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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
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.
Marketers distributed 253 billion coupons via FSIs last year, worth more than $300 billion in discounts to shoppers. The number of FSI pages hit a record 200 billion, up just over 1% for the year, according to FSI tracking service Marx Promotion Intelligence, Minneapolis. Although the number of coupons slipped 0.1% from 2005, page volume grew 1.1% to a record level. Average coupon face values also achieved record levels, rising 4% to $1.19. Coupons from nonfood consumer packaged goods drove this growth, rising 3.6% to $1.45, according to the 2006 Marx FSI Distribution Trends Report. Packaged goods brands accounted for 67.4% of all FSI pages, followed by direct response ads (23.4%) and franchised restaurants (9.2%). Among packaged goods, non-food brands ran 2.7% more coupons than they did in 2005, and food brands ran 3.9% fewer, according to Marx’s annual FSI Distribution Trends Report. The firm does not track coupon redemption. The top 10 product categories for coupon distribution were:
The 10 manufacturers that dropped the most coupons last year were Procter & Gamble; General Mills; SC Johnson & Son; Unilever; Reckitt Benckiser; Nestle; Johnson & Johnson; Altria Group (including Kraft Foods); Colgate-Palmolive Co. and Kimberly-Clark Corp. New product launches have always been a strong catalyst for couponing, and 2006 was no exception: Marx tallied coupon support for 384 product launches from packaged goods brands. "Consumers continue to seek out FSIs to be exposed to new products, gain additional product information, benefit from purchase incentives, and plan their shopping trips," said Marx Chief Operating Officer Mark Nesbitt in a statement. Sunday newspaper FSIs reached an average of nearly 70 million households each week. The heaviest activity came just before Easter (April 2, 144 FSI pages) and Thanksgiving (Nov. 11, 128 FSI pages).
During the first six months of 2006,
the average face value of Free Standing Inserts (FSIs) increased 8.6 percent to
$1.18 vs. the same period in 2005. It is the largest average face value for a
half year period on record. According
to the Marx Promotion Intelligence FSI Trend Report, this trend is being fueled
primarily by the expanded use of FSI coupons for high-value products
increasingly being added to the grocery channel. Face values for high-value
products averaged $4.07 during the first half of 2006, up 20% from the same
period in 2005. "Marketers
continue to leverage FSIs to provide impression value and reach while delivering
consumer incentive and brand messaging," said Mark Nesbitt, chief operating
officer, Marx Promotion Intelligence/ TNS Media Intelligence. "However, it
is evident that high-value consumer promotions have emerged as an effective
tactic as innovative new products are introduced and traditional retail channels
continue to blur." In the first half of 2006, average face values of coupons rose 10.9% across all non-food segments, versus same period 2005. The household products category led this trend with a 22% increase to $1.11 driven by expanded activity in support of high-value products. Coupons for non-food items decreased 2.7 percent versus record levels in the first half of 2005. Personal care and household products segments had slight increases in coupon distribution of 0.4 percent and 0.3 percent respectively, while the health care segment had a decrease of 7.9 percent. Average face values of coupons among food categories rose 2.2 percent to $0.82, led by refrigerated foods with an 8.2 percent increase to $0.74. The cereal category posted a 7.1 percent decline to $0.83. Coupons for food items decreased 6.5 percent versus record levels last year, although refrigerated foods had a 3.9 percent increase in coupon circulation. During the first half of 2006, more than 130 billion coupons were delivered via FSIs in Sunday newspapers. The amount was down 4.2 percent from the same period in 2005, which was the most active six-month period on record for FSI activity. This decrease in coupons corresponds with a 2.2 percent decrease in total pages. Through the Coupon Council, PMA gathers statistics about the coupon industry. Here are some of them:
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:
By participating in co-equity promotions, manufacturers can accrue the following benefits:
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.
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."
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:
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.
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.
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."
During the first six months of 2006, the average face value of Free Standing Inserts (FSIs) increased 8.6 percent to $1.18 vs. the same period in 2005. It is the largest average face value for a half year period on record. According to the Marx Promotion Intelligence FSI Trend Report, this trend is being fueled primarily by the expanded use of FSI coupons for high-value products increasingly being added to the grocery channel. Face values for high-value products averaged $4.07 during the first half of 2006, up 20% from the same period in 2005. "Marketers continue to leverage
FSIs to provide impression value and reach while delivering consumer incentive
and brand messaging," said Mark Nesbitt, chief operating officer, Marx
Promotion Intelligence/ TNS Media Intelligence. "However, it is evident
that high-value consumer promotions have emerged as an effective tactic as
innovative new products are introduced and traditional retail channels continue
to blur." High value products using FSIs include many personal care items and household cleaning products. Examples include: teeth whitening kits (Colgate Simply White, Crest Night Effects and Crest WhiteStrips), diabetes care (OneTouch Blood Glucose Monitoring System), portable air treatment systems (Febreze ScentStories, Air Wick FreshMatic, Glade Wisp), and disposable toilet cleaning systems (Clorox Toilet Wand, Scrubbing Bubbles Fresh Brush). In the first half of 2006, average face values of coupons rose 10.9% across all non-food segments, versus same period 2005. The household products category led this trend with a 22% increase to $1.11 driven by expanded activity in support of high-value products. Coupons for non-food items decreased 2.7 percent versus record levels in the first half of 2005. Personal care and household products segments had slight increases in coupon distribution of 0.4 percent and 0.3 percent respectively, while the health care segment had a decrease of 7.9 percent. Average face values of coupons among food categories rose 2.2 percent to $0.82, led by refrigerated foods with an 8.2 percent increase to $0.74. The cereal category posted a 7.1 percent decline to $0.83. Coupons for food items decreased 6.5 percent versus record levels last year, although refrigerated foods had a 3.9 percent increase in coupon circulation. During the first half of 2006, more than 130 billion coupons were delivered via FSIs in Sunday newspapers. The amount was down 4.2 percent from the same period in 2005, which was the most active six-month period on record for FSI activity. This decrease in coupons corresponds with a 2.2 percent decrease in total pages.
COUPON DISTRIBUTION INCREASES 10% FOR 2005 Coupon redemption declined 6% in 2005, while distribution increased 10% last year to 323 billion coupons. For several years, coupon face values have increased 8-9%, compared to the 1-2% in prices. The average coupon value is $1.16. Overall, coupon distribution is up 10%, with 6% for non-food categories and 3% for food coupons. Meanwhile, redemption is up 20% for food, but down 29% for non-food categories. The number of coupons requiring multiple purchases is down. In the non-food category, consumers are 30% more likely to use a buy-two coupon than a buy-one. In food, they are actually 14% more likely to use a buy-four than a buy-one. And overall, across food and non-food consumers are 49% more likely to use buy-four and 18% more likely to use buy-three than to use a buy-one. Most of the increased redemption can be seen with in-store coupons as about a third of redemption’s are from in-store distribution. The Internet accounts for less than 2/10ths of a percentage of coupon distribution and redemption, however, they are reaching their targets. Minority group such as Hispanics and African-Americans are undeserved markets in terms of coupons. CPG marketers are seeking consumers more than ever before by using targeted distribution methods. Marx Promotion Intelligence reports that during the first six months of 2006, Free Standing Insert (FSI) average face value increased 8.6 percent to $1.18 versus the same period in 2005. It is the largest average face value for a half year period on record. This trend is being driven primarily by the expanded use of FSI coupons for high-value products which are increasingly being added to the grocery channel such as Teeth Whitening Kits, Diabetes Care Products, Portable Air Treatment Systems and Disposable Toilet Cleaning Systems. Face values for high-value products averaged $4.07 during the first half of 2006, up 20 percent from the same period in 2005.
COUPON DISTRIBUTION SURGES 9% in 2004Lifestyle 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.
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.
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
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.
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:
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