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MARKETING RELATED ARTICLES

COUPON RELATED ARTICLES

REBATE & PREMIUM FULFILLMENT ARTICLES

FREQUENT SHOPPER & RETAILER ARTICLES

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COUPON TRENDS

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wpe4.gif (1222 bytes)       CMS REPORTS ANNUAL COUPON DISTRIBUTION TO 286 BILLION

CMS announced that over $331 billion in potential consumer savings were distributed through coupons in 2006 with over 2.6 billion coupons redeemed. Marketers found that almost 142 million consumers used coupons with substantial usage across ethnic and demographic lines. Coupon distribution declined by 12% in 2006, with a corresponding 13% drop in redemption with more than 286 billion coupons distributed.

The emphasis on Free-standing Inserts (FSI’s) continues to grow despite continued declines in newspaper readership. About 89% of the coupons in 2006 were distributed via FSI’s in Sunday newspapers. Overall, 92.5% of all coupons were distributed via methods sent directly to the home (direct mail, newspaper, magazine, etc). The use of in-store methodologies declined slightly in 2006, from 5.3% to 4.9% of all coupons. The percent of coupons redeemed by in-store method, though, increased to over 34%. Clearly, different targeting and distribution strategies allow marketers to reach consumers in compelling ways.

The average expiration period fell somewhat to 2.9 months, and the average expiration period for FSI coupons held steady at 2.6 months. Average face value also declined, both on a per-coupon and per-item basis. For the second consecutive year, the increase in the consumer price index (CPI) outpaced the increase in the average face value distributed for all coupons, possibly causing consumers to find coupons offers less attractive. The prevalence of multiple purchase coupons also increased, to almost 28% of all coupons distributed. As marketers continue to address changing demographics and technologies, and customize their coupon promotions likewise, they will ensure greater consumer response. Coupons remain a relevant and compelling way to reach consumers and move product, but adaptation is necessary for marketers’ offers to stay relevant.

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wpe4.gif (1222 bytes)       FSI DELIVER 253 BILLION COUPONS WORTH $300 BILLION IN 2006

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

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

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

The top 10 product categories for coupon distribution were:

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

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

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

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

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

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

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

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

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

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

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wpe4.gif (1222 bytes)    COOPERATIVE COUPON PROMOTIONS INCREASE INCREMENTAL SALES

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:

bulletIncreased exposure to customers. The retailer’s FSI ad provides the opportunity to reach additional customers beyond those attained through store circulars.
bulletEnhanced retail brand image. Joint campaigns with leading packaged goods manufacturers help enhance a retailer’s brand image.
bulletIncreased 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.
bulletDifferentiation 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.
bulletIncreased 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:

bulletIncreased 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.
bulletImproved retailer relations. Because retailers and manufacturers are working together to attract the same customers, relationships between the two parties are strengthened.
bulletIntegrated 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.
bulletIncreased 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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wpe4.gif (1222 bytes)    CIC PROPOSES ADDING HOLOGRAM TO DETER GROWING COUNTERFEITING

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

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

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

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

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

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wpe4.gif (1222 bytes)    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:

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

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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."

 

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

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

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

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

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

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

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

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

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


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

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

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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.

COUPON DISTRIBUTION SURGES 9% in 2004

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.



Source: CMS, Inc. Advantage Update, "CMS 2004 Coupon Trends: Coupon Distribution Surges 9%," First Quarter, 2005

Sluggish Economy Spurs Search for Deals

COUPON DISTRIBUTION GROWS IN 2002

CONSUMERS EXPLORE NON-TRADITIONAL SHOPPING CHANNELS

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. That gives us about 3,100 coupons (60 coupons per week) for every household in the U.S.



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 Survey.

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

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

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

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

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

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

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

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

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

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

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

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

Rank

Retailer

1

Kroger

2

Wal-Mart

3

Ahold

4

Military Commissaries

5

Safeway

 

 

 

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

  TOP 20 DISTRIBUTION CATEGORIES

2002
Rank

2001
Rank


  Category

1

1

Household Cleaners

2

6

Prepared Foods

3

7

Detergents

4

2

Medications/Health Aids

5

4

Paper Products

6

3

Condiments/Gravies

7

8

Personal Soap/Bath

8

5

Frozen Prepared Foods

9

9

Cereal

10

24

Skin Care Preparations

11

16

Cough & Cold Remedies

12

22

Fresheners/Deodorizers

13

17