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Top If you like our site, please bookmark it so it will be easy to find later. REBATE & PREMIUM FULFILLMENT ARTICLES FREQUENT SHOPPER & RETAILER ARTICLES
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.
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, 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." Coupon face values declined by a penny to $1.44, a reversal of years of increase while expiration periods contracted by 10 percent after years of remaining static.
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
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
TRADE PROMOTIONAL BUDGETS
HOW PROMOTIONAL BRANDS ARE EVALUATED
HOW MARKETERS BASED ROI
WHAT DETERMINES AGENCY REVIEWS
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
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
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
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.
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.
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:
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).
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." 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:
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."
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.
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.
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.
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 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. 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 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:
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.
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.
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.
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:
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:
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.
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.
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.
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."
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.
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
COUPON DISTRIBUTION BY SHARE
Source: Watts NCH Promotional Services
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:
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:
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:
Overview of Industry Trends
Source: International Data, LLC - The Definitive Report for the Coupon Industry
Mid Year Trends 2000
Source: AC Nielsen
Source: FMI e-Marketing Survey 1999 INTERNATIONAL COUPON TRENDS Number of food outlets (where coupons are a large part of the marketing mix)
Source: International Data & Marketing Statistics 2000 The Consumer in the United States
Source: NCH Consumer Study, 2000 Frequency of Coupon Use by Type of Store in the U.S.
Highlights Canada:
United Kingdom:
Italy:
Spain:
PROMOTION MARKETING EXPENDITURES 1997 - 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.
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:
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:
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.
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.
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.
"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." 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.
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.
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.
THE IMPACT OF COUPONING The FSI Council/PDI study revealed the following:
Retail Systems Consulting Card Based Marketing Report indicated that:
The 1998 Annual Report of the Promotion Industry reported that:
The Resource Marketing Group Study revealed that the Drivers for Electronic Growth include:
Research conducted by Promotion Decisions, Incorporated (PDI) found that full-page ads result in:
A 1998 study conducted by Roper Starch Worldwide on reader awareness of Free Standing Inserts (FSI’s) revealed the following:
Associated
refers to the percentage of readers who
recognized the featured brand.
The position of the coupon in an FSI does not affect awareness.
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
COUPONING TRENDS FOR 1997
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TOP 10 CATEGORIES FOR COUPON
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