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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
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%, according to CMS, a promotions logistics company. 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%, according to CMS. 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.
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| Household cleaning products (12.4 million coupons, down 5.7%) | |
| Pet food and treats (12.3 million coupons, up 12.4%) | |
| Rug and room deodorizers (10.8 million coupons, up 15%) | |
| Cross-category personal care (10.5 million coupons, up 7.5%) | |
| Snacks (7.2 million coupons, down 3.4%) | |
| Cough, cold, sinus and allergy (6.7 million coupons, up 4.7%) | |
| Hair care products (6.2 million, up 0.8%) | |
| Vitamins (6 million, down 14.7%) | |
| Dishwashing soap (5.5 million, up 5.9%) | |
| Cereal (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).
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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:
| Three of four (76%) of U.S. consumers use coupons. | |
| Shoppers save nearly $3 billion annually by using coupons. | |
| CPG manufactures offered more than $300 billion in coupon savings in 2004. | |
| Coupon users report an average of 11.5% savings on their grocery bill with coupons. | |
| Nearly half of retailers (46%) reported offering shoppers some form of a bonus coupon program in 2004. |
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Manufacturers and retailers have increased their use of cooperative coupon promotions substantially in recent years to increase incremental sales. A new analytical study conducted by CMS and CouponInfoNow.com confirms this as their study explores the growth in usage and examines overall redemption trends. Their study examined three different types of cooperative offers. Offers made jointly by retailers and manufacturers, between two or more different manufacturers, and two or more different brands by the same manufacturer were deemed to be relevant.
While there are extensive differences in both the origination and strategic goals of inter-brand and inter-company promotions, they are treated (and perform) similarly in the analyzed sample.
In 2002, CMS and CouponInfoNow.com reported the above average performance of FSI coupons featured in co-equity promotions. Analysis done at that time found that 60% of cooperative FSI promotions redeemed above expectations, when compared to identical non-cooperative offers. Since that time, FSI co-marketing use has grown at an average annual rate of over 60%. From 2004 to 2005, non-food product categories experienced the most significant growth, but the majority of product categories also posted significant growth. This growth underscores the desire of retailers and manufacturers to take advantage of the many benefits of cooperative FSI promotions. Particularly, manufacturers benefit from increased merchandising support, improved retailer relations, integrated consumer and trade promotion, and increased sales. Retailers likewise benefit from increased exposure to customers, enhanced store image, increased store traffic, differentiation from the competition, and increased retail category share.
By coordinating promotions between multiple parties (retailer/manufacturer, multiple manufacturers, multiple brands, etc.), participants can create mutually beneficial and successful promotions. With a retailer/manufacturer context, promotional partners can highlight savings that go beyond the face value of the coupon. In most cases, the cooperative advertisement is placed in close proximity to the coupon offer. This provides consumers with knowledge of the final selling price (at the participating retailer’s locations) and an added incentive to clip and use the coupon(s). By removing many of the ambiguous elements of standard inserts like purchase location and price point, the retailer removes the obstacles to redemption. One significant question remains for manufacturers. If co-marketing is seen as a way to differentiate from the FSI clutter, has the explosion in cooperative promotions dampened the tactic’s performance?
The CMS study indicated that the growth of distribution did not significantly hinder the effectiveness of co-marketing and co-equity promotions. Over 58% of the offers reviewed performed above expectations (compared to 60% in the 2002 CMS Study). This clearly demonstrates that the increased usage has not diluted performance as might have been thought.

Both food and non-food categories have benefited from the unique advantages that co-marketing provides. Interestingly, though, it is the non-food categories (also the fastest growing in terms of distribution) that seem to have developed the best performing programs. Around 61% of non-food promotions in the sample performed above expectations, compared to only 53% for food. This is the reverse of the 2002 findings, when the analysis found 51% of non-food and 69% of food promotions exceeded expectations.

Another area featuring somewhat surprising findings are those promotions featuring direct FSI support by retailers. Those promotions were evenly split in performance, whereas the inter-company and inter-brand promotions found much greater success. While far from conclusive, it does show that it is possible to conduct a successful cooperative campaign without a large trade component.

A key element of retailer-supported promotions that is not measured by this study is local store support. Lack of buy-in from retail locations in terms of circulars, merchandising, and field sales can quickly sabotage even the most well-planned promotions. Another often-overlooked factor with retailer-supported promotions is the implied exclusivity of the deal. If a consumer connects the coupon to the featured retailer, they may not be receptive to the offer if they do not frequent that chain.
These general findings provide a clear indication that cooperative promotions can be a powerful tool. In Part Two of our analysis, we will take a closer look at these findings to reveal some of the success factors and pitfalls.
By participating in co-equity promotions, retailers can accrue the following benefits:
| Increased exposure to customers. The retailer’s FSI ad provides the opportunity to reach additional customers beyond those attained through store circulars. |
| Enhanced retail brand image. Joint campaigns with leading packaged goods manufacturers help enhance a retailer’s brand image. |
| Increased store traffic. Cost-conscious customers are drawn to a participating retailer by the tempting combination of a manufacturer’s coupon and the retailer’s price reduction. Co-equity ads also help draw customers away from competing classes of trade. |
| Differentiation from the competition. Coupon inserts are one of the most widely read sections in the Sunday paper and are often used by consumers to plan their weekly shopping trips. Co-equity ads that include a retailer’s logo generate top-of-mind awareness of the featured retailer. |
| Increased retailer category share. A study by News America Marketing reports retailer category share can increase from 2% to 30%. |
By participating in co-equity promotions, manufacturers can accrue the following benefits:
| Increased retailer support. When participating in co-equity promotions, retailers typically agree to provide enhanced merchandising support for the featured product(s), including displays at point-of-sale. Two studies by Valassis reported higher levels of display support were achieved during the promotional period. Participation in co-equity promotions can also motivate retailers to purchase additional product to prevent out-of-stock situations. |
| Improved retailer relations. Because retailers and manufacturers are working together to attract the same customers, relationships between the two parties are strengthened. |
| Integrated consumer promotion and trade promotion. The free-standing insert ads (consumer promotion) tie to the retailer’s featured price reduction (trade promotion), thereby integrating the two categories of promotion funds. |
| Increased sales. Studies by News America Marketing report co-equity programs can generate increased sales. According to their report, brand sales at participating retailers can increase up to 1500%, market-wide brand sales can increase up to 80%, and market-wide category sales can increase between 4% and 150%. |
The study showed that sixty percent of the offers studied had redemption rates above or equal to the corresponding brand averages for the specified products, indicating that co-equity programs do boost redemption rates. Increased redemption rates imply increased sales, a benefit to both the retailer and the manufacturer. With respect to food and non-food offers, the majority of the time, coupon offers featured in co-equity ads had redemption rates above or equal to their corresponding brand averages.

The study reviewed offers in three product categories: dry grocery, frozen, and household. In each of these categories, coupon offers featured in co-equity ads generated above average redemption rates the majority of the time.

FSI co-equity promotions, in which a manufacturer and retailer integrate coupons with retail price promotions and merchandising, are growing exponentially. And consumers are responding. According to a CMS's Advantage Update, manufacturer coupons featured in co-equity promotions achieve redemption rates above or equal to their corresponding brand averages sixty percent of the time. The attractive coupling of a manufacturer’s coupon with a retailer’s temporary price reduction provides added incentive for the consumer to clip the coupon and use it to purchase the product from the participating retailer. However, increased redemption rates are not the only benefit of co-equity promotions. As studies from both Valassis and News America Marketing report, manufacturers benefit from increased merchandising support, improved retailer relations, integrated consumer and trade promotion, and increased sales. Retailers benefit from increased exposure to customers, enhanced store image, increased store traffic, differentiation from the competition, and increased retail category share.
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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.
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NATIONAL
COUPON MONTH SPURS AWARENESS FOR CPG MARKETERS
National Coupon Month in September aims to educate consumers about coupons. At the same time, CPG marketers and retailers will benefit from increased awareness of the promotion industry’s most used tactic. "National Coupon Month is a celebration of coupons," said Claire Rosenzweig, CAE, president of the Promotion Marketing Association (PMA), the trade group that developed the promotion. "It’s the time of the year to celebrate the power of coupons as part of the promotional mix and within an integrated marketing communications plan."
Consumers can find information about coupons at the National Coupon Month Web site, www.couponmonth.com. There are tips ranging from making coupon-clipping a great math and savings lesson for the kids to using coupons with shorter expiration dates first to stock up on necessary items. The site is a year-round resource for those looking to maximize their savings and shop smart with coupons. Rosenzweig said heightened consumer awareness of coupons eventually results in increased usage, which benefits manufacturers and retailers. "We want marketers to understand the best way to utilize coupons," she said. Through the PMA Coupon Council, "we try to help marketers understand the role of coupons in the overall integrated marketing mix and how they can be used as part of an integrated marketing plan to help build the brand."
Meanwhile, PMA’s new Retail Council is ramping up its activity as well. "We’re trying to help retailers understand how promotion as a whole can be used to drive traffic to the store. And certainly coupons are a critical element to that," she said. Rosenzweig encouraged CPG manufacturers to enhance their involvement with coupons by joining the PMA Coupon Council. "We welcome these companies as members of the PMA so they can tap into our resources. We encourage them to link to the National Coupon Month website – there’s a logo for it – and to literally get on the bandwagon."
Through the Coupon Council, PMA gathers statistics about the coupon industry. Here are some of them:
| Three of four (76%) of U.S. consumers use coupons. | |
| Shoppers save nearly $3 billion annually by using coupons. | |
| CPG manufactures offered more than $300 billion in coupon savings in 2004. | |
| Coupon users report an average of 11.5% savings on their grocery bill with coupons. | |
| Nearly half of retailers (46%) reported offering shoppers some form of a bonus coupon program in 2004. |
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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.
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IDENTITY THEFTS COSTS CONSUMERS $57 BILLION IN 2005
Consumers in the United States lost $57 billion in 2005 to criminals who stole their identities according to a study by the Council of Better Business Bureaus and Javelin Strategy & Research. It revealed that identity theft cost U.S. consumers 4% more in 2005 than the $54.4 billion it cost in 2004. The average fraud rose to $6,383 from $5,885. The 8.9 million Americans who learned that criminals had stolen personal data and used it to commit fraud fell 4%, from 9.3 million in 2004 and 10.1 million in 2003. Data showed that people who were younger and had lower incomes were more vulnerable.
Unfortunately, it is not very difficult to commit identity fraud. There are several ways that the thieves commit identity theft such as Internet fraud, "phishing," a much-publicized practice where criminals send e-mails asking prospective victims to verify personal data through links to real-looking, but fake, web sites. In addition, victims lost data because their wallets, checkbooks, credit cards that were lost or stolen, victimized by family members, friends, acquaintances, or fellow employees, and stolen or misdirected mail.
In general, people whose incomes were less than $35,000 reported larger frauds, though people who earned $75,000 to $100,000 a year reported the biggest average fraud totaling $9,978. The median fraud totaled $750, unchanged from a year earlier. The survey found that "Generation X," which it defined as people aged 25 to 34, are more at risk than older people, perhaps because their "more active lifestyle" encourages fraud. The survey said a typical fraud costs $422 and takes 40 hours to fix. While fraud takes an average of 84 days to detect, 40% of cases are resolved within one week.
Consumers can protect themselves by closely monitoring their credit reports, personal accounts, and reviewing mail that contains financial statements. Putting fraud alerts on credit reports is an effective way to thwart future fraud. Monitoring your account activity is a crucial early discovery point for possible fraud.
Please Note Illinois has formed a new hotline for residents to report identity theft and take steps to repair their credit and prevent future problems. Attorney General Lisa Madigan said the line is designed to provide immediate counseling. Illinois residents can reach the hotline by dialing (866) 999-5630. For the hearing-impaired, the TTY number is (877) 844-5461.
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Marketers Offer Additional $37 Billion in Coupon Savings in 2005
February 3, 2006: CMS, Inc., announced that coupon distribution increased 10% in 2005. Distribution now stands at 323 billion coupons, nearly a 30 billion-coupon increase versus a year ago. About 88% of these coupons were distributed via Sunday newspapers (free-standing inserts or FSIs). "The very fact that brands put an extra $37 billion in coupon savings on the table proves that they're seeing the value in this type of promotion," said coupon industry analyst and CMS's Director of Marketing, Matthew Tilley. "They're obviously counting on and getting advertising value, retail support and direct sales improvements. Otherwise, we'd see them cutting back."
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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:
| Three of four (76%) of U.S. consumers use coupons. | |
| Shoppers save nearly $3 billion annually by using coupons. | |
| CPG manufactures offered more than $300 billion in coupon savings in 2004. | |
| Coupon users report an average of 11.5% savings on their grocery bill with coupons. | |
| Nearly half of retailers (46%) reported offering shoppers some form of a bonus coupon program in 2004. |
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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.
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Lifestyle Changes of Aging Baby Boomers Impact Redemption Trends
Overall coupon distribution in 2004 grew a healthy 9% to 342 billion coupons. Intense competitive pressure in the general household products category, occasioned by the introduction of roughly 1,300 new products, spurred marketers within this category to significantly increase coupon distribution. Coupled with increases in other non-food categories such as healthcare and body care, consumers were presented with the opportunity for more than $318 billion in potential savings on their favorite brands.

More than 82% of all consumer packaged goods coupons distributed in 2004 were delivered via colorful free-standing inserts (FSIs) in the Sunday newspaper, an increase over the previous year. Delivered to over 67 million households every week, FSIs provide a relatively inexpensive method for distributing coupons. Savvy marketers, using increasingly sophisticated targeting strategies and metrics, are optimizing consumer response to their brand's coupon offerings while still using this traditional 'mass market' vehicle.

The impact of aging baby boomers continues to be felt in overall coupon redemption trends, which dipped 10% to 3.2 billion coupons. While the aging boomers continue to use coupons, their lifestyles are changing. Every year, more and more boomers become "empty nesters" - buying for households of two instead of four or five.
But thrifty shopping habits don't just fade away. Although they may now report being "lighter" coupon users, 69% of primary shoppers report that they still "frequently or almost always check or clip coupons" as part of their shopping behavior. Additionally, the continued growth in meals consumed away from home contributed to lower coupon redemption. However, the declining trend appeared to soften in the fourth quarter, indicating consumers may ultimately be responding to the creeping inflation.

Tactically, marketers increased the average face value of coupons offered to consumers by eight cents to $0.93, allowing coupon users to save almost $3 billion on their grocery bills. Though it's hard to bypass these savings, other tactics may discourage coupon usage by the consumer. For example, the percentage of coupons requiring multiple purchases remained steady at 27%; and the average expiration period, or the length of time a consumer has to use a coupon, remained relatively stable at 3.0 months.


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Amid
tales of economic uncertainty and consumer malaise, leading packaged goods
marketers turned to proven promotional tactics to protect and grow market share.
According to CMS, the premier provider of innovative promotion management
solutions, 2002 coupon distribution rose 3.4% to 336 billion coupons, offering
consumers more than $272 billion in potential savings.

One primary driver behind this increase in coupon distribution volume was the
Procter & Gamble Brand Saver program. This well-integrated multi-brand
marketing program enticed consumers with savings from multiple Sunday newspaper
coupon inserts, and was further supported by magazine advertising, tie-in
promotions with retailers, a Brand Saver web site and electronic newsletters.
The volume of in-ad coupons, or those redeemable at a specific retailer, grew 4.3% from 2001(this figure excludes store coupons issued by a retailer using trade promotion dollars.
The
record number of new product introductions in 2002 may also have influenced
overall coupon distribution. According to Supermarket News, over 22,000 new
products were introduced, more than in any year since 1995. Marketers typically
promote trial of new products with consumer-direct incentives such as coupons,
and some leading retailers reportedly require coupon support behind new product
introductions.
"Coupon
promotions are flexible, and can be structured to support a variety of marketing
and merchandising objectives and collaborative category management goals,"
explains Bob Carter, president of CMS. "Coupons compliment many other forms
of advertising, trade and consumer promotion, and can be distributed broadly to
the masses, or be tightly targeted to reach a specific audience -- or even a
specific consumer. And, unlike many other elements of the marketing mix, the
immediate impact on product sales can be forecasted and tracked."
Tactically,
marketers increased the average face values of their coupons by $.04 to $.81.
This increase, however, was tempered by an increase in coupons requiring
multiple purchases. More than one-quarter (28%) of all coupons now require
consumers to purchase two or more products. According to Carter, "Smart
marketers are willing to experiment with coupon attributes to find the
combination that will best appeal to the target consumer while maximizing
overall coupon ROI for the brand."


The
economic uncertainty in 2002 impacted consumer usage of coupons in surprising
ways. As often reported, consumers were on the lookout for bargains, resulting
in a move away from traditional grocery shopping channels. Instead, consumers
increasingly shopped warehouse clubs, supercenters and dollar stores, which
feature lower prices on many brand name products. This shift helped reduce
coupon volume, as many of these alternate shopping channels do not accept
manufacturer coupons. "Consumers also tend to associate coupons with
grocery stores, so they may not even remember to take their coupons when
visiting non-traditional grocery retailers," explains Carter.
The
number of coupons redeemed by consumers during 2002 dipped 5.4% to 3.7 billion
coupons, with most of the weakness in the first half of the year. By midyear,
coupon redemption trends strengthened, with more consumers proactively seeking
savings as concerns rose over way, unemployment and rising energy costs.

Also
impacting coupon redemption were changing consumer demographics and shopping
behavior - in particular, more men shopping for groceries and shrinking
household sizes. An increasing number of men planned, shopped for, and prepared
meals; however, research shows that men are somewhat less likely than women to
use coupons on a regular basis. In addition, the number of single-person
households, which tend to redeem fewer coupons, was at its highest point ever.
Source:
CMS 2003 Trends Press Release
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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, CMS Inc. 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, per CMS.
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, according to CMS. 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.
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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:
|
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.”
|
2002 |
2001 |
|
|
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.
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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.
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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.
Lorraine Gallaher, director of marketing for CMS, said "The growth in online coupons is quite significant and with the economy the way it is, once consumers realize they can get better values online, there's a good chance more of them will make that switch. In addition, online coupons are much less likely to require customers to buy more than one unit of a product and the average time to expiration is 4.8 months, versus 3 months for the typical newspaper coupon.”
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.
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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, corporate accounts manager and industry relations executive
for CMS 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 CMS 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.
"CMS tracks 41 different methods of distribution, offering coupon issuing
manufacturers many options to get the right coupon in the hands of the right
consumer" said DiBlasio.
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.
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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:
|
48% of coupon shoppers have a household income of more than $50,000. | |
|
28%
of coupon shoppers spend $120+ in an average week on groceries. | |
|
58%
of coupon shoppers use their coupons at grocery stores. | |
|
63%
of coupons shoppers are married. | |
|
38%
of coupon shoppers have either an Associates, Bachelors or Post Graduate
degree. | |
|
56%
of coupon shoppers are book lovers. | |
|
72%
of coupon shoppers read the newspaper | |
|
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.
| Multiple-purchase coupons have increased from 17% of all coupons in 1996 to 25% of all coupons in 2001. | |
| Coupon duration dropped from 99 days
in 2000 to 95 days in 2001. | |
|
Manufacturers
used more FSIs in 2001 than 2000, due to cost-consciousness. | |
|
57.9% of
consumers say they regularly use coupons.
| |
|
Only 38.0% of men
and 45.7% of women say that coupons help them choose among the brands they
normally buy. | |
|
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.)
| |
|
84% of all
coupons distributed last year were through FSIs.
FSI coupons were 81.5% of grocery products, and 88.5% of HBC. |
Carolina Manufacturer’s Service did indicate that coupon distribution was up 29% in the 4th quarter of 2001, which is significantly higher than the historical average of 9%. On average, there were 14 coupons redeemed per person in the U.S. in 2001. In addition, CMS research indicated that retailers offering double and triple coupons achieve as much as $11,000 more in average weekly sales with sales per square foot running about $9 higher than stores without bonus coupons.
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.
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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, according to CMS, the premier provider of innovative promotional management solutions. 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. According to Bob Carter, president of CMS, "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."
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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 |
|
2000
Rank |
Percent
Change |
|
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 |
|
||
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|
COUPON DISTRIBUTION TRENDS
1994 - 2001 |
||||
|
(
Based on NCH & CMS annual reports in billions ) |
||||
|
|
||||
|
Year |
CMS |
%
Vs Prev Year |
NCH |
% Vs Prev Year |
|
1994 |
327 |
1% |
310 |
3.7% |
|
1995 |
325 |
-1 |
292 |
-5.7 |
|
1996 |
306 |
-6 |
269 |
-8.0 |
|
1997 |
276 |
-10 |
250 |
-6.8 |
|
1998 |
278 |
1 |
249 |
-0.5 |
|
1999 |
288 |
3.6 |
256 |
2.8 |
|
2000 |
340 |
7.5 |
248 |
-3.1 |
|
2001 |
333 |
-2.1 |
239 |
-3.6 |
|
Multiple
Purchase Requirements |
|||||||
|
|
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
|
Percentage of Coupon Distribution |
13% |
17% |
21% |
22% |
23% |
24% |
25% |
Coupon highlights from 1999 -
2001
|
NCH
showed redemptions down 2% to 4.6 billion in
1999, down in 2000 by 3.1 % to 4.5 billion, and down again by 11% in 2001 to
approx. 4 billion. | |
|
CMS
showed redemption down to 4.6 billion in 1999,
down in 2000 by 4.3% to 4.4 billion and down again by 11% in 2001 to 3.9
billion. | |
|
NCH
Indicated that the Average face value in 2001
was 83cents, 77 cents in 2000 and 73 cents in 1999 | |
|
CMS
calculated the average face value in 2001 as
79cents. | |
|
FSI coupons continue to dominate distribution with 84% in 2001, 82% in 2000, and
81% in 1999. (NCH)
| |
| Although on-line coupons have grown since 1999/2000 they still are an insignificant factor in the industry. Internet coupons accounted for less than 1% of all coupons distributed in 2000 and again in 2001. Some Internet couponing has become more "consumer friendly". |
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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
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COUPONING TRENDS FOR
THE YEAR 2000CPG 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:
| The average duration of coupons
from distribution date to expiration date remained consistent at 14 weeks. | |
| The 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. | |
| The 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. |
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MARKETERS TAKE AIM WITH COUPONS
Over $234 Billion In Savings Offered to Consumers
Carolina Manufactures Services announce as consumer confidence in the economy lags, marketers are protecting branded market share by offering increased savings incentives with coupons. According to CMS, a leader in promotional settlement and information management services, the number of coupons distributed annually to consumers increased 7.5% in 2000 to over 330 billion. In addition, experimentation with varied methods of distribution and a return to more consumer-friendly coupon tactics characterized the year.
"This renewed marketing focus, combined with the weakening economy and growing retailer participation in delivering coupon incentives, is finally getting the consumer’s attention, and has helped drive increased coupon redemption trends in the fourth quarter," explained Bob Carter, president of CMS. Over 4.4 billion coupons were redeemed in 2000, representing consumer savings upwards of $3.3 billion.
Marketers increased coupon distribution volume for the second year in a row and continued to test different methods of coupon distribution. Major CPG powerhouses experimented with the nascent "solo FSI", a sophisticated Sunday newspaper insert sponsored by a single manufacturer. In addition to offering numerous coupons for the company’s products, the solo FSI invites readership with its coordinated theme, recipes and consumer tips. Three of the top five companies distributing coupons employed solo FSI's during 2000.
The increasingly competitive consumer environment also prompted a return to more user-friendly coupon tactics. In response to the consumers’ demand for added flexibility in deciding when to use a coupon, marketers increased the average expiration period by nearly 10% to 3.4 months. Additionally, marketers upped the potential savings, increasing the average coupon face value by 6% to $0.75.
Historically, as the economy weakens, consumers look for ways to economize and coupon redemption increases. After peaking in July of last year, the Consumer Confidence Index dropped over 36 points through February, foreshadowing a weakening economy. "Budget-conscious consumers have two choices for saving money – they can use coupons to receive discounts on branded products or they can turn to private label products," according to Carter. "With the continued quality improvements in many private label products, brand managers may be concerned that the consumer who tries a private label to save money may permanently switch. Coupons can be used as an effective defensive strategy to combat private label pricing."
The consumer’s love affair with coupons has not gone unnoticed by retailers, who have become increasingly active in developing co-marketing programs involving manufacturers’ coupons. Retailer-specific promotions involving coupons are now found in mass-market vehicles such as FSI's as well as in highly targeted direct mail campaigns. Using information collected from the consumer’s frequent shopper card, innovative retailers offer free enrollment in baby clubs, senior clubs and other targeted programs. Once registered, consumers receive newsletters, special offers, and of course coupons.
The Internet is also
fertile ground for savvy consumers seeking coupon savings. Internet-delivered
incentives, including print-at-home paper and electronic "clipless"
coupons, are increasingly popular with wired consumers. Retailers are blazing
the trail in this new arena, with over 25,000 stores currently participating in
some form of online coupon program directly linked to their web sites.
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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:| Distribution | |
| Redemption | |
| Media | |
| Face Value | |
| Purchase Requirements | |
| Coupon Life |
Overview of Industry Trends
| Industry distribution for 1999 was $263.4
billion up 1.2% from 1998 | |
| Redemption decreased by 1.3% in 1999 from
4.66 billion in 1998 to 4.60 billion in 1999 | |
| Grocery category captured 56% of
distribution for 1999 up 7.1% from 1998 | |
| Grocery distribution increased by 5% in
the first half of 2000 |
| Average face value distributed was $0.74
for 1999 up 7% from 1998 |
| $1.00 face value increased by 12% in
distribution and 17% in redemption for the first half of 2000 |
| Average purchase requirement distributed
for 1999 was 1.5 units up 15% from 1998 |
| The single-purchase requirement dropped
by 5% in redemption for the first half of 2000 |
| FSI share distribution for 1999 was at
93% up 4 % from 1998 |
| FSI distribution decreased by 1% to 92%
in the first half of 2000 |
| Average coupon life distributed for 1999
was 2.16 months up 5% from 1998 |
| Coupon redemption of coupons with a
two-month Life increased by 147% in the first half of 2000 |
| Dry cereal category decreased 37% in
distribution with 3.46% for 1999 down from 5.5% in 1998 |
| Chains share of the retail market for
1999 was 52% up 4% from 1998 |
| Grocery category had the highest average
redemption from all retail types |
| Northeast - highest redemption of the
grocery category within chains at 76% |
| Southwest - highest redemption of the
grocery category within mass merchandisers at 52% |
| Northeast - highest redemption of
grocery category within wholesalers at 82% |
| Midwest - highest redemption of grocery
category within drug stores at 33% |
| Midwest - highest redemption of grocery
category within independents at 54% |
| Frozen Foods category captured 50% of
the redemption for Catalina |
| Single-purchase requirement obtained 64%
of Catalina redemption |
| 26% of the Catalina coupons redeemed had
a face value of $1.00 |
| 15% of shelf-dispensed coupons
distributed was for personal care products |
| 21% of shelf-dispensed coupons
distributed had $0.55 face value |
| Average face value for new product
coupons distributed in the first half of 2000 was $0.80 |
| Average purchase requirement for new
product coupons distributed in the first half of 2000 was 1 unit |
| Average life for new product coupons
distributed in the first half of 2000 was 82 days |
| 67% 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
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Mid Year Trends 2000
| Distribution 161 billion, up 8% (FSI volume up 8%) - 291 billion for year 2000 | |
| Redemption 2.1 billion, down 12% - 4.2 billion for the year 2000 | |
| Average redemption rate 1.0% | |
| Average expiration period 2.83 months | |
| Average face value 74 cents | |
| Five Coupons redeemed per household. | |
| Average purchase requirements rises to 1.5 units per coupon. | |
| Internet volume up 1266% (estimated 95 million coupons) | |
| Frequent Shopper Programs | |
| 70% of consumer participate in FSP's | |
| 95% use FSP card every time they shop | |
| Only 3% do not want to provide personal information | |
| E-promotions are the Number one reason for FSP |
| 10% of total marketing dollars spent on e-promotions, but primarily trade funds (pay for performance trade deals) vs. consumer |
Source: AC Nielsen
| FSP customers = 78% of total dollar sales | |
| 67% report increases in revenue | |
| 41% report increases in transaction size | |
| 35% 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:
| 10.5 coupons redeemed per household. |
| Top three retailers control 62% of the market. | |
| Shift to more coupons on Non-Food Items. | |
| Higher value coupons used. | |
| FSI's represent more than half of all coupons distributed. |
United Kingdom:
| 19.9 coupons redeemed per household. |
| FSI's are not utilized. | |
| Five major retailers dominate retail market. | |
| Loyalty Program first introduced (Tesco). |
Italy:
| 4.2 coupons redeemed per household. |
| Retail markets has many independents, however, Hyper & Supermarkets represent 52% of ACV. | |
| Coupon market dominated by a few manufacturers. | |
| Most coupons require proof of purchase (like rebates). |
Spain:
| 1.4 coupons redeemed per household. |
| Acquisitions changing retail environment. | |
| Coupon market dominated by a few manufacturers. | |
| Coupons used to build a database. |
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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. |
|||||
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COUPONING TRENDS FOR 1999
CAROLINA MANUFACTURER'S SERVICE
FINDS COUPON
DISTRIBUTION UP AGAIN
Consumers Pocket over $3 Billion in Savings
Coupon distribution volume continued to climb as packaged goods marketers
experimented with a flourishing medley of new delivery options. According to CMS, an
affiliate of Inmar Enterprises, Inc., the nations largest provider of promotional
settlement services, 1999 coupon distribution topped 288 billion coupons, an increase of
3.6%. Thrifty consumers clipped and redeemed 4.6 billion coupons, for a savings of over $3
billion at the cash register.
"By trying various distribution methods and creatively using the newest information
management tools, brand marketers can target consumers and deliver promotional incentives
more effectively than ever," explained Bob Carter, president of CMS. "Coupons
remain an important element in the marketing mix because they consistently deliver
measurable results."
Colorful Sunday free-standing newspaper inserts comprised 92% of overall coupon
distribution, down 1 point from 1998. But while free-standing inserts (FSI) continued to
be the most common method of distribution, coupon volume distributed by various electronic
methods grew 20%. Internet-delivered coupons, although still a controversial topic in the
industry, saw a five-fold increase in distribution as entrepreneurial marketers sought
better ways to target and deliver effective incentives. The distribution of in-pack and
on-pack coupons also jumped significantly, signaling the use of defensive strategies
designed to reward brand loyalty and stimulate repurchase.
Consumer response to these various methods was decidedly mixed. Although consumers
redeemed 4.6 billion coupons in 1999, this volume was down 2.5%. The average FSI
redemption rate dropped slightly to 1.1%; however, redemption rates for several other
methods increased. "Todays consumers are very, very busy. In addition to value,
they are seeking simplicity and convenience in their shopping experience," explains
Carter. "Consumers do respond favorably to user-friendly incentives. They appreciate
the value of coupons, but offers must be provided in a simple, easy to-use format at just
the right time to influence the buying decision."
Some marketers have responded to the consumers demand for added convenience by
lengthening the period in which a coupon can be redeemed. Expiration periods increased
slightly in 1999 for the first time in over five years. The average expiration period was
2.9 months, up from 2.8 months in 1998. Still, more than 95% of coupons distributed in
1999 had expiration periods of 5 months or less.
Another factor that may affect consumer response to an offer is a multiple purchase
requirement. Continuing last years trends, the percentage of coupons requiring
multiple purchases declined in 1999 to 22.5%. This decline may help explain the 2%
decrease in average face value to $0.65, as multiple purchase requirement coupons
typically offer a higher face value to attract consumers. In 1999, approximately 40% of
coupons had face values of $0.50 or less, the most common ceiling in bonus coupon markets.
The availability of more sophisticated technology at retail continues to impact the way
consumers receive promotional offers. For example, once popular in-ads, or
manufacturers coupons printed within a retail stores advertisements, have been
virtually replaced by electronic discounts offered through retailers loyalty card
programs. And this shift will continue the consumer environment of the future
promises an increasing demand for quick, one-stop shopping and a greater emphasis on
permission-based marketing techniques. Successful marketers will rely on superior
technology to add convenience and speed the flow of information for more effective
promotions.
Trends -- Method of Coupon Distribution
| In 1999, manufacturers used almost 40 methods of coupon distribution. |
| Direct Mail, Electronic Shelf, Handout In Store with Sample, In Pack, Military Magazine, Magazine Pop Up, On Pack and On Pack Cross Ruff all increased their shares of distribution. |
| Electronic methods of coupon distribution continued to emerge Electronic Checkout, Electronic Discount, Electronic Frequent Shopper, Electronic Kiosk, Electronic Shelf, Internet, and Targeted Frequent Shopper. |
| Although their share of distribution decreased almost one point, FSI's continued as the dominant method of coupon distribution with 92% of overall coupon distribution. |
1999 Percent of Total Coupons Distributed and Redeemed by Distribution Method
|
|
Percent |
Percent |
|
Method |
Distributed |
Redeemed |
|
Bounceback |
<0.1% |
0.2% |
|
Consumer Response |
<0.1% |
0.1% |
|
Direct Mail |
1.1% |
1.4% |
|
Direct Mail Co-Op |
0.1% |
0.1% |
|
Electronic Checkout |
0.7% |
3.9% |
|
Electronic Shelf |
0.6% |
3.8% |
|
Free Standing Insert |
91.8% |
70.9% |
|
Handout Off Store Location |
<0.1% |
<0.1% |
|
Handout Off Store Location with Sample |
<0.1% |
<0.1% |
|
Handout |
0.9% |
2.3% |
|
Handout Co-Op |
<0.1% |
<0.1% |
|
Handout In Store with Sample |
0.1% |
<0.1% |
|
In Pack |
1.0% |
2.2% |
|
In Pack Cross Ruff |
0.3% |
0.5% |
|
Instant Redeemable |
0.3% |
7.2% |
|
Instant Redeemable Cross Ruff |
0.1% |
1.3% |
|
Military Handout |
0.1% |
0.6% |
|
Military Magazine |
0.1% |
0.2% |
|
Magazine-On-Page |
0.4% |
0.2% |
|
Magazine Pop Up |
0.6% |
0.3% |
|
Military Shelf Pad |
0.1% |
1.1% |
|
Internet |
<0.1% |
0.1% |
|
On Pack |
0.5% |
1.4% |
|
On Pack Cross Ruff |
0.2% |
1.2% |
|
Newspaper Run of Press |
0.3% |
0.2% |
|
Shelf Pad |
0.1% |
0.6% |
|
Targeted Frequent Shopper |
<0.1% |
<0.1% |
|
Other |
0.6% |
0.2% |
Coupon Redemption Rate Trends by Distribution Method
|
Method |
1997 |
1998 |
1999 |