDS ARE EVALUATED

Brand Awareness

54%

Return on Investment

47%

Incremental Sales

39%

Response Rates

39%

Lead Generation

37%

Increased Customer Knowledge

36%

Redemption Rate

25%

Media Impressions

21%

Retention Rates

13%

Trade Sell-in

9%

Other

5%

HOW MARKETERS BASED ROI

INDIVIDUAL CAMPAIGN RESPONSE

49%

TOTAL CAMPAIGN VALUE

34%

PROFIT

31%

TOTAL CUSTOMER VALUE

21%

TOP-LINE REVENUE

18%

OTHER

6%

WHAT DETERMINES AGENCY REVIEWS

CREATIVE WORK

52%

PRICE

48%

SERVICE

36%

CLIENT RELATIONSHIPS

35%

STARTEGIC WORK

27%

PREVIOUS RELATIONSHIP

26%

CATEGORY-SPECIFIC PERFORMANCE

23%

CREDENTIALS

22%

TIME TO MARKET

9%

According to the DMA’s Power of Direct Marketing 2007-2008 report, spending on non-catalog direct mail is set to reach $36.4 billion globally in 2008, up 5.6% from the $34.5 billion spent in the channel last year. That makes direct mail the second highest item in the marketing budget, behind only telemarketing, on which $47 billion will be spent this year. By 2012, the DMA forecasts, non-catalog direct mail spending will reach $44.5 billion for a compound annual growth rate 2007-2012 of 5.2%. The study found that direct mail produces a lower return on investment (ROI) than other media: in 2008, $15.60 for every dollar spent, according to the DMA. That comes in below this year’s anticipated ROI of $45.65 for commercial e-mail and $20.19 for non-e-mail Internet marketing.

Marketers really like e-mail, as about 840 billion messages will hit inboxes by 2013, compared to 418 billion this year. The boom can be attributed to e-mail’s low cost and high return. Spending on e-mail is expected to reach $4 billion by 2012, compared to $3.1 billion in 2008, according to Forrester Research. Companies whose customers have opted in to receive marketing messages are likely to spend 138% more than non opt-in customers, says Jeanniey Mullen, the founder of the Direct Marketing Association’s E-mail Experience Council. These customers also purchase products 25% faster when notified through e-mail about specials, discounts, new products and services. Response rates vary significantly based on the type of e-mail. The costs to send e-mail are dropping as marketers push service providers for volume discounts and the return-on-investment remains strong. Companies average a $48 return for every $1 spent, Mullen says. E-mail budgets are increasing, but not at a significant pace—about 25% to 30% year over year for the last five years.

WHO SENDS E-MAILS

(In Billions)

2008

2013

CONSUMER PRODUCTS

7

13

FINANCIAL SERVICES

5

14

MEDIA & ENTERTAINMENT

9

18

MANUFACTURING (HIGH-TECH)

11

21

BUSINESS SERVICES

13

32

RETAIL & WHOLESALE TRADE

158

258

TRAVEL AND HOSPITALITY

216

482

Source Forrester Research, Inc.

Consumer packaged goods marketers issued 302 billion coupons in 2007, an impressive 6% increase over 2006, or a whopping 16 billion more coupons. They also fine-tuned the mix, reducing the number of offers by more than 8% while increasing the circulation of those offers by nearly 5%. The value of the coupons totaled about $387 billion, a big jump compared to the $337 billion in 2006. Making coupons even more attractive, the average value of an offer increased 10 cents, to $1.28, outpacing the price increases of food for the first time. Consumers turned in $2.8 billion of the total $387 billion in available coupon value, or $8.57 per person. That added up to 2.6 billion coupons redeemed in 2007, or 2.6%, the first time since 1992 that redemption did not decline. Internet coupons redeemed at 1.82%.

NCH Marketing, a promotional marketing services company, also reported an increase, albeit a smaller one. It reported that of the overall 285 billion consumer packaged goods coupons offered, the share of grocery coupons distributed grew to 66.8%, or 190 billion, in 2007, from 63.9% in 2006. On the other hand, coupons for health and beauty products dipped to 33.2%, or 94.8 billion coupons, from 36.1% in 2006, NCH found. Free-standing inserts continue to lead the way marketers distribute coupons (88.1%), followed by handouts (4.7%), direct mail (2.2%), magazines (2.1%), newspapers (1.2%), in/on-pack (1.2%), Internet (0.4%) and military (0.1%)..Eight-nine percent of consumers surveyed said they use the coupons, with 64% using them with "some regularity." NCH also found that for the first time in over a decade, redemption had not declined but remained flat with last year at 2.6%. Marketers cut the average redemption time down from 2.9 months to 2.5 months in a bid to suppress redemption’s and cut costs.

Event marketing is hitting a high note in these low economic times by enabling marketers to stage effective, efficient promotions as an alternative to pricier media messages. Stevenson Communications Industry Forecast, growing 12.2% to $19.18 billion, up from $17.1 billion the year before. Companies will drop about $1.86 billion on games, contests and sweepstakes this year, about flat with $1.83 billion in 2006, a trend that has continued over the last five years, according to the Veronis Suhler Stevenson Communications Industry Forecast.

GAMES, CONTESTS AND SWEEPSTAKES SPENDING

2002

$1.796 BILLION

2005

$1.804 BILLION

2008

$1.854 BILLION

Retail sales of licensed products in North America remained flat at an estimated $107.8 billion in 2007, from $107.4 billion in 2006, the result of soft economic conditions, according to the International Licensing Industry Merchandisers’ Association (LIMA). Royalties also remained about flat, slipping 0.8% to $5.98 billion last year after three consecutive years of growth. Trademarks and brands, the second largest licensing category, dropped 2.7% last year, to an estimated $19 billion in retail sales, and rang up $1.09 billion in royalties. Sports followed at about $14.7 billion, bringing in $815 million in royalties. Despite a 1.2% dip from 2006, the category remains healthy, Brochstein says.Fashion generated about $14.6 billion in sales, while royalties dipped by 2.4%, to $810 million. Overall spending on promotions tied to loyalty programs showed modest growth last year—approximately $2.1 billion, a 3.6% rise over the $2 billion spent in the previous year, according to the Veronis Suhler Stevenson Communications Industry Forecast.

LOYALTY PROMOTION SPENDING

YEAR

2003

2004

2005

2006

2007

SPENDING (IN MILLIONS)

$1,902

$1,991

$2,010

$2,060

$2,134

GROWTH

2.2%

4.7%

1.0%

2.5%

3.6%

According to estimates from marketing research firm eMarketer, total U.S. mobile advertising spending will reach $1.7 billion this year, up from $878 million in 2007, and should hit $6.5 billion by 2012. Sales of promotional products jumped 3.5%, to $19.4 billion, in 2007, a new record, the association says. Apparel is the top category at 30.7%, followed by writing instruments (10.3%), bags (7%), drink ware (6.3%) and desk/office/business accessories (6.1%). Nearly half of the respondents to Promo’s 2008 Premiums and Incentives Survey said they hand out premiums at events or on tours. And premiums appear to deliver better ROI (55%) compared to ad specialties (15%), the survey found.

Paid product placement was a particularly bright spot last year, as spending grew 33.7% to the $2.9 billion mark, from $2.2 billion in 2006, even though it was the slowest rate of growth since 2003, according to the Veronis Suhler Stevenson Communications Industry Forecast. Most of that growth was on television, 71.6%, because of the frequency, exposure and reach that TV series offer. Films took 25% of the spending. Other media, such as newspapers, magazines, videogames, the Internet, books, recorded music and radio, made up the other 3.4%, the report found.

P-O-P is also playing a bigger role. Marketers increased spending on PO-P by 5.2% last year, to $20.3 billion, making it the largest consumer promotions category, according to the Veronis Suhler Stevenson Communications Industry Forecast. P-O-P was the biggest expense for 8.6% of marketers last year, according to Promo’s 2008 Marketer Trends Study. Some 73% of consumer packaged goods manufacturers and 86% of retailers ranked shopper marketing programs among the top-four activities that deliver meaningful ROI, according to a recent study by Deloitte Consulting LLP.

According to the Veronis Suhler Stevenson Communications Industry Forecast, marketers will spend almost $2.3 billion on product sampling in 2008, an increase of about 5% over the $2.15 billion spent in the same channel last year.

Return to the top of the page  

      NCH REPORTS 285 BILLION COUPONS DISTRIBUTED IN 2007

U.S. consumer packaged goods manufacturers once again increased the total number of coupons offered to consumers. Distribution volume grew by six billion or 2.2 percent in 2007 to 285 billion. This growth was attributed to an increase in coupons issued for Grocery products. The share of Free Standing Inserts (FSIs), Direct Mail, Magazine and Internet media grew in 2007. FSIs now account for 88 percent of all coupons distributed. The share of coupons issued via Handouts declined by 1.1 percentage points.

In addition to offering more coupons, CPG companies have continued to increase the average value of coupons. The average face value distributed across all U.S. CPG companies increased by $.05 in 2007. Although marketers are making more coupons available with higher face values, they are continuing to increase their use of tactics that suppress redemption. The overall use of multiple purchase requirement coupons remains high (up one percentage point to 27 percent of all coupons distributed). Further, the monthly duration trend has reached two and a half months versus the previously popular three month duration.

Despite the increased use of such tactics, redemption volume did not go down in 2007. In fact, for the first time since 1992, total CPG redemption volume remained flat compared to the prior year. The Grocery segment saw a six percent growth in redemption volume from that segment’s increased promotional activity. This change may also be explained, in part, by broader economic factors, such as rising energy and food prices, a shaky housing market and slower economic growth. As consumers feel the impact of these changes, they may increasingly look for opportunities to save money, including coupons.

In 2007, 89 percent of the participants in NCH’s annual Consumer Survey indicated they use coupons at supermarkets. They use coupons to plan their shopping lists (86 percent), choose the brands they will buy (92 percent) and try new brands (94 percent). Engaged consumers continue to seek more coupons when making product purchases.  For more detailed information, go to www.nchmarketing.com or you can click here.

Return to the top of the page

       FSI DELIVER 253 BILLION COUPONS WORTH $300 BILLION IN 2006

Marketers distributed 253 billion coupons via FSIs last year, worth more than $300 billion in discounts to shoppers. The number of FSI pages hit a record 200 billion, up just over 1% for the year, according to FSI tracking service Marx Promotion Intelligence, Minneapolis.

Although the number of coupons slipped 0.1% from 2005, page volume grew 1.1% to a record level. Average coupon face values also achieved record levels, rising 4% to $1.19. Coupons from nonfood consumer packaged goods drove this growth, rising 3.6% to $1.45, according to the 2006 Marx FSI Distribution Trends Report.

Packaged goods brands accounted for 67.4% of all FSI pages, followed by direct response ads (23.4%) and franchised restaurants (9.2%). Among packaged goods, non-food brands ran 2.7% more coupons than they did in 2005, and food brands ran 3.9% fewer, according to Marx’s annual FSI Distribution Trends Report. The firm does not track coupon redemption.

The top 10 product categories for coupon distribution were:

bulletHousehold cleaning products (12.4 million coupons, down 5.7%)
bulletPet food and treats (12.3 million coupons, up 12.4%)
bulletRug and room deodorizers (10.8 million coupons, up 15%)
bulletCross-category personal care (10.5 million coupons, up 7.5%)
bulletSnacks (7.2 million coupons, down 3.4%)
bulletCough, cold, sinus and allergy (6.7 million coupons, up 4.7%)
bulletHair care products (6.2 million, up 0.8%)
bulletVitamins (6 million, down 14.7%)
bulletDishwashing soap (5.5 million, up 5.9%)
bulletCereal (5.5 million, down 8.2%)

The 10 manufacturers that dropped the most coupons last year were Procter & Gamble; General Mills; SC Johnson & Son; Unilever; Reckitt Benckiser; Nestle; Johnson & Johnson; Altria Group (including Kraft Foods); Colgate-Palmolive Co. and Kimberly-Clark Corp.

New product launches have always been a strong catalyst for couponing, and 2006 was no exception: Marx tallied coupon support for 384 product launches from packaged goods brands. "Consumers continue to seek out FSIs to be exposed to new products, gain additional product information, benefit from purchase incentives, and plan their shopping trips," said Marx Chief Operating Officer Mark Nesbitt in a statement. Sunday newspaper FSIs reached an average of nearly 70 million households each week. The heaviest activity came just before Easter (April 2, 144 FSI pages) and Thanksgiving (Nov. 11, 128 FSI pages).

Return to the top of the page  

wpe4.gif (1222 bytes)       AVERAGE FSI FACE VALUE UP 8.6% IN FIRST HALF OF 2006

During the first six months of 2006, the average face value of Free Standing Inserts (FSIs) increased 8.6 percent to $1.18 vs. the same period in 2005. It is the largest average face value for a half year period on record. According to the Marx Promotion Intelligence FSI Trend Report, this trend is being fueled primarily by the expanded use of FSI coupons for high-value products increasingly being added to the grocery channel. Face values for high-value products averaged $4.07 during the first half of 2006, up 20% from the same period in 2005. "Marketers continue to leverage FSIs to provide impression value and reach while delivering consumer incentive and brand messaging," said Mark Nesbitt, chief operating officer, Marx Promotion Intelligence/ TNS Media Intelligence. "However, it is evident that high-value consumer promotions have emerged as an effective tactic as innovative new products are introduced and traditional retail channels continue to blur."

High value products using FSIs include many personal care items and household cleaning products. Examples include: teeth whitening kits (Colgate Simply White, Crest Night Effects and Crest WhiteStrips), diabetes care (OneTouch Blood Glucose Monitoring System), portable air treatment systems (Febreze ScentStories, Air Wick FreshMatic, Glade Wisp), and disposable toilet cleaning systems (Clorox Toilet Wand, Scrubbing Bubbles Fresh Brush).

In the first half of 2006, average face values of coupons rose 10.9% across all non-food segments, versus same period 2005. The household products category led this trend with a 22% increase to $1.11 driven by expanded activity in support of high-value products. Coupons for non-food items decreased 2.7 percent versus record levels in the first half of 2005. Personal care and household products segments had slight increases in coupon distribution of 0.4 percent and 0.3 percent respectively, while the health care segment had a decrease of 7.9 percent. Average face values of coupons among food categories rose 2.2 percent to $0.82, led by refrigerated foods with an 8.2 percent increase to $0.74. The cereal category posted a 7.1 percent decline to $0.83. Coupons for food items decreased 6.5 percent versus record levels last year, although refrigerated foods had a 3.9 percent increase in coupon circulation.

During the first half of 2006, more than 130 billion coupons were delivered via FSIs in Sunday newspapers. The amount was down 4.2 percent from the same period in 2005, which was the most active six-month period on record for FSI activity. This decrease in coupons corresponds with a 2.2 percent decrease in total pages.

Through the Coupon Council, PMA gathers statistics about the coupon industry. Here are some of them:

bulletThree of four (76%) of U.S. consumers use coupons.
bulletShoppers save nearly $3 billion annually by using coupons.
bulletCPG manufactures offered more than $300 billion in coupon savings in 2004.
bulletCoupon users report an average of 11.5% savings on their grocery bill with coupons.
bulletNearly half of retailers (46%) reported offering shoppers some form of a bonus coupon program in 2004.

Return to the top of the page  

wpe4.gif (1222 bytes)    CIC PROPOSES ADDING HOLOGRAM TO DETER GROWING COUNTERFEITING

The Coupon Information Corporation (CIC) is urging CPG manufacturers to add a special hologram to their Free Product and high-value coupons to deter counterfeiting. The proposed implementation date for this Voluntary Best Practice developed by the CIC is Sept. 1, 2006. "Counterfeit coupons have cost manufacturers millions of dollars and have created numerous costs and challenges for retailers. It is hoped that this Best Practice will provide a reasonable, cost-effective solution for the entire industry," said Bud Miller, executive director, CIC, Alexandria, Va.

The anti-counterfeiting device is a hologram designed to enhance the standard "Manufacturer’s Coupon and Expiration Date" wording on a coupon. The words are legible when viewed directly. When the coupon is titled slightly and viewed, a bright diffractive security image (the CIC logo) covers up the words "Manufacturer’s Coupon" and the actual expiration date. In the "Terms and Conditions" listed on the coupon, CIC recommends adding a statement that the coupon is valid only if it has a hologram on it. Two suggestions: "Void Without Hologram" and "Security Feature: Hologram."

CIC is making the artwork of the hologram available free of charge to all product manufacturers, whether they are CIC members or not. To receive an electronic image of the CIC logo for use as an anti-counterfeiting device, contact CIC at (703) 684-5307. "A company has just done a prototype that we passed on to our members," he said. "Several manufacturers are aggressively working to implement it. Our recommendation is that they should start hitting the market in September. "There will be some transition time," he continued. "We hope it becomes a universal practice over the next year. Obviously, we have no magic wand to make that happen. We have letters out to about 250 manufacturers. It is a voluntary practice, but the more companies that use it, the more secure it will be. This is the first time we are doing anything like this. But the counterfeiting problem is growing and it needs to be stopped in a systemic way."

The Voluntary Best Practice has been endorsed by the Association of Coupon Professionals (ACP) and praised by industry experts. "It is a way to allow for high value coupons to be distributed and decrease the possibility of counterfeiting. It will require a strong industry push to get the word out to manufacturers, retailers and consumers to make this practice work. But it allows the industry to continue to provide incentives directly to consumers to use products," said John Irwin, president of ACP. Charles Brown, vice president of marketing for NCH Marketing Services, said the CIC should be commended for taking a leadership approach in developing the best practice hologram. "We’ll suggest it to any clients who choose to issue free coupons in appropriate media," he said. "In reality, with all the formats of coupons in circulation, a hologram on what is hoped to be most free coupons still won’t be fool-proof for cashiers, but hopefully it is a deterrent against counterfeiters even attempting to pass a bogus free coupon.
"There is no panacea solution," he added, "but continued diligence with coupon design best practices such as the CIC’s hologram recommendation, increased investment in fraud detection and prosecution, and greater consumer awareness will go a long way to enhance the deterrence effect needed for a healthy industry."

According to Miller, counterfeit coupons over the years have ranged from amateurish home-made versions to high-quality, professional ones virtually identical to those issued by manufacturers.
"Unfortunately, even the amateurish coupons are often accepted for redemption, creating liabilities for a variety of industry participants," he said. "Once a counterfeit is accepted, someone -- whether it is a manufacturer or a retailer -- is going to have to pay for it, creating uncontrollable liabilities and unnecessary trade relations issues." Counterfeiters have forced retailers to be more aggressive in reviewing coupons at the check out lane, according to Miller. The increase in front-end security procedures has created consumer discomfort, increased costs, and lengthened lines. "There are a number of anti-counterfeiting techniques available to the industry," he said. "The effectiveness of these techniques varies. However, the number of potential solutions means that cashiers are seldom trained in all of the available loss prevention techniques. Any anti-counterfeiting solution should increase overall cashier efficiency and reduce consumer challenges by being instantly recognizable." Miller said some manufacturers have recently begun using foil technologies to print entire coupons. Since these can reasonably be considered to be counterfeit resistant, a hologram is not necessary for these types of coupons.

Return to the top of the page  

COUPON DISTRIBUTION INCREASES 10% FOR 2005

Coupon redemption declined 6% in 2005, while distribution increased 10% last year to 323 billion coupons. For several years, coupon face values have increased 8-9%, compared to the 1-2% in prices. The average coupon value is $1.16. Overall, coupon distribution is up 10%, with 6% for non-food categories and 3% for food coupons. Meanwhile, redemption is up 20% for food, but down 29% for non-food categories. The number of coupons requiring multiple purchases is down. In the non-food category, consumers are 30% more likely to use a buy-two coupon than a buy-one. In food, they are actually 14% more likely to use a buy-four than a buy-one. And overall, across food and non-food consumers are 49% more likely to use buy-four and 18% more likely to use buy-three than to use a buy-one. Most of the increased redemption can be seen with in-store coupons as about a third of redemption’s are from in-store distribution. The Internet accounts for less than 2/10ths of a percentage of coupon distribution and redemption, however, they are reaching their targets.

Minority group such as Hispanics and African-Americans are undeserved markets in terms of coupons. CPG marketers are seeking consumers more than ever before by using targeted distribution methods. Marx Promotion Intelligence reports that during the first six months of 2006, Free Standing Insert (FSI) average face value increased 8.6 percent to $1.18 versus the same period in 2005. It is the largest average face value for a half year period on record. This trend is being driven primarily by the expanded use of FSI coupons for high-value products which are increasingly being added to the grocery channel such as Teeth Whitening Kits, Diabetes Care Products, Portable Air Treatment Systems and Disposable Toilet Cleaning Systems. Face values for high-value products averaged $4.07 during the first half of 2006, up 20 percent from the same period in 2005.

Return to the top of the page  

       AVERAGE FSI FACE VALUE UP 8.6% IN FIRST HALF OF 2006

During the first six months of 2006, the average face value of Free Standing Inserts (FSIs) increased 8.6 percent to $1.18 vs. the same period in 2005. It is the largest average face value for a half year period on record.

According to the Marx Promotion Intelligence FSI Trend Report, this trend is being fueled primarily by the expanded use of FSI coupons for high-value products increasingly being added to the grocery channel. Face values for high-value products averaged $4.07 during the first half of 2006, up 20% from the same period in 2005.

"Marketers continue to leverage FSIs to provide impression value and reach while delivering consumer incentive and brand messaging," said Mark Nesbitt, chief operating officer, Marx Promotion Intelligence/ TNS Media Intelligence. "However, it is evident that high-value consumer promotions have emerged as an effective tactic as innovative new products are introduced and traditional retail channels continue to blur."

High value products using FSIs include many personal care items and household cleaning products. Examples include: teeth whitening kits (Colgate Simply White, Crest Night Effects and Crest WhiteStrips), diabetes care (OneTouch Blood Glucose Monitoring System), portable air treatment systems (Febreze ScentStories, Air Wick FreshMatic, Glade Wisp), and disposable toilet cleaning systems (Clorox Toilet Wand, Scrubbing Bubbles Fresh Brush).

In the first half of 2006, average face values of coupons rose 10.9% across all non-food segments, versus same period 2005. The household products category led this trend with a 22% increase to $1.11 driven by expanded activity in support of high-value products. Coupons for non-food items decreased 2.7 percent versus record levels in the first half of 2005. Personal care and household products segments had slight increases in coupon distribution of 0.4 percent and 0.3 percent respectively, while the health care segment had a decrease of 7.9 percent.

Average face values of coupons among food categories rose 2.2 percent to $0.82, led by refrigerated foods with an 8.2 percent increase to $0.74. The cereal category posted a 7.1 percent decline to $0.83.

Coupons for food items decreased 6.5 percent versus record levels last year, although refrigerated foods had a 3.9 percent increase in coupon circulation.

During the first half of 2006, more than 130 billion coupons were delivered via FSIs in Sunday newspapers. The amount was down 4.2 percent from the same period in 2005, which was the most active six-month period on record for FSI activity. This decrease in coupons corresponds with a 2.2 percent decrease in total pages.


Through the Coupon Council, PMA gathers statistics about the coupon industry. Here are some of them:

bulletThree of four (76%) of U.S. consumers use coupons.
bulletShoppers save nearly $3 billion annually by using coupons.
bulletCPG manufactures offered more than $300 billion in coupon savings in 2004.
bulletCoupon users report an average of 11.5% savings on their grocery bill with coupons.
bulletNearly half of retailers (46%) reported offering shoppers some form of a bonus coupon program in 2004.

Return to the top of the page  

COUPON DISTRIBUTION INCREASES 10% FOR 2005

Coupon redemption declined 6% in 2005, while distribution increased 10% last year to 323 billion coupons. For several years, coupon face values have increased 8-9%, compared to the 1-2% in prices. The average coupon value is $1.16. Overall, coupon distribution is up 10%, with 6% for non-food categories and 3% for food coupons. Meanwhile, redemption is up 20% for food, but down 29% for non-food categories. The number of coupons requiring multiple purchases is down. In the non-food category, consumers are 30% more likely to use a buy-two coupon than a buy-one. In food, they are actually 14% more likely to use a buy-four than a buy-one. And overall, across food and non-food consumers are 49% more likely to use buy-four and 18% more likely to use buy-three than to use a buy-one. Most of the increased redemption can be seen with in-store coupons as about a third of redemption’s are from in-store distribution. The Internet accounts for less than 2/10ths of a percentage of coupon distribution and redemption, however, they are reaching their targets.

Minority group such as Hispanics and African-Americans are undeserved markets in terms of coupons. CPG marketers are seeking consumers more than ever before by using targeted distribution methods. Marx Promotion Intelligence reports that during the first six months of 2006, Free Standing Insert (FSI) average face value increased 8.6 percent to $1.18 versus the same period in 2005. It is the largest average face value for a half year period on record. This trend is being driven primarily by the expanded use of FSI coupons for high-value products which are increasingly being added to the grocery channel such as Teeth Whitening Kits, Diabetes Care Products, Portable Air Treatment Systems and Disposable Toilet Cleaning Systems. Face values for high-value products averaged $4.07 during the first half of 2006, up 20 percent from the same period in 2005.

COUPON SPENDING INCREASED 4.5 PERCENT TO $6.8 BILLION IN 2002

The number of CPG coupons printed and issued also rose, jumping 3.8 percent to 248 billion in 2002, after posting a drop for the first time in five years in 2001, according to NCH Marketing Services, estimates that the number of coupons distributed rose 3.4 percent to 336 billion. The average expiration period also dropped 4.8 percent, to around three months, giving consumers less time to redeem coupons.

Coupons distributed via FSI rose to 86 percent per NCH, while handout co-op, handout off-store location, in-ad, in-pack, in-pack cross ruff, instant redeemable, Internet, and Sunday supplement coupons also gained ground. Electronic distribution accounted for 8.8 percent of total redemption, while Internet coupons measured 0.2 percent of total redemption.

Much of the growth was propelled by Procter & Gamble, which ran its own branded insert eight times in 2002. Others, such as H.J. Heinz, Nestlé, and ConAgra, either developed their own brand-saver inserts or bought out the whole first section of a co-op FSI, as Kraft did with its Friends & Family program.

In 2002 a whopping 71 percent said coupons save them a lot of money, compared to just 50.9 percent in 2001, according to an NCH poll. However, redemption rates fell again in 2002, down 5.4 percent to 3.7 billion. And while the number of consumers who say they sometimes use coupons increased to 37.6 percent compared to 36.6 percent in 2001, the number of respondents who always use coupons fell from 21.3 percent to 18.5 percent, per NCH. The number of consumers who rarely use coupons rose from 17.9 percent to 23.3 percent.

One boon for the industry is the increased coupon use among Hispanic consumers. More than 65 percent of Hispanics reported using coupons, according to a separate NCH survey. More manufacturers, consequently, are starting to produce double-sided coupons in both English and Spanish.

Return to the top of the page

CPG Coupon Distribution Rebounds as Large Companies' Corporate Events Drive Volume Up

The total number of manufacturer coupons printed and distributed by consumer-packaged goods (CPG) companies grew by 3.8% to 248 billion in the United States during 2002, as measured by NCH Marketing Services. Health & Beauty Care (HBC) products saw the largest increase, up 15.9% and volume was driven up by large companies who issued more coupons to consumers through corporate events in solo and co-op Sunday free standing inserts (FSIs).

The second half of 2002 saw a rebound of coupon events growing by almost 10% compared to the second half of 2001, which had been greatly impacted by September 11th, the economic downturn and an overall advertising and promotional spending decline. The positive rebound of 2002 was seen in many types of coupon media, including in and onpack, Internet, electronically dispensed, run-of-press (ROP) newspaper and FSIs.

FSIs continue to increase their share of all coupons distributed, rising to 86% of the 248 billion manufacturer coupons in 2002. Most notable in the FSI increase is the volume driven by national corporate solo events such as Procter & Gamble’s Brand Saver insert, and Kraft’s Food & Family insert. Additionally, other large corporations like Campbell’s,

ConAgra, and Nestle, with many brands across several categories, have created corporate group events over the first six to ten pages of co-op FSIs that feature many of their products in one congruent campaign. Such events provide significant corporate branding and consumer recognition opportunities with coupons.

Internet coupons experienced continued growth of over a 50% increase in distribution volume in each of the previous three years. Handout coupons remain the second most frequently used medium to issue coupons, which includes in-store, on-shelf, electronically dispensed and with samples. [Chart A]

“Consumers interest in all types of coupons grew in the past year, as primary grocery shoppers looked for ways to economize on their family budget, choosing brands offering coupons that they know and trust and forming positive connections with new products,” said Charles Brown, vice president of marketing for NCH. Today, 84% of shoppers report they use coupons while shopping for grocery, health care, and household items at supermarkets, mass merchandisers, and drug chains, and 71% say "coupons save me a lot of money," up from 51% a year earlier,  according to NCH’s 2002 Consumer Survey.

Consumers’ attitudes toward coupon values are changing. Now, 71% of consumers agree that coupons save them a lot of money, compared to only 51% of consumers in 2001. [Chart B]  

The savings value may be more reflective of the perceived need to economize, than the actual savings offered by manufacturers. Average face values offered and distributed on coupons increased by 4 cents to $0.89 overall in 2002, however, coupons with multiple purchase requirements rose two percentage points to 26% of coupon distribution, effectively counteracting the face value increase. With multiple purchase requirements, the average value offered per product item purchased is really only $0.77, a gap of $0.12 per item versus the printed face value. “The savings per item gap has offset the increased face value offered to consumers, making coupons less attractive to redeem,” said Brown.

Consumers saved more than $3 billion by redeeming CPG coupons in 2002, or $0.80 per coupon redeemed on average. “The $0.80 average savings obtained by consumers in using coupons continued a departure from the typical trend when in 2001, for the first time ever, the average face value redeemed declined and dropped below the average face value distributed,” noted Brown. “This was true again in 2002, and is due to many of the higher face value coupons requiring consumers to purchase multiple items (two or more) in order to redeem the coupon. Consumers are less likely to redeem those coupons, and instead, choose single purchase, lower face value offers.”

Additionally, coupons that are good for multi-brands or good universally across an entire product group saw a significant increase in usage among marketers last year, up 22% in distribution volume. “This type of multi-brand coupon first became popular when the Post brand of cereals introduced a universal coupon in 1996. Although in the last two years we had seen a declining usage of the technique, there was a big upswing again in 2002,” noted Brown.

The return on investment (ROI) for the marketer using multi-brand coupons can be excellent, because they offer high perceived face values, but often also move two or more product items with multiple purchase requirements, all in one distribution buy. In 2002, however, the complexity and clutter of multi-brand and universal coupons, worked to suppress redemption, as the average redemption rate for those offers dropped to 1.5% from 1.8% in the prior year. Multi-brand and universal coupons carrying purchase requirements of two or more items grew to 40% of all such coupons distributed, which contributed to the decline in redemption.

Consumers also had less time to redeem the coupons distributed in 2002. The overall duration of offers was dramatically shortened, by nine days less, to an average of only 12.6 weeks, down from 13.9 weeks in 2001. “This is the first time ever in the United

States that we have seen offers with this short a duration since NCH began tracking worldwide coupon trends nearly 40 years ago,” said Brown. “Throughout the 90’s, an average expiration date of three and a half months was typical for all coupons. Now consumers have less time than ever to use a coupon, as many Sunday FSI coupons have only eight to ten weeks as a typical expiration date,” noted Brown.

Consumers reacted negatively to the shortened period of time available to use their coupons in 2002. NCH’s Consumer Survey showed a dramatic increase in the number of consumers who said coupons expire before they have a chance to use them. In 2002, 69% of consumers said coupons expire too soon, compared to only 53% of consumers in 2001 when duration averaged more than three months.

These suppressing offer characteristics generated a total redemption volume of 3.8 billion coupons in the United States, a reduction of 5% compared to the year prior. “To balance budgets, marketers continued to increasingly use multiple purchase requirements, while also shortening the expiration period of coupons by more than one week, significantly reducing the usability and attractiveness of coupons for consumers by 20%, in spite of the increased quantities printed,” said Brown. The NCH Coupon Attractiveness Index measures the offer attributes of expiration date, face value and multiple purchases in combination to show the overall effect on consumers’ propensity to redeem. The NCH

Coupon Attractiveness Index dropped seven points to 51 points in 2002, after several years of holding relatively steady. All in all, redemption attractiveness is far less than it once was for manufacturer coupons. [Chart C]

Not all coupons are designed to be redeemed; in fact, an opposite 20% increase in the Coupon Attractiveness Index would exceed most marketers’ budgets. It is a balancing act between motivating consumer response, supporting retail sell-through and creating advertising value from the coupon, while also maintaining control of the promotion budget. In the past year, marketers have suppressed redemption due to a number of factors, including the new Financial Accounting Standards Board (FASB) ruling requiring redemption cost to be accounted for as a direct reduction of revenue, and the impact of a rising cost per coupon redeemed for many traditional grocery channel retailers and wholesalers – especially influential to the small and mid-size coupon volume manufacturers.

The grocery channel represents the largest portion of all coupons redeemed; however, the share of coupons going through traditional supermarkets has been declining as more shopping shifts to other channels. Evidence is seen even within the top five retail redeemers of coupons in the United States:

Rank

Retailer

1

Kroger

2

Wal-Mart

3

Ahold

4

Military Commissaries

5

Safeway

 

 

 

 
“As more and more consumers shop for grocery items in alternative channels like discount, dollar and drug stores, I would expect to see Wal-Mart outpace Kroger as the largest redeemer of coupons, as well as, a continued shift in the landscape of where coupon use occurs,” said Brown. “The impact of a rising cost per coupon redeemed combined with the lack of merchandising around coupon events within the traditional grocery channel would seem to be counterproductive to competing with the emerging channels.”

  TOP 20 DISTRIBUTION CATEGORIES

2002
Rank

2001
Rank


  Category

1

1

Household Cleaners

2

6

Prepared Foods

3

7

Detergents

4

2

Medications/Health Aids

5

4

Paper Products

6

3

Condiments/Gravies

7

8

Personal Soap/Bath

8

5

Frozen Prepared Foods

9

9

Cereal

10

24

Skin Care Preparations

11

16

Cough & Cold Remedies

12

22

Fresheners/Deodorizers

13

17

Pet Treats

14

21

Laundry Supplies

15

13

Toothpaste

1

39

Oral Hygiene

17

15

Vitamins

18

11

Packaged Meats

19

10

Snacks

20

14

Canned Vegetables

Source: NCH Marketing Services

 

 

 

 

 

 

 

 

 

 

 

 

 
Coupons continue to be used successfully by marketers for new product introductions, as seen last year particularly among health and beauty care items, where seven of the ten fastest growing categories for coupon distribution were HBC products. The highest growth in coupon distribution volume for 2002 came in the Oral Hygiene category where many promotions were seen for the introduction of teeth whitening products. While HBC products saw a 15.9% increase in total coupon distribution volume, grocery products declined in total by 2.7%. Among the categories with the largest volume of coupons distributed, Prepared Foods and Detergents moved up the ranks to No. 2 and No. 3 respectively, following Household Cleaners, which held the No. 1 spot for two years in a row.

Return to the top of the page

COUPON REDEMPTION DECLINES 10% IN 2002 TO 110 MILLION IN CANADA

Coupons provide consumers with significant savings on the products they buy in supermarkets, drug stores and mass merchandisers.   Coupons influence promotional activity that increases brand and category sales without affecting the base price that consumers are willing to pay for a brand. 

Even though Canadian marketers distributed 2.32 billion coupons to consumers in 2002, the amount of couponing activity in Canada declined year-over-year, with marketers distributing 13% fewer coupons to consumers. 

This decline in coupon activity began during the last 4 months of 2001, and increased after the September 11 tragedy.  At that time there was reluctance by marketers to commit to new promotional spending which affected 2002-couponing activity. Several major marketers did not repeat major coupon programs that they had conducted in late 2000 and early 2001.

Coupon distribution continued to be strong in some categories like Cold Beverages, Dairy, Over-the-Counter Medicines, Infant Care and Premium Pet Food.  Among the major methods of distribution, only the Free Standing Insert maintained its levels from a year earlier.

While redemption volumes declined by 10%, to 110 million coupons, the amount of Free Standing Insert coupons redeemed increased because of higher average redemption rates and stable volumes. The overall decline in redemption was led by the amount of In/On Package and In Store couponing. 

The average face value remained at $1.25 per coupon distributed, the same as in 2001.  Coupon values continued to be influenced by much higher value offers on Pet Food, Over-the-Counter Medicines, Infant Care and Household Products.  Food Product coupons, however, had a below average value of 75¢.  

Couponing on Household Care, Infant Care and Pet Foods and Products accounted for 30% of all coupons distributed in 2002 up from 26% a year earlier. This growth offset some of the decline in couponing in the food and personal care categories.  Coupons on food products accounted for 39% of all coupons distributed, which is a decrease of one percentage point year-over-year.  Food product coupons, however, continued to account for more than 50% of all coupons redeemed.  Coupons on high purchase frequency food products achieve above higher redemption rates even though face values are lower than in other categories.  As a result, the average face value of coupons redeemed remained lower than the value distributed.

Among all of the major media, only Free Standing Inserts (FSI) maintained its volume of coupons distributed, year-over-year.  The FSI accounted for 64% of all coupons distributed in 2002, which is up by 9 points over 2001.  FSI’s are newspaper inserts that contain coupon advertising and other consumer offers, and are delivered to 5.5 million homes twice each month. 

Return to the top of the page

       ONLINE COUPONS INCREASE 111 PERCENT TO 242 MILLION IN 2002

Consumer Product Goods (CPG) marketers are beginning to devote more of their budgets to online marketing. They are offering coupons that customers can print out at home and redeem at the store. Consumers downloaded about 242 million coupons last year, an increase of 111 percent over the 114 million downloaded in 2001, according to Carolina Manufacturer Services Incorporated. Of those, 7.6 million were redeemed, which is more than a 400 percent increase from the 1.7 million in 2001. But online coupons remain less than one percent share of the coupon market. More than 335 billion paper coupons were distributed last year, with 3.7 billion being redeemed for a total of $3.1 billion.

One company that has used online coupons extensively stated that they spend 20 percent less to acquire each new customer in marketing campaigns that include coupons, compared with noncoupon campaigns. One benefit of using online coupons is the ability to track such statistics. When the coupon is downloaded, users give the company their name, e-mail address and other information. The coupon's code is tied to each individual user, so when it is redeemed, the company knows who redeemed it and where.

The SmartSource iGroup, which includes the online coupon unit (SmartSource.com) of the News Corporation's News America Marketing Division. works similarly to many other online coupon sites. Users register with the site, including details about family members' ages, gender and pets, along with the names of stores where they shop. After that, users have free access to 30 to 35 coupons on a given day, worth about $14. Manufacturers pay SmartSource an undisclosed fee each time a consumer redeems a coupon. "We're seeing companies start to budget for this, which hasn't happened before," said Bill Christie, SmartSource's president.

Other coupon providers include CoolSavings, which offers discounts and coupons for online and off-line companies, and E-centives. CoolSavings last year began to offer coupons on sites other than its own, a service that Coupons Incorporated and E-centives also provide. Manufacturers often place the coupons on their own sites, where they can have more control over the presentation.

Coupons Incorporated distributes coupons on behalf of more than 200 Web sites, according to its chief executive, Steven Boal. Mr. Boal said that there were no definitive statistics on the size of the online coupon industry but that what marketers pay for the coupon distribution and redemption process is probably in the neighborhood of $50 million per year compared with the $2 billion that marketers spend annually delivering coupons in Sunday newspapers.

Grocery executives are showing more interest in online marketing because the typical Internet user is much like customers who come into their stores. A recent report by Forrester Research, a technology research firm, found that 50 million households in the United States qualify as middle income, defined as earning from $25,000 to $75,000 a year. Of those, 69 percent are now online. A Forrester analyst said those Internet users are obvious potential customers for online coupons because they tend to be the heaviest off-line coupon clippers.

Return to the top of the page

2002 REPORTS ON THE 2001 COUPON TRENDS

    STATE OF THE COUPON INDUSTRY 2002 MID YEAR TRENDS RESULTS

At the Joint Industry Coupon Conference held in Coronado, California on September 30 - October 1, 2002, Dick DiBlasio delivered the "State of the Coupon Industry" address. DiBlasio indicated that changing economic conditions, shifting consumer demographics, and continuing retail consolidation are affecting the coupon industry.  Over the past several months’ consumer confidence has been flat, reflecting the uneasiness of the economy.  Interest rates are down and economic growth is slow.  To save money, consumers are looking in newspapers for specials, participating in frequent shopper programs, stocking up on sale items, comparing prices, and using manufacturer and retailer cents-off coupons. 

Consumer demographics are changing.  Hispanic and Asian populations in the U.S. are growing.  Together, they now account for more than 15% of the total U.S. population.  These ethnic groups may be unfamiliar with or new to cents-off coupons; therefore, marketers must employ new strategies to reach and inform these consumers.

Retail consolidation continues to affect the coupon industry. Based on A.C.V., the top ten U.S. supermarket retailers now comprise 50% of the total market and are expected to increase this share to 70% by 2007.  As consolidation continues to occur, retailers will continue to gain power and influence over manufacturers. In order to succeed, retailers and manufacturers will have to increasingly work together to reach consumers.

Dick revealed that the Midyear Trends show that despite the uncertain economy and trying business conditions, consumer packaged goods companies continue to utilize coupons as a critical part of their marketing mix. Total coupon volume for the first six months of 2002 increased 1.5% to 170.2 billion distributed for the six-month period ending in June 2002.  Total redemption declined however, to 1.9 billion coupons redeemed, an 8.3% decline.

"Even though the total redemption market declined, I believe it is unfriendly tactics, not consumer need or desire that drove this decline," stated DiBlasio. "We've seen an increase in both the number of coupons requiring multiple purchases and shorter expiration periods.  In fact, over 15% of coupons distributed expired in a month or less.  This makes it more of a hassle for the consumer, and restricts coupon redemption."

Average expiration period on a coupon is now three months, down 10.4% from one year ago, while 26% of all coupons require a multiple purchase. FSIs account for over 78% of all coupons distributed.  


Internet coupons remain a small but active percentage of overall distribution (0.1% of total distributions); consumers are reacting to them more favorably. Average redemption rates increased to 3.6% for Internet coupons.
As Internet coupon distribution companies continue to invest and perfect their promotional offerings and as consumers search the Internet for more promotional alternatives, look for Internet coupons to be a more significant part of the total coupon market.             

In addition to unfriendly consumer coupon tactics, other in-store factors may be driving down redemption.  Out-of-stock levels are reported high, at 7.4% of all SKUs.  Brand loyalty is reported growing, along with the use of frequent shopper cards and retail-driven targeted promotions.

The coupon industry continues to respond to change.  The recent Financial Accounting Standards Board (FASB) ruling requiring accounting changes for corporate promotional expenses (See my article in the News & Views Section) will further sharpen the focus on couponings' performance and ability to deliver measurable results.  And upcoming changes to product and coupon bar codes must enhance a marketer's ability to efficiently deliver the right incentive to the right consumer, properly monitor and account for the results.  Despite lower redemption volume, consumer's still pocketed annualized savings of $3 billion using coupons and marketers moved billions of units of incremental product.

Return to the top of the page

    COUPON DISTRIBUTION AND REDEMPTION DECLINED IN 2001

The Coupon industry is changing as a result of many factors including changes in consumers’ purchasing behavior, economic conditions, mergers and consolidations (both by manufacturers and retail grocery chains) and changes in coupon marketing practices. Marketers are redefining their marketing strategy and their promotion modeling mix.

I believe that in 2001, manufacturers reduced advertising and promotional spending, cut capital expenditures, reduced trade show spending in order to improve their short-term bottom line, especially after September 11th. In my opinion, this is shortsighted because during a weakened economy with unemployment rising, consumers are looking for ways to save money and are more inclined to switch brands or try a new product. This is the time when marketers should increase advertising and promotional spending to increase their customer bases and market share while their competitors reduce spending and lose customers.

Marketers need to recognize that the makeup of the U.S. population as there are 11.8% more people over the age of 65, 42% more Asian-Americans and 40% more Hispanic-Americans in the U.S. than in 1990 according to the U.S. Census Bureau. There are 20% more female head of households and 21% more head of households are living alone as well as a 5% decrease in married couples.

According to NPD Research, consumers lifestyles are changing also with consumers purchasing 73 takeout meals and 64 restaurant meals a year. Consumers make 2.2 shopping trips per week with an average transaction size of $23.03 and spend $38 per person each week according to the FMI (Food Marketing Industry).

The makeup of the grocery industry through consolidation has resulted in the top ten chains having over 90 operating names and control over 44% of the ACV (All Commodities Volume) with the top five chains having 32% of the ACV. The top five supermarket chains in 2001 were:

Name 2001 Sales (Billions) ACV
Kroger $50.7 9.7%
Albertson's 38.3 7.3%
Safeway 34.4 6.6%
Ahold USA 23.2 4.4%
Wal-Mart 20.1 3.8%
Totals $166.7 31.8%

Through consolidations, retailers have improved inventory controls, merchandising, space management, private label and category management. Wal-Mart continues to gain market share as they open 100 Supercenters annually and are losing their customer base, which was 94.6% of weekly shoppers in 1980 and is estimated to drop to 68.1% in 2004. In 1990, Wal-Mart’s grocery sales were $25.8 billion from 1,402 stores and 123 Sam’s Clubs. In 2000, that increased to $191 billion from 1.709 stores, 476 Sam’s Clubs, 939 Supercenters and 1,405 international stores.

According to Carolina Manufacturer’s Service, coupon distribution declined 2.1% to 333 billion while coupon redemption declined 11.4% to 3.9 billion with FSI’s representing 79.6% and In-ads at 10% of the coupons distributed. The average face value of a redeemed coupon dropped for the first time 1.3% to 78 cents and 26% of all coupons distributed required multiple purchases lead by cereals, frozen deli and beverages. The average expiration date for coupons distributed dropped from 3.4 to only 3.1 months with 45.7% expiring in less than 2 months and 46.5% expiring in 3 to 5 months while the average coupon redeemed dropped from 5.2 to 4.1 months. Only 7.9% of all coupons distributed had expiration dates if six months or greater. Internet coupons remain negligible at 0.1%of all coupons distributed and had a 2.91% redemption rate in 2001.

Valassis determined what a coupon shopper looks like in its September Consumer Navigator.  The monthly report developed statistics that identify characteristics of coupon shoppers. The study found the following:

bullet

48% of coupon shoppers have a household income of more than $50,000.

bullet

28% of coupon shoppers spend $120+ in an average week on groceries.

bullet

58% of coupon shoppers use their coupons at grocery stores.

bullet

63% of coupons shoppers are married.

bullet

38% of coupon shoppers have either an Associates, Bachelors or Post Graduate degree.

bullet

56% of coupon shoppers are book lovers.

bullet

72% of coupon shoppers read the newspaper .

bullet

48% of coupon shoppers get coupons from the color coupon booklet distributed in Sunday newspapers.

NCH Marketing Limited indicated that a reduction in coupon offers, a shift in media mix and multiple purchase requirements resulted in a 1.7% decline in redemption rate and an 11% decline in coupons redeemed of 4.0 billion in 2001. Coupon distribution declined 3.6% to 239 billion coupons but the total number of coupon offers dropped 27% as Free Standing Inserts increased 2% to 84% of all coupons distributed. Redemption dollars paid declined 17% to $3 billion. The average face value offered increased to 83 cents, although due to multiple purchase requirements (25% of coupons distributed), the average savings per item are only 72 cents. The average face value redeemed dropped from 79 cents to 74 cents in 2001, which has resulted in 15% fewer products moved via a coupon.

The 2001 Top Ten Product Categories for Distribution
2001 2000 Category
1 1 Household cleaners
2 2 Medication, remedies & health aids
3 3 Condiments, gravies, sauces
4 4 Paper Products
5 5 Frozen prepared foods
6 6 Prepared foods
7 7 Detergents
8 8 Personal soap & bath additives
9 9 Cereal
10 10 Snacks

Source: NCH Marketing Services

The average face value of distributed coupons increased in 2001, but the average face value redeemed, decreased.  The face value of distributed coupons increased from $.77 in 2000 to $.83 in 2001 - a 7.0% increase.  Redemption dropped from 4.8 billion coupons in 1998, to 4 billion in 2001.  Despite the economic turndown, total coupon redemption volume declined.  Consumers saved $3.0 billion in 2001 by using coupons, but it was down 17.0%.

Total coupon distribution was down 3.6% and redemption was down 11.1 %.  Distribution declined due to consolidation of CPG companies continued into 2001.  Consolidations led to temporary reductions in promotional spending.  Manufacturers continued to use multi-brand or “universal” coupons, which also led to a reduction in distribution.  2001 had 27% fewer brand events/day and the duration for coupons was a half-week less.  

bulletMultiple-purchase coupons have increased from 17% of all coupons in 1996 to 25% of all coupons in 2001.
bulletCoupon duration dropped from 99 days in 2000 to 95 days in 2001.
bullet

Manufacturers used more FSIs in 2001 than 2000, due to cost-consciousness.

bullet

57.9% of consumers say they regularly use coupons. 

bullet

Only 38.0% of men and 45.7% of women say that coupons help them choose among the brands they normally buy.

bullet

The household cleaner category is still number one for the third straight year, in coupon distribution.  Cereal fell to 9th place, primarily due to the use of “universal” coupons.  (Coupons good for multiple brands within one manufacturer.) 

bullet

84% of all coupons distributed last year were through FSIs.  FSI coupons were 81.5% of grocery products, and 88.5% of HBC. 

Coupons will remain a viable marketing tool because of their low FSI distribution costs and advertising value (Full-page four-color ad for approximately $7 per thousand). Consumers still like and look for FSI’s in their Sunday newspapers.

Return to the top of the page

    CONSUMERS SAVE OVER $3 BILLION WITH COUPONS IN 2001

But Corporate Budget Cuts, Lax Tactics Drive Down Redemption

Economic uncertainty and other unanticipated events in 2001 caused consumer packaged goods marketers, consumers, and retailers to rethink their use of coupons. For marketers, corporate belt-tightening resulted in slashed advertising schedules, a decrease in targeted coupon distribution and a departure from consumer-friendly practices. The impact of September 11th terrorist activities also contributed to a disappointing year in terms of overall coupon redemption.

Last year’s sluggish economy, characterized by reduced consumer spending, weak retail sales, and increased unemployment, forced some of the larger international conglomerates to reevaluate and scale back coupon programs. Companies such as Procter & Gamble and Kraft focused on core brands and only tentatively used coupons to support their marketing plans. As compared to 2000, these shifts in corporate strategies resulted in an 8.1% decrease in advertising spending and a 2.1% decrease in the number of coupons distributed to 333 billion coupons.

While overall coupon distribution was down, the average distribution quantity per drop increased 7.5%, indicating marketers moved away from targeted coupon offers, possibly in an attempt to stretch their dollars while still reaching a mass audience. One result of this shift was a decrease in overall coupon redemption. The downside of shifting away from targeted offers is that consumers have to work harder to obtain coupons for the product categories they actually want or need. A passionate coupon user may be willing to do this, but the more casual user may not be willing or able to invest the extra time and effort.

Marketers further sought to streamline the costs of their coupon programs by straying from coupon best practices. The average face value increased slightly to $0.77, keeping pace with the Consumer Price Index. However, the percentage of coupons requiring multiple purchases increased to 26%. The increasing percentage of multiple-purchase coupons reduced the average potential savings per item purchased to only $0.66. In addition, the average expiration period, or amount of time a consumer has to redeem the coupon, was reduced by 8.8% to 3.1 months. Consumers responded to these tactics by using fewer coupons, and overall redemption volume fell 11.3% to 3.9 billion coupons.

In addition to the sputtering economy, marketers faced additional challenges presented by terrorist activities. In addition, media coverage of the anthrax scare made consumers wary of unexpected mail. According to Carter, "Historically, we see a rise in direct mail coupon redemption in the fourth quarter. But in the fourth quarter of 2001, direct mail redemption declined dramatically." Marketers appropriately reacted to the anthrax scare by reducing direct mail coupon distribution volume by almost 60% between the third and fourth quarters.

Retailers, perennially seeking innovative ways to attract and retain customers, are discovering the rewards of using consumer-friendly incentives. An increasing number of chains reached out to consumers through manufacturer-retail co-promotions in Sunday FSIs. "Combining manufacturer coupons with retail price features seems to deliver the meaningful deal today’s consumers are seeking," said Carter. "Additionally, there’s an increase in the tactical use of bonus coupon promotions, with scattered reports of quadruple-value coupon offers in a few markets."

In 2001 supermarket and drug store private-label sales increased 1.1%, boosted by continued quality improvements and the consumer’s increasing value consciousness. "Value-conscious consumers are searching for the best deal to stretch their household budgets," says Carter. "Retailers are responding by providing a choice: meaningful price incentives on branded products and an expanded selection of high-quality private-label goods. It’s a win-win for the consumer, but a growing challenge for brand marketers."

Return to the top of the page

    CPG's Change Coupon Media Mix & Purchase Requirements

Strategy Results in Less Products Moved by Coupons at the Retail Level

March 15, 2002  (NCH Press Release) A shift in the mix of media for coupon distribution and reduced frequency of coupon events, combined with suppressed consumer incentives, affected greatly the total number of coupons redeemed in the U.S. during 2001. NCH Marketing Services released the annual statistics and measurements of coupon activity for the U.S. Consumer Packaged Goods industry last year. 

The number of manufacturer coupons printed and distributed in 2001 totaled 239 billion, a minor decline of 3.6 % percent over the previous year’s volume. Although the total annual quantity printed did not change considerably, a significant 27% reduction in the number of brand events per day meant consumers had fewer opportunities to clip a coupon in 2001. 

The events which did run had larger distribution quantities on average and were more national in scale, reflective of the increased use of Sunday Free Standing Inserts, now 84% of all coupons distributed, up from 82% in 2000. While the more targeted media, such as Handouts, Magazines and In & On-Pack, with higher redemption rates per coupon distributed, saw fewer total coupons offered, contributing to the significant decline in coupon redemption volume, down 11% to 4.0 billion total coupons redeemed in the U.S., compared to 4.5 billion in 2000.

Also contributing to the decline in redemption was continued suppression of incentive attributes, which made coupons less attractive to consumers. For example, the average face value offered on coupons rose to 83 cents, however, the consumer must now purchase more items to get that savings, thus, the average savings offered per item is really only 72 cents. As a result, for the first time since NCH has been tracking coupon trends, the average face value redeemed dropped, now only 74 cents compared to 79 cents last year.

The marketer’s strategy of requiring a consumer to buy two or more items in order to receive the face value of the coupon has been growing in recent years. In 2001 multiple purchase requirements were carried on one in every four coupons distributed in the U.S., or 25% of all coupons offered, compared to only 13% of all offers in 1995. 

In the past, printing and distributing multiple purchase coupons could be efficient for the marketer, in that only one coupon had to be issued to net two (or more) product purchases. Even with a lower average redemption rate for a multiple purchase coupon event, and the resulting fewer total coupons redeemed, the effect was an improved ROI for the marketer compared to the cost of single purchase offers, because more total products were sold in past years’ strategies.

In 2001, however, the marketers’ strategy backfired. Consumers redeemed far fewer coupons, resulting in nearly a billion fewer products moved last year with coupons, down 15% from the prior year. Again, this decline was a first time ever trend noted by NCH, where the total products moved with coupons declined. The benefit of improved ROI was lost due to the mere 1% share increase in coupons offered with buy two or more requirements, issued within low redeeming media and with less event frequency.

"Failure occurred for that strategy, as measured in total products moved, when its usage exceeded the breaking point for consumer response," said Charles Brown vice president of marketing for NCH, "And I’m certain that the cost constrained marketers didn’t intend to exceed that breaking point. Hopefully, they’ll quickly re-evaluate their individual brand and category strategies, to ensure their own coupons remain profitable, and consumer sentiment positive toward their future offers."

NCH’s surveys of consumer attitudes and behaviors toward coupons have been showing for many years a growing dissatisfaction with the values offered on coupons. Last year, a low of only 51% of consumers said that coupons "save them a lot of money," and 70% of coupon users say they skip coupons requiring them to buy more than they normally would.

Overall, coupon usage was reported by 76% of shoppers during 2001, and that portion of the population has remained constant, but the frequency of usage has dropped with declined availability and suppressed attractiveness of the offers. For example, the consumers who report they always use coupons while shopping has dropped to 21% of the population last year, compared to 22% in 2000, and 25% in 1999.

Economic uncertainty may drive more consumers to use coupons more frequently, which was an opportunity for marketers last year. NCH commissioned a consumer survey in January 2002 and found that nearly 10% of the population said they had increased their use of coupons since the recession started. NCH noted, however, that the downturn of 2001 was mild and unlike any previously studied recession periods where multi-quarter declines occurred in Gross Domestic Product, such as in recessions of the 70’s and 80’s, when both distribution and redemption grew.

"2001 was a year of unique trends for coupons, with perhaps some influence of recessionary perception upon consumers, but the year’s total results were an anomaly. The data shows decreased savings value, decreased redemption, and decreased products moved with coupons, so one might ask why? The answer lies in the influences upon the marketer," said Brown.

Like the previous year, several large CPG companies consolidated via merger, impacting promotional spending. As well, several consolidations begun in 2000 took longer than expected for FTC approvals, contributing to the coupon spending decline. "Consolidation strategies often net temporary reductions in promotional spending, due to numerous short-term business distractions," said Brown.

Another influence upon the cost-conscious marketer, especially for the small to mid-size manufacturer, has been some rather dramatic changes in retailer invoicing practices for coupons. The resulting perception of inefficiencies and inequalities to the product manufacturer caused them to eliminate some events and reduce consumer attractiveness of their offers.

The outlook for the future is not without optimism, according to NCH. "Some in the industry will have to take a step back, based on these reported results, and evaluate their couponing strategies to maintain viability for consumer motivation. The shopper’s willingness to use coupons remains very strong. What’s needed is a basic evaluation of marketing mix allocations and appropriate redemption incentives for each brand’s promotion objective. And not everyone went over-board last year, many marketers continue to get it right," noted Brown.

Additionally, NCH has seen evidence of post-consolidated companies returning to greater levels of coupon distribution. "The first quarter of 2002 appears to be a highlight for couponing this year," added Brown.

Top 20 Categories in Print Media Coupon Distribution for the years 2000 - 2001

2002 Rank


Category

2000 Rank

Percent Change
2000 - 2001

1

Household Cleaners

1

13.8%

2

Medications-Remedies-Health Aids

4

-14.1%

3

Condiments-Gravies-Sauces

2

9.6%

4

Paper Products

5

-7.9%

5

Prepared Foods-Frozen

3

-1.0%

6

Prepared Foods

7

-0.4%

7

Detergents

6

8.7%

8

Personal Soap and Bath Additives

9

-6.6%

9

Cereal

8

19.4%

10

Snacks

12

-0.5%

11

Packaged Meats

11

5.8%

12

Wrapping Materials & Bags

10

14.8%

13

Toothpaste

15

-1.8%

14

Vegetables-Canned

19

-6.1%

15

Vitamins

13

7.9%

16

Cough & Cold Remedies

16

1.6%

17

Pet Treats

17

2.5%

18

Soup

18

1.2%

19

Candy & Gum

23

-3.3%

20

Cat Food

27

-8.7%

Source: NCH Marketing Service

 

  Return to the top of the page

COUPONS INCREASE IN CANADA IN 2001

The number of coupons distributed by manufacturers and redeemed by consumers in Canada for the year 2001 was the largest increase sin more than 10 years. There were 2.67 billion coupons distributed in 2001, a 6% increase over 2000, while consumers redeemed 122 million coupons, a 9% increase from a year earlier. Consumers saved $128 million on products which is 7% more than consumers saved with coupons in 2000.

The value of coupons distributed increased to $1.25 due to the Health and Beauty Aid, Infant Care and Pet Food categories. The average value of coupons distributed increased by 17¢, which is 16% higher than a year earlier.

Couponing on Infant Care, Pet Foods and Household Care products accounted for 30% of all coupons distributed last year, up from 26% a year earlier. Growth in these categories offset declines in the food and personal care categories. Coupons on food products accounted for 40% of all coupons distributed, which is a decrease of 4 percent from 2000. Food product coupons, however, accounted for 55% of all coupons redeemed by consumers. On average, food product coupons had above average redemption rates even though their face values tend to be lower than in other categories. As a result, the average face value of coupons redeemed was lower than the value distributed. Coupons on personal care products accounted for 27% of coupons distributed, down from 30% a year earlier.

Free Standing Inserts (FSI’s) accounted for 55% of all coupons distributed in 2001, which is the same share as the previous year. FSI’s are newspaper inserts that contain coupon advertising and other consumer offers are delivered to more than 5 million homes approximately twice each month. The share of coupons distributed In-Store was 17 percent, a 1 percent from the 16 percent, a year earlier. In-Store couponing also accounted for more than 45% of all coupons redeemed. In/On Pack coupons also declined by 1 percentage point to 12% of all coupons distributed. This method accounted for 25% of all coupons redeemed by consumers. This occurred because Instantly Redeemable (On Pack) as well as In and On Pack Self coupons have higher redemption rates. The share of Direct Mail and Door-to-Door coupons distributed remained stable year-over-year, as did the proportion of coupons redeemed. The number of Magazine coupons distributed increased to its highest level since 1995.

Even with the launch of two Internet coupon distribution services, Internet couponing still accounted for less than 1% of all coupons distributed and redeemed last year.

These trends show that consumer-packaged-good marketers continue to be interested in effective and efficient methods to reach consumers with coupon offers that build brand sales.

COUPON TRENDS

 

2001

2000

1999

1998

1997

Quantity Distributed

2.67 Billion

2.52 Billion

2.50 Billion

2.70 Billion

3.0 Billion

Quantity Redeemed

122 Million

112 Million

115 Million

130 Million

130 Million

Consumer Savings

$128 Million

$120 Million

$115 Million

$112 Million

$104 Million

Average Face Value

$1.25

$1.08

$0.97

$0.83

$0.78

Average Valid Period

234 Days

270 Days

232 Days

253 Days

257 Days

COUPON DISTRIBUTION BY SHARE

Distribution Method

2001

2000

1999

1998

1997

Free-Standing Insert

55%

55%

52%

55%

54%

In-Store

16%

17%

17%

14%

11%

In-On Package

12%

13%

16%

13%

17%

Direct Mail

5%

5%

8%

9%

6%

Magazine

6%

5%

2%

3%

4%

Charity

2%

2%

2%

4%

5%

Other

4%

3%

3%

2%

3%

Source: Watts NCH Promotional Services

Return to the top of the page

COUPONING TRENDS FOR THE YEAR 2000

    CPG Merger and Acquisition Activity Impacts Coupon Promotion Volume

Marketers Expected to Increase Couponing in 2001

During the year 2000 several large Consumer Packaged Goods manufacturers consolidated via merger with other CPG's impacting the total number of coupons distributed in the U.S. to promote purchases of their products. NCH’s annual analysis of coupon trends has shown that the number of manufacturer coupons distributed in 2000 totaled 248 billion, a slight decline of three percent over the previous year. The 2000 trends are consistent with the past three years, with 256 billion, 249 billion and 250 billion coupons distributed in each corresponding past year.

"In a year filled with many mergers and acquisitions it is not uncommon to see an impact on coupon promotion," commented Charles Brown, vice president for worldwide coupon processor NCH. "In 2000, if not for the eight noteworthy CPG marketers who followed pre-consolidation strategies, the U.S. coupon distribution and redemption volumes would have remained relatively consistent with 1999," continued Brown.

"In prior years, we have seen companies approach pre-consolidation by tightening their promotion budgets as a short term tactic for cost reduction. After the consolidation is complete, these companies often return with increased coupon promotion activity in the following year to grow newly acquired brands," said Brown. NCH’s measurement found four companies who are 6 to 12 months post-consolidation increasing their coupon distribution activity by +23% on a weighted average basis compared to prior year.

"The completion of many mergers combined with current news of an economic slowdown in the U.S. indicates that," according to Brown, "for 2001 and beyond we are likely to see an overall increase in couponing activity. Marketers have historically distributed more coupons when the economy slows in an effort to motivate consumer purchases, and consumers tend to be more apt to respond and redeem during periods of economic decline."

NCH reports that American shoppers redeemed 4.5 billion coupons and saved a total of 3.6 billion dollars during 2000. This redemption volume was down 4.2% when compared with 1999, due to the aforementioned pre-consolidation strategies followed by eight noteworthy CPG companies. The 3.6 billion dollars saved by Americans remained consistent with 1999. This was due to an increase in the average face value distributed of 77 cents, up 5.5% from 73 cents in 1999 and an increase in the average face value redeemed to 79 cents.

The 2000 couponing activity of many other companies indicates coupons were employed in their promotional marketing strategies to a much greater degree than the prior year, as high as 22% more in certain categories. The Top 10 highest growth categories for coupon distribution were as follows:

Chart A: Categories with Highest Growth of Coupons Distributed in 2000

1

DISPOSABLE DIAPERS

2

PAPER PRODUCTS

3

PET TREATS

4

CHEESE

5

SNACKS

6

HOUSEHOLD CLEANERS

7

CONDIMENTS, GRAVIES & SAUCES

8

VITAMINS

9

TOOTHPASTE

10

CANNED VEGETABLES

Media choice overall for marketers showed only slight changes to the past (see chart B), however, the impact of mergers again changes the picture. In fact, for some media, such as Free Standing Inserts, the total volume of coupons distributed grew year over year when you exclude the impact of CPG consolidation. Additionally, the overall share of FSI's grew to 82.4% of all coupons distributed with a redemption rate of 1.5%.

Notable media trends in 2000 also included the use of Custom Corporate Sunday Free Standing Inserts which stand alone from the cooperative insert, and the continued growth of Electronic coupons, including those distributed via the Internet for CPG products, which have doubled in total volume distributed compared to 1999. "Although they remain less than half a percentage share of the total 248 billion coupons distributed in the U.S., the four year growth trend and strong consumer response to this vehicle indicate continued expansion of the electronic medium in the future," noted Brown. Other characteristics of coupons in 2000:

bulletThe average duration of coupons from distribution date to expiration date remained consistent at 14 weeks.
bulletThe incidence of multiple purchase requirements grew modestly to 24% of all coupons where the consumer must purchase two or more of the promoted products in order to receive the face value savings.
bulletThe average face value offered on coupons increased by a substantial 5.5% to 77 cents distributed, outpacing the cost of living increase experienced by consumers in the U.S. during 2000, and partially compensating the consumer by providing higher per purchased unit savings in spite of the higher multiple purchase requirements.

0

Return to the top of the page

    International Data Releases The Definitive Report for the Coupon Industry

International Data, LLC has just released The Definitive Report for the Coupon Industry, which includes the coupon trends for 1999 and the first half of the year 2000. The report analyzes the critical components of a coupon including:

bulletDistribution
bulletRedemption
bulletMedia
bulletFace Value
bulletPurchase Requirements
bulletCoupon Life

Overview of Industry Trends

bulletIndustry distribution for 1999 was $263.4 billion up 1.2% from 1998
bulletRedemption decreased by 1.3% in 1999 from 4.66 billion in 1998 to 4.60 billion in 1999
bulletGrocery category captured 56% of distribution for 1999 up 7.1% from 1998
bulletGrocery distribution increased by 5% in the first half of 2000
bulletAverage face value distributed was $0.74 for 1999 up 7% from 1998
bullet$1.00 face value increased by 12% in distribution and 17% in redemption for the first half of 2000
bulletAverage purchase requirement distributed for 1999 was 1.5 units up 15% from 1998
bulletThe single-purchase requirement dropped by 5% in redemption for the first half of 2000
bulletFSI share distribution for 1999 was at 93% up 4 % from 1998
bulletFSI distribution decreased by 1% to 92% in the first half of 2000
bulletAverage coupon life distributed for 1999 was 2.16 months up 5% from 1998
bulletCoupon redemption of coupons with a two-month Life increased by 147% in the first half of 2000
bulletDry cereal category decreased 37% in distribution with 3.46% for 1999 down from 5.5% in 1998
bulletChains share of the retail market for 1999 was 52% up 4% from 1998
bulletGrocery category had the highest average redemption from all retail types
bulletNortheast - highest redemption of the grocery category within chains at 76%
bulletSouthwest - highest redemption of the grocery category within mass merchandisers at 52%
bulletNortheast - highest redemption of grocery category within wholesalers at 82%
bulletMidwest - highest redemption of grocery category within drug stores at 33%
bulletMidwest - highest redemption of grocery category within independents at 54%
bulletFrozen Foods category captured 50% of the redemption for Catalina
bulletSingle-purchase requirement obtained 64% of Catalina redemption
bullet26% of the Catalina coupons redeemed had a face value of $1.00
bullet15% of shelf-dispensed coupons distributed was for personal care products
bullet21% of shelf-dispensed coupons distributed had $0.55 face value
bulletAverage face value for new product coupons distributed in the first half of 2000 was $0.80
bulletAverage purchase requirement for new product coupons distributed in the first half of 2000 was 1 unit
bulletAverage life for new product coupons distributed in the first half of 2000 was 82 days
bullet67% of new product coupons distributed in the first half of 2000 were accompanied by a secondary offer (sweepstakes, rebate, recipe, or refund)

Source: International Data, LLC - The Definitive Report for the Coupon Industry

Return to the top of the page

Mid Year Trends 2000

bulletDistribution 161 billion, up 8% (FSI volume up 8%) - 291 billion for year 2000
bulletRedemption 2.1 billion, down 12% - 4.2 billion for the year 2000
bulletAverage redemption rate 1.0%
bulletAverage expiration period 2.83 months
bulletAverage face value 74 cents
bulletFive Coupons redeemed per household.
bulletAverage purchase requirements rises to 1.5 units per coupon.
bulletInternet volume up 1266% (estimated 95 million coupons)
bulletFrequent Shopper Programs
bullet70% of consumer participate in FSP's
bullet95% use FSP card every time they shop
bulletOnly 3% do not want to provide personal information
bulletE-promotions are the Number one reason for FSP
bullet10% of total marketing dollars spent on e-promotions, but primarily trade funds (pay for performance trade deals) vs. consumer

          Source: AC Nielsen

bulletFSP customers = 78% of total dollar sales
bullet67% report increases in revenue
bullet41% report increases in transaction size
bullet35% report decreases in advertising and marketing costs

          Source: FMI e-Marketing Survey 1999

INTERNATIONAL COUPON TRENDS

Number of food outlets (where coupons are a large part of the marketing mix)

USA    172,800
Italy    160,983
France      83,529
United Kingdom       75,837
Canada     28,100

Source: International Data & Marketing Statistics 2000

The Consumer in the United States

Price Conscious 26.3%
Promotion Sensitive 30.7% - 57%
Brand Loyal  24.8%
Time laden  13.6%

 Source: NCH Consumer Study, 2000

Frequency of Coupon Use by Type of Store in the U.S.

Grocery Store  74.0%
Mass Merchandise 53.2%
Drug Stores  51.7%

United States

Canada

United Kingdom

Italy

Spain

Percent of Coupon Distribution via Print:
 (Newspaper, Magazines and FSI's)

85.7%

54.0%

42.6%

14.6%

1.8%

Percent Redemption Compared Print Media

1.3%

0.7%

1.8%

1.4%

2.6%

Percent of Coupon Distribution In-On Pack

3.0%

16.0%

7.5%

33.6%

84.4%

Percent Redemption Compared In-On Pack

8.7%

4.3%

26.8%

30.2%

23.1%

Percent of Coupon Distribution In-Store

8.7%

17.0%

15.1%

46.8%

1.1%

Percent Redemption Compared In-Store

5.0%

11.4%

16.8%

30.5%

21.1%

Percent of Coupon Distribution Door-to-Door

N/A

N/A

10.1%

N/A

8.4%

Percent Redemption Compared Door-to-Door

N/A

N/A

4.8%

N/A

1.9%

Percent of Coupon Distribution Direct Mail

2.0%

8.0%

19.2%

4.9%

1.1%

Percent Redemption Compared Direct Mail

3.5%

8.2%

20.2%

18.4%

22.8%

Average Face Value Redeemed

0.73

0.99

0.57

1.01

0.99

 

Canada

United Kingdom

Italy

Spain

1997

1998

1999

1997

1998

1999

1997

1998

1998

1997

1998

1999

Coupon Distribution (Billions)

3.0

2.7

2.5

4.7

5.1

4.7

0.401

0.645

0.941

0.048

0.068

0.093

(Coupon Redemption Millions)

130

130

115

271

310

487

70

68

87

13.2

13.5

15.3

Highlights

Canada:

bullet10.5 coupons redeemed per household.
bulletTop three retailers control 62% of the market.
bulletShift to more coupons on Non-Food Items.
bulletHigher value coupons used.
bulletFSI's represent more than half of all coupons distributed.

United Kingdom:

bullet19.9 coupons redeemed per household.
bulletFSI's are not utilized.
bulletFive major retailers dominate retail market.
bulletLoyalty Program first introduced (Tesco).

Italy:

bullet4.2 coupons redeemed per household.
bulletRetail markets has many independents, however, Hyper & Supermarkets represent 52% of ACV.
bulletCoupon market dominated by a few manufacturers.
bulletMost coupons require proof of purchase (like rebates).

Spain:

bullet1.4 coupons redeemed per household.
bulletAcquisitions changing retail environment.
bulletCoupon market dominated by a few manufacturers.
bulletCoupons used to build a database.

Return to the top of the page

PROMOTION MARKETING EXPENDITURES 1997 - 1999

1997

1998

% vs. pr.yr.

1999

% vs. pr.yr.

Couponing

6,240

6,550

3%

7,095

8%

POP

13,100

13,700

5%

14,400

5%

In-Store

748

800

7%

870

9%

Sampling

925

1010

9%

1,120

11%

Premiums/Incentives

24,100

25,300

5%

26,300

4%

Ad Specialties

11,900

13,200

11%

14,800

12%

Fulfillment

2,860

2,720

***

3,297

21%

Prom. Licensing

5,140

5,500

7%

5,760

5%

Specialty Printing

5,300

5,600

6%

6,200

11%

Sponsorships

5,900

6,800

15%

7,600

12%

Agency Revenues

1,259

1,474

17%

2,189

49%

Interactive

880

1,020

16%

1,471

44%

Direct mail

36,890

39,620

7%

41,403

5%

Biz to Biz promotion

31,640

36,000

14%

40,200

12%

Advertising $ for Promotion

22,050

24,255

10%

26,680

10%

Trade Shows

17,400

18,792

8%

20,671

10%

Sweepstakes *

not estimated

1,200

na

1,380

15%

TOTAL CONSUMER

186,332

203,541

9%

221,436

9%

Trade Promotion

79,000

85,000

7%

90,100

6%

Account specific **

not estimated

12,000

na

19,000

58%

TOTAL TRADE

na

97,000

na

109,100

12%

GRAND TOTAL

265,332

300,541

9%

330,536

10%

 

OTHER TOTALS

Total without adv.$ for prom

243,282

276,286

303,856

Cons. W 8% for dupe.

171,425

187,258

203,721

Grand total w8% for dupe

244,105

276,498

304,093

* not included prior to 1999.. source: Promo Magazine

** not included prior to 1999.. source: Cannondale Associates

*** Some fulfillment costs were adjusted to add the Sweepstakes category in 1999 with an estimate for 1998 to provide year end comparisons.

Return to the top of the page

Return to the top of the page

        Coupon Usage by Marketers Grows in 1999

More coupons are distributed for the first time in five years

For the first full year in five years, Consumer Packaged Goods manufacturers have increased the number of coupons distributed to promote purchases of their products.

NCH’s recent annual analysis of coupon distribution trends found that the volume of coupons CPG marketers printed and distributed grew by nearly three percent last year, for the first year over year growth in the last five years. The surge in couponing activity resulted in a total volume of 256 billion manufacturer coupons distributed for 1999.

Coupon promotions, historically a core element of a brand’s marketing mix, had seen fewer numbers printed in many CPG categories over the last several years. This was largely due to marketers choosing more specific geographic and demographic targeted markets and a preponderance of multi-brand "universal" coupons in one high volume category. 1999 saw a strong return to more couponing in all major media, across most product categories, following signals of upswing during the previous year.

"Many marketers may have noted a decrease in their brand share, or lackluster sales, that corresponded with a change in their couponing strategy, and thus returned to offering more coupons as one of the most cost effective ways to directly motivate trial and repeat purchases," commented Charles Brown, vice president of marketing at NCH. Brown also explained that the past trend of decreased distribution in some categories resulted from targeting experiments that may have gone too far; "Targeting for example, works best if you reach and motivate the right audience for your objective. If you miss the mark, the more costly targeted coupon may not payout," said Brown.  Given the increased distribution volume some might conclude that mass marketing was back in vogue. True, for some media, NCH saw both an increased number of events and a larger per event circulation, driving up the total industry volume. Other media, however, are specialized and marketers have learned to use them effectively to target certain audiences, such as competitive buyers or brand switchers. "There is no one size fits all strategy for coupon promotions today," said Brown, "some marketers use it to maintain sales and share. Others put their coupon budget to work in developmental markets."

The Top 10 highest growth categories for coupons indicate the range in promotion strategies employed. Some grew by double-digit percentages as coupons were used for new product introductions. Other categories grew simply to compete during this dash to more couponing.

Top 10 List: Categories with Highest Growth in Coupons Distributed 1999

1

FROZEN PREPARED FOODS

2

PREPARED FOODS

3

COSMETICS

4

PACKAGED MEATS

5

DOUGH PRODUCTS

6

DENTAL HYGIENE AIDS

7

DISPOSABLE DIAPERS

8

VITAMINS

9

SKIN CARE PREPARATIONS

10

YOGURT

Most notable in their return to coupons were the grocery product categories who increased distribution as a whole by 7.2% to 173 billion coupons. Not all categories within this group followed suit, however, as the Cereal category for first time lost their rank as the number one issuer of coupons. Instead, for 1999 Household Cleaners offered more total coupons. Many Cereal coupons today are "universal" across a brand franchise, or entire product line, meaning fewer coupons in volume are issued. The Top 10 rank changes for 1999 vs. 1998 in total coupons distributed are as follows:

Category Rank: Largest Volume of Coupons Distributed

1999

1998

1

2

HOUSEHOLD CLEANERS

2

1

CEREAL

3

4

CONDIMENTS, GRAVIES, SAUCES

4

3

MEDICATIONS, REMEDIES, HEALTH AIDS

5

7

PREPARED FOODS

6

5

DETERGENTS

7

10

FROZEN PREPARED FOODS

8

6

PERSONAL SOAP, BATH ADDITIVES

9

9

PAPER PRODUCTS

10

13

PACKAGED MEATS

Additionally, the NCH study found the average face value of coupons distributed reached 73 cents, up four percent from 1998, with Health & Beauty Care coupons accounting for the majority of this increase.

Weighted by category distribution volume, HBC average face values were up a substantial 8.1% to 89.4 cents, whereas Grocery average face value increased only 3.2% percent to 65.5 cents. "Face value alone can be a bit of a misnomer. You also need to consider how many purchases marketers require of consumers to obtain that savings," said Brown. NCH market tracking for 1999 shows that coupons requiring the purchase of two or more items now account for over 23% of all coupons printed.

Health and Beauty Care manufacturers as a whole decreased the volume of coupons distributed by 5.4% to 83 billion, however, they also decreased their use of multiple purchase coupons nearly a full share point to only 8.4% of all HBC coupons offered. Therefore, HBC effectively increased the ease of use and redemption potential of their coupons. Grocery manufacturers continued to increase their use of multiple purchase requirements, driving up the trend to 26.9% of all grocery coupons distributed with the risk of adversely impacting consumer redemption.

The NCH study also found electronic Internet coupons for CPG products continuing to grow in 1999, but at a slower pace than the last two years. Coupons printed at home via the Internet and coupons delivered via the mail or electronically activated as a result of an Internet site visit grew by more than 33% over the prior year, yet they remain less than half a share point of the total 256 billion coupons distributed for consumer packaged goods. "The Internet as a vehicle for coupons continues to be of great interest to many in NCH’s worldwide client base", said Brown, "and many see the next generation of electronic promotions as a new frontier for our industry. It is our vision that to be successful, promotions will continue to evolve in ways that provide marketers with secure and effective means to move more product while meeting consumers’ needs for ease and time savings."

Total coupon spending was flat at $6.153 billion in 1999 which is broken down as follows:

Total Spending $6.153 billion

Face Value:

$ 3.6 billion (59%)

Distribution:

$ 2.0 billion (32%)

Handling:

$ 376 million (6%)

Processing Fees:

$ 106 million (2%)

Other:

$ 71 million (1%)

Return to the top of the page

COUPONING TRENDS FOR 1998

     NCH REPORTS ON THE STATE OF THE INDUSTRY

Charles Brown, Vice President of Corporate Services for NCH NuWorld Marketing LTD. presented the State of the Industry address at the recent ACP Conference held in Denver.  According to NCH data, coupon distribution remained flat at 249 billion in 1998 as compared with 250.2 billion in 1997.  A stable trend in coupons is noteworthy after several years of decline {see Chart A}.  The turnaround actually began in the fourth quarter of 1997, which indexed 15 points higher than typical, indicative of a significant return to coupon marketing that carried into 1998.  Grocery coupon distribution dropped 1.4% to 161.6 billion (64.9%) while HBC coupon distribution increased 1.3% to 87.4 billion (35.1%) in 1998.   

wpe4.gif (6573 bytes)

Strong upswings approaching year-end occurred for a second time in 1998 with the months of September (National Coupon Month) and October most notable for Grocery products {see Chart B}. "Almost all coupon media saw increases in 1998, as most marketers sought the brand building sales increases and targeting benefits that come with sustained levels of coupon promotion," said NCH NuWorld Vice President, Charles Brown. "Sunday Free Standing Inserts (FSI’s) in particular, as the largest vehicle, increased their share of market, positively impacting the year-end volumes," said Brown.

wpe6.gif (5337 bytes)

Despite the compressed attractiveness of many coupon promotions, total redemption for the year was 4.8 billion coupons. This volume was down a mere -2% since 1997, which is the lowest decline in the past five years {see Chart C}. The 4.8 billion was comprised of 3.54 billion (-4.6%) in grocery coupons and 1.26 billion (+5.9%) in HBC coupons. Consumers saved $3.60 billion in 1998 remaining level to the $3.63 billion in 1997.

wpe7.gif (6895 bytes)

"Not only are we seeing overall improvements in recent trends, but also proof that if done properly, coupon targeting can help to cost effectively meet the promotion objectives of increasing product movement and volume. It’s a tight rope that some marketers have mastered."

Marketers overall, however, kept the redemption attractiveness of these coupon incentives at compressed levels. Although average face value increased slightly to 70.2 cents from 67.9 cents in the past year, more of the coupons required the consumers to purchase two or more products in order to receive the discount. The average face value redeemed was 75 cents, an increase of 1 cent over 1997. The average face value redeemed for grocery products remained flat at 61 cents, while HBC products increased from 97 cents in 1997 to $1.03 in 1998.

Today, nearly 22% of all coupons circulated are of the multiple purchase variety. This trend is driven by Grocery product manufacturers who distributed more than 25% of their coupons as multiple purchase in 1998, up one and a half share points, compared to Health & Beauty Care (HBC) product manufacturers who maintained multiple purchase at 9.5% of coupons distributed in 1998.

Consumers have responded by continuing to seek out those coupons offering the highest savings, driving the overall value redeemed up by one cent to $.75 in the past year. As an incentive to purchase products, coupons provided a total of $3.6 billion in savings to consumers in 1998, virtually flat to each of the past two years, in spite of lower volumes.

  
        
   TOP 20 DISTRIBUTION CATEGORIES

RANK

 

RANK

 

1998

1997

 

1998

1997

 

1

1

Cereal

11

22

Toothpaste

2

2

Household Cleaners

12

9

Shampoo & Conditioners

3

4

Medications/Health Aids

13

14

Packaged Meats

4

3

Condiments, Gravies, Sauces

14

11

Cat Food

5

7

Detergents

15

17

Baking Mixes

6

5

Personal Soap, Bath Additives

16

34

Juices & Drinks

7

6

Prepared Foods

17

12

Laundry Supplies

8

13

Wrapping Materials & Bags

18

16

Salads Dressing, Mayo & Toppings

9

29

Paper Products

19

10

Dog Food

10

8

Frozen Prepared Foods

20

36

Snacks

Free Standing Inserts (FSI) continue to dominate distributions representing 79.9% of grocery, 82.3% of HBC coupons and 80.7% of all coupons combined. The remaining 19.3% is comprised of In-Store Handouts (8.5%), Magazines (3.6%), In-On Packs (2.9%), Direct Mail (2.3%), Newspaper (1.5%) and Other (0.5%).

The overall length of time from issue date to expiration date remained constant at 3.1 months in 1998, on average. Grocery product manufacturers increased slightly the average duration of their coupon offers to 3.1 months from 3.0 months in 1997, however, the coupons distributed by HBC manufacturers declined in duration to 3.0 months from 3.3 months last year.  It was noted that 17 test brands with expiration dates over 3 months generated 21.5% higher redemption's according to the FSI Council study.

Percent of Distribution by Face Value 

 Grocery Products

Health & Beauty Care

 

1997

1998

 

1997

1998

$.01 - .30

21.7

19.7

$.01 - .30

9.1

9.2

$.31 - .45

21.7

21.1

$.31 - .45

10.9

9.9

$.46 - .55

24.9

24.6

$.46 - .55

24.1

20.9

$.56 - .75

12.5

10.4

$.56 - .75

16.0

15.3

$76 - 1.00

13.6

18.7

$76 - 1.00

30.1

34.9

$1.01 +

5.6

5.5

$1.01 +

9.8

9.8

The use of multiple purchase coupons rose to 21.9% of the total coupons distributed from 20.6% in 1997. Single  purchase coupons generated 88.4% more new buyers and repeat purchases (10.93%) versus multiple purchase coupons (5.8%) according to the FSI Council.

NCH NuWorld studies of U.S. consumer attitudes and opinions toward coupons also demonstrated marked improvement in 1998. While 81% of all Americans use coupons for grocery shopping, 75% of men also report using coupons, and more of them are becoming heavy coupon users, up three shares to 23.6% of males. As well, 62% of shoppers use coupons to plan their shopping list, and 64% use coupons to chose brands they’ll buy, both trends up in the past year among U.S. shoppers.

Source: NCH NuWorld Marketing Ltd.

wpe5.gif (1222 bytes)     TOP 10 CATEGORIES FOR COUPON USAGE      

 

 

Category


1998% OF Sales Purchased

With a Manufacturer Coupon*

                                1998% Change in Total

Dollar Sales Volume**

1. Disposable Diapers

17.1

+ 4.0

2. Detergents

15.0

+ 0.2

3. Meal Starters

14.2

+ 10.1

4. Dough Products (Refrigerated)

13.6

+ 3.7

5. Cereal

13.4

- 1.6

6. Tobacco & Accessories

12.9

+ 0.6

7. Wrapping Materials, Bags

12.8

+ 2.9

8. Oral Hygiene

11.7

+ 5.8

9. Household Cleaners

11.7

+ 6.0

10. Diet Aids

11.4

+ 18.8

* Source: AC Nielsen Homescan (Dollar Sales) ** Source: AC Nielsen Scantrack

Return to the top of the page

                 THE IMPACT OF COUPONING

The FSI Council/PDI study revealed the following:

bullet

58% of coupon redemption's were generated by new or lapsed users of the product;

bullet

57% of repeat purchases were made without a coupon;

bullet

Repeat Purchases were 8% higher among FSI coupon redeemers than non-redeemers;

bullet

Full-Page FSI's offer more pulling power - Higher redemption rates (63%), more new/lapsed buyers (49%) and more incremental volume (61%);

bullet

FSI shoppers generated more sales for individual brands (14%) and overall categories (13%);

bullet

FSI's offer advertising value and enhance brand loyalty;

bullet

FSI readers are already interested consumers.   The coupon is the key element of the ad, but FSI's also communicate a message;

bullet

Brand recall among FSI readers is 50.6% higher for full-page ads versus half-page ads and 53% of readers recall advertisers by brand.

Retail Systems Consulting Card Based Marketing Report indicated that:

bullet7,753 U.S. supermarkets have frequent-shopper card programs;
bulletThis accounts for 26% of the total supermarkets in the U.S., represents a 19% increase over 1997 and 22.5% of the total ACV;
bullet72.1% of retailers with Frequent Shopper Programs have annual sales over $2 billion.

The 1998 Annual Report of the Promotion Industry reported that:

bulletMarketers spent $172 million on loyalty card programs in 1997, funded mostly by retailers;
bullet70% of purchase decisions are made at the shelf;
bulletTargeting has become the focus of in-store marketing.

The Resource Marketing Group Study revealed that the Drivers for Electronic Growth include:

bulletA shift away from mass marketing;
bulletGreater segmentation;
bulletCustomer management;
bulletExecuting customer specific promotions;
bulletIntegrating loyalty marketing with other databases; and
bulletPower of purchase history which shows the economic rationale to differentiate offers, provides  a method to calculate profit by household, creates strong competitive advantages and provides performance statistics.

Research conducted by Promotion Decisions, Incorporated (PDI) found that full-page ads result in:

bulletHigher Redemption Rates (17.5% Higher)
bulletGreater incremental sales volume ( 9.0% more)
bulletMore new and lapsed users of the featured product (27.5%)
bulletA larger number of repeat purchases, especially among new buyers.

A 1998 study conducted by Roper Starch Worldwide on reader awareness of Free Standing Inserts (FSI’s) revealed the following:

 

Associated

Read Most

Covers

80%

38%

Page 2

69%

32%

Page 3

66%

26%

Inside Pages

54%

24%

Spreads

70%

37%

Tabs

66%

35%

Associated refers to the percentage of readers who recognized the featured brand.
Read Most
refers to the percentage of readers who read more than half the copy in an ad. refers to the percentage of readers who recognized the featured brand.

Full Page ads generate significantly higher brand recognition and copy interaction than Half Page ads, resulting in twice the intent to purchase.

The position of the coupon in an FSI does not affect awareness.

Top Coupon Position:

61%

Bottom Coupon Position:

62%

Side Coupon Position:

58%

Average Coupon Position:

60%

It is recommended that you leverage your FSI artwork to a theme and integrate it into your overall marketing plan. You should enhance trade support by providing extended lead times and motivate your sales force with incentives. You could also include recipes or tie-in with relevant products or premium offers or match a brand or seasonal product to an event.

Source: News America FSI/CMS Study

Return to the top of the page

COUPONING TRENDS FOR 1997

NCH NuWorld Reports on 1997 "State of the Industry"

In 1997 consumer packaged goods manufacturers continued to use coupons as the most widely used sales promotion tool, in many ways just as they always have, however, coupons are crossing a bridge toward the future. Coupons are offered and redeemed in many more electronic ways than ever before, and the future is expected to deliver new coupon methods that we can only imagine today.

As a direct motivation to consumers to buy their products, CPG manufacturers maintained a level amount of $3.6 billion in discount value incentive spending in 1997. Each category, however, utilized coupons to a different degree last year. The share of grocery coupons remained steady at approximately 66 percent of the total distribution market, slowing the downward trend of the past several years. Heavy grocery product coupon distribution during the last quarter of 1997 indicated a strong return to coupons for generating year-end sales promotion results. (See Chart A)

For many years Health and Beauty Care (HBC) coupon activity has been growing steadily as a percent of all coupon activity, however, in 1997, HBC coupon distribution share increased only slightly. HBC also increased activity in the fourth quarter of 1997, but not to the same degree as Grocery. (See Chart B)

                             

Manufacturers continued to look for ways to make coupon promotions more effective. Examples of these effectiveness initiatives include:

bulletTargeting FSI circulation.
bullet More emphasis on in-store coupon activities such as at-shelf and P.O.S. coupons.
bullet Targeting coupons at the most likely coupon users, or those users who are prone to product trial and brand switching.

The practice of targeting has provided a tremendous impact on coupon distribution quantities over the past several years. Since 1993, the number of offers has increased by 5 percent, while the average offer size has declined by more than 12 percent. Based on this trend, evaluating the total volume of coupons distributed isn't necessarily valid any more, as it may no longer be indicative of the spending and strategic use coupons are maintaining among packaged goods marketers. Instead, each brand and category should be evaluated independently based upon their individual objectives.

Overall, grocery coupon distribution in 1997 totaled 163.9 coupons, a decline of 7.3 percent over 1996. The aim of designing more effective coupon promotions with less total volume is also seen in the HBC category. HBC coupons declined in total volume distribution in 1997, but at a decreasing rate when compared to the grocery industry. Overall HBC coupon distribution in 1997 totaled 86.3 billion coupons, down 5.8 percent from 1996.

For 1997 NCH NuWorld Marketing has re-aligned product category breakouts to provide greater detail, and more closely match the new definitions used by the syndicated market research companies. For example, Pet Food has been split into four categories: Dog Food, Cat Food, Pet Treats and Other Pet Food Items. This redefinition includes taking breakfast items out of the Cereal grouping and thus, with the partitioning of other previously large category groups, the Cereal category has returned to the number one position in coupon distribution quantities.

Categories with strong growth in coupon distribution for 1997 include: Shampoo and Conditioners, Salad Dressing, Mayo, Spreads & Toppings, Dog Food, Laundry Supplies, and Household Supplies. Some of those with declines include: Cat Food, Wrapping Materials and Bags, and Packaged Meats categories. These coupon mix changes impact the overall statistics in the industry. (See Chart C)

                      

Distributing FSI’s via Sunday newspapers remained the most popular couponing method for grocery product manufacturers. FSI coupons represented 79.7 percent of 1997 grocery coupon issued, a slight drop in distribution share from the previous year. In-Store & Handout coupon activity continued growth in distribution share, rising from 8.0 percent in 1996 to 8.9 percent in 1997, a 3% increase in volume. Coupons distributed in or on grocery product packages dropped slightly in share from 4.0 percent to 3.6 percent, while the use of magazines and newspapers coupons increased in 1997.

The share of In-Store & Handout coupons utilized by HBC manufacturers has continued strong growth, reaching 8.3 percent in 1997 as compared to a share of 6.7 percent in the prior year, a 16% increase in volume. Despite a slight decline in distribution share, FSI’s remained popular with HBC manufacturers representing more than 8 out of every 10 HBC coupons distributed in 1997. Similar to grocery product coupons, HBC coupons distributed in or on product packages declined in share while those included in magazines and newspapers gained in share.

Manufacturers increased the average face value of coupons distributed by 1.2 cents in 1997 to 67.9 cents. This increase was driven by a growth in the average face value for HBC coupons up 5.9 percent to 80.8 cents. This increase was primarily driven by an 8.5 percent growth in the average face value for the personal care & hygiene product category. The average face value of all grocery product coupons distributed in 1997 declined by 2.1 percent over the prior year to 61.2 cents.

More and more of the higher value coupons today require purchases of more than one item. In 1997, 20.6 percent of all coupons distributed were multiple purchase coupons. This means that in 1997 roughly one in five coupons required the consumer to buy two or more products to receive the specified discount, effectively decreasing the incentive value of the coupon to consumers, and thus, a lower response rate is often the result.

Many consumers have noticed the lower face values and increased purchase requirements. Based on NCH NuWorld's 1997 consumer study, the share of consumers who believe that coupons offer large savings dropped to 66.1 percent, as compared to 72.8 percent in the prior year. As a result, consumers are more selective with their coupon usage, choosing higher value coupons and driving up the average face value of redeemed coupons by 5 cents, to 74 cents. This 7 percent increase in value was driven not only by the increased value of HBC coupons, but by an increase in the average value of grocery coupons redeemed as well.

Prior to 1996, the growth in the average face value of redeemed coupons has outpaced the growth in the consumer price index. After a trend breaking year in 1996, this pattern has emerged again in 1997. The average face value of redeemed coupons has grown by 7 percent in 1997, while the change in the Consumer Price Index was 1.5 percent for the same time period.

In 1997, the average duration of all distributed coupons was 3.1 months, up only slightly from the 3.0 month average of the prior year. The average for grocery product coupons remained stable at 3.0 months, while HBC coupons were valid for a longer period of time in 1997, up to 3.3 months. Manufacturers continue to utilize shorter coupon duration’s to limit their liabilities and to boost redemption in the short term.

NCH NuWorld's consumer study in 1997 showed another increase in the share of consumers who believed that coupons expire too soon. The share rose to 70.6 percent, compared to 69.3 percent in 1996 and 60.6 percent in 1995. Despite all the consumer research that indicates coupon duration’s are too short to meet all product purchase cycle and consumer lifestyle limitations, manufacturers continue to choose short duration coupons, which effectively reduces the response to these coupons.

Consumer confidence and the economy also impact coupon redemption. In 1997, the consumer confidence index reached an eight-year high achieving an index of 136.2 at year-end according to The Conference Board.

While coupon usage is constant with just over 82 percent of consumers reported using coupon in 1996 and 1997, frequency of use has declined. The percentage of consumers who stated that they always use coupons has dropped from 27.4 percent in 1996 to 25.8 percent in 1997. The level of 'sometimes' users has grown. NCH NuWorld's studies of the coupon industry show a negative relationship between the economy and coupon redemption. When the economy is strong and consumer confidence is high, coupon redemption declines.

Overall coupon redemption totaled 4.9 billion coupons in 1997, this represented a decline of 7.5 percent. This decline was driven by the decrease in grocery product coupons redeemed. Grocery product coupon redemption dropped 12.9 percent in 1997, totaling 3.7 billion coupons, compared to 4.3 billion in 1996. (See Chart D)

                      

The big story in coupon redemption for 1997 was in the HBC category. Redemption rates for some key media increased in the HBC category, driving a 14.4 percent increase in the number of HBC coupons redeemed in 1997 up to 1.2 billion. Both coupon face values and average duration increased for the HBC category in 1997 provided increased monetary motivation and allowed consumers more time to make the decision to redeem the coupons. (See Chart E)

                              

Source: NCH NuWorld Marketing Limited

Return to the top of the page

 

Home ] Site Map ] Resource Directory ] Feedback ] Legal & Privacy ] I&MI Incentive & Meeting Media ]

Telephone: (708) 401-3766
Send mail to  santella@msn.com with questions or comments about this web site.
Copyright  1998 Santella & Associates.  Legal Disclaimer
Last modified: July 09, 2013