What are the advantages of Internet coupons?

What are the weaknesses of Internet coupons?

Is credit card fraud easier to pull off now than in the past? What should retailers be doing to protect their businesses?

Recent reports suggest that the self-checkout technology adds convenience and speeds consumers through the front-end. It also has provided a new opportunity for credit card fraud as stores have largely stopped checking for ID. There is little risk for an identity thief to use self-checkout technology.

Coupon Processing Terminology

Many of these terms are the result of the coupon process and specifically relate to deductions and misredemption. The exact terms may vary by clearinghouse and manufacturer's agent.

Coupon Appearance:

Consecutively Numbered
Coupons have consecutive serial numbers.

Counterfeit
Bogus coupons that may have a different print quality or paper than the coupons distributed by the manufacturer.

Gangcut/Gangtorn
Matching cuts or tears on two or more sides.

Mint
Coupons that do not appear handled or are in an uncirculated condition.

Poor Mix
The shipment(s) lacks variety in the type of coupon(s) normally submitted to the manufacturer(s).

Straight-Edge Torn
Coupons have identical straight-edge cuts.

Washed Appearance
Coupons have a rough, washed appearance.

Wrinkled Coupons
Coupons appear to have been wrinkled in a matching pattern.

Credit Memo
The retailer is in the Manufacturer’s deductor file.

Does Not Stock
The store does not stock the product for which it is submitting coupons.

Expired
The coupon has passed the expiration date printed on the face of the coupon plus the grace period allowed by the manufacturer.

Foreign Coupon
A manufacturer’s term referring to coupons which were sent to them but were issued by other manufacturers. Most manufacturers return such coupons to the sender.

In-Ad Coupons
Coupons that are included in a particular retailer’s newspaper ad or handbill, which shoppers may redeem only at the retailer’s store(s). The coupons are usually issued under a special agreement between the retailer and the manufacturer of the product.

Method of Distribution

Coupon promotions can be delivered to consumers in many ways such as Free-standing Inserts (which represent approximately 84% of all coupons distributed) efficiently reach a mass audience. Some methods, such as direct mail, may be more expensive but enable more precise targeting.

You need to consider both production and distribution costs which is dependent on the distribution method selected. FSIs are typically printed and distributed by an FSI vendor at a contracted rate per thousand whereas on-pack coupons are part of existing product labeling and distribution, and therefore may not carry any incremental cost other than printing plate charges. Your costs will vary by method and vendor. Retailer-negotiated methods, such as in-ads may involve use of trade funds.

The following are the various methods of coupon distribution:

Bounceback (BB) - A coupon sent in response to a consumer’s special request, usually requiring proof of purchase.

Color Run-Of-Press (CRP) - A multi-colored coupon printed on a newspaper page.

Direct Home Delivery (DHD) - A coupon delivered to the consumer’s home via a delivery medium other than the U.S. mail. Examples include door hangers, leaflets, or plastic bags containing subscription publications.

Direct Mail Solo (DM) - A coupon delivered through the mail directly from a manufacturer or supplier.

Direct Mail Co-op (DMC) - Several coupons from different manufacturers that are mailed together in one envelope.

Direct Mail with Sample (DMS) - A coupon delivered through the mail along with a sample of the featured product.

Electronic Checkout (EC) - A coupon that is printed by a machine in the retail store at the time of checkout. It is intended for use on a future purchase.

Electronic Discount (ED) - A discount received by all consumers at the checkout if they purchase a specified product at a participating retailer during the promotion period.

Electronic Frequent Shopper (EFS) - A discount received electronically at checkout by all frequent-shopper club members if they purchase a specified product during the promotion period.

Electronic Internet Coupon (EIT) - A non-targeted electronic coupon delivered by the Internet. The consumer may receive a shopping list or other information with a bar code to be scanned at the checkout. No paper coupons are required.

Electronic Kiosk (EK) - A coupon delivered by a machine at a kiosk in a retail store.

Electronic On-cart (EOC) - A coupon delivered to a consumer by a machine located on a cart. The coupon for the product is dispensed when the cart approaches that product’s location in the store.

Electronic Shelf (ES) -

Free-standing Insert (FSI) - A multi-color coupon in stand-alone format, inserted in the Sunday newspaper.

Handout (HO) - A coupon handed out by someone at the store level.

Handout Co-op (HOC)

Handout In-store with Sample (HSS) - A coupon presented to a consumer at the retail location with a sample of the featured product.

In-ad (IA) - A coupon printed within a retail store’s advertisement. It is usually only redeemable at the retail location that sponsored the ad.

In-pack (IP) - A coupon found inside a product package.

In-pack Cross Ruff (IPC) - A coupon found on one’s product package that is redeemable on a different product.

Instant Redeemable (IR) - A coupon found on a product’s package that can be easily removed for instant use when the consumer purchases the specific product.

Instant Redeemable Cross Ruff (IRC) - A coupon found on one’s product package that can be easily removed for instant use on another product.

Magazine-on-page (MOP) - A coupon printed on a magazine page.

Newspaper Co-op (NCC) - Coupons, printed in a group in a newspaper, that are from more than one manufacturer.

Newspaper Run-of-press (ROP) - A black and white coupon printed on a newspaper page.

On-pack (OP) - A coupon that is printed as part of the product’s package. The package must be "destroyed" to use the coupon.

On-pack Cross Ruff (OPC) - A coupon, printed as part of a product’s package that is redeemable on another product. The package must be "destroyed" to use the coupon.

Shelf Pad (SP)

Sunday Supplement (SS) - A coupon printed in a Sunday supplement or magazine.

Targeted Frequent Shopper (TFS) - A discount targeted to certain frequent shopper club members received electronically at checkout if they purchased a specified product during the promotion period.

Circulation 

The total number of coupons distributed is a factor of your overall promotional objective and distribution method.

Coupon Design Costs

The coupon's design can also affect processing costs and retailer fees more information. The bar code is the essential centerpiece for getting good marketing information from your coupon program and can facilitate quicker and less expensive transaction settlement with retailers.

Good coupon design can mean the difference between a consumer using a coupon or not. Following the industry guidelines for standard designs can also save costs in the transaction settlement process that often appear as hard-to-handle fees.

Colors - Make the coupon a contrasting color from the ad. Avoid distracting background colors and textures. Don’t try to fill in the entire coupon; white space is OK.

Purchase Requirements - The requirements for purchase should be shown prominently and stated in simple, easy-to-read language. Multiple purchases should be clearly stated and shown next to the face value. Avoid complicating the offer with different sizes, flavors, etc.

Manufacturer Coupon - The words "Manufacturer’s Coupon" should be printed in bold type within a box at the top of the coupon to distinguish its origin.

Expiration Date  - The expiration date or the words "No Expiration" should be prominently displayed at the top center of the coupon. Include month, day, and year.

Product Name & Logo  - Where possible, put your company logo on the coupon.

Perforation - If possible, actual perforations should be printed around the coupon. If not, dotted lines around the perimeter show the consumer where to cut.

Coupon Size - Ideally, coupons should be 6" X 2.5" (with a tolerance to 3" X 2.0625"), or roughly the size of a dollar bill.

Picture - Always put a picture of your product on the coupon.

Value - The face value of coupons should be clearly stated and prominently displayed.

Offer Code - Coupons should be encoded with a numeric offer code conforming to Uniform Code Council Guidelines and printed directly above the UPC code.

Paper Stock - Coupons should be of a texture and weight that can be processed efficiently.

Address - The name and address of the manufacturer or redemption center to which the coupon should be sent for reimbursement must appear on the coupon.

Terms of Offer - The legal terms of the offer outlining valid coupon redemption (including an 8¢ retailer handling fee, one coupon per consumer, etc.) should be stated in simple, easy-to-read language on the face of the coupon.

Consumer Code - For extra value, every coupon should be coded to provide consumer tracking and/or geographic market analysis.

Barcode

The U.P.C. coupon code is a 12-digit, all numeric code that:

It consists of a number system character (NSC) 5 (unless the EAN-99 is being used), followed by a five-digit manufacturer identification number, a three-digit family code, a two-digit value code and a modulo 10 check character.

Face Value

The face value of the discount will vary depending on the product's retail price, your promotional objective and the competitive environment. For example, higher face values for new products may be required to help consumers overcome the risk of purchasing an unknown, whereas current brand loyal consumers may still appreciate a lower face value as a simple reward.

Redemption Rate

This rate is the percentage of total coupons distributed that were actually redeemed by consumers and submitted by retailers for reimbursement. Redemption rates can be forecast by studying historical redemption trends for similar products and distribution methods as well as your brand's coupon redemption history, if available.

Coupon Handling Fee

The industry standard provides a handling fee of 8 cents per coupon to offer retailers reimbursement for the cost of handling manufacturer coupons. The retailer-handling fee should be stated on the coupon under the terms of offer, as well as in a formal coupon redemption policy distributed to your retail customers.

Retailer Invoice Deductions and Fees

Some retailers charge fees for non-standard coupon design or other hard-to-handle coupons, shipping or transportation costs and special handling. Some of these fees can be avoided by following standard coupon design guidelines and best practices. If you don't reimburse retailers fast enough or if you fail to pay the amount claimed on the retailer's coupon invoice, you may find the retailer will attempt to recoup his funds by taking deductions from your product invoices.

Redemption Agent Service Fee

Source: CouponInfoNow.com sponsored by CMS.  

The manufacturer's agent will charge a fee for processing your coupons and providing reporting and other promotional management services to your business. The contractual fee may vary according to the total annual volume of coupon redemption.

What is the number 5 system character on a U. P. C. coupon and what is its importance?

The number 5 is the number system character on a coupon U. P. C. All coupons must have a number system of 5 as that is what tells the scanner that it is scanning a coupon and not a product.

Why can’t a U. P. C. product symbol be on a coupon and a U. P. C. coupon symbol cannot be on a product?

If a U. P. C. product symbol is on a coupon, the consumer could be charged for an item that was not purchased instead of being credited for the value of the coupon. If a product has a coupon U. P. C., a consumer could get the item for free instead of the coupon value.

Why are barcode colors and spacing critical to the scanning process? What colors should be avoided in the bars and spaces?

If poor color choices are made, the bar code symbol might not scan due to poor symbol color contrast. The suggested color combination is black bars and white spaces. Avoid red, reddish, pastel or light colors for the bars and dark colors for the spaces. Poorly designed coupons may result in hard-to-handle fees from retailers.

How do retailers get family code information? What is the minimum information that they need to enter family codes into their systems?

Manufacturers supply family code information to retailers. Retailers need the following information to enter family codes into their systems: manufacturer name and address, U.P.C. number for the product being couponed, product description, family code number assignment, and the manufacturer’s contact person.

What are my alternatives if you cannot find a value code on the value code table that matches the value of the offer that you want to use on your coupon?

The suggested solution is to change your offer to one of the industry defined valid values. Any other offer will not validate at the point-of-sale and therefore will cause errors and slow-downs.

How is the family code 000 used? Are there any limitations to its use?

The family code 000 is used to coupon products with the same manufacturer’s number and no other coupon relationships such as summary code and super summary code. The family code 000 cannot be used with certain value codes, such as 01, 14, 16, and 19.

What family code should a manufacturer use when couponing products together that have different manufacturer numbers?

None. There is currently no way to bar code a coupon for products bearing different manufacturer numbers.

What is the coupon code used when retailers want to distinguish in-store distributed coupons from other types of coupons?

The coupon code is the EAN-99 13 digit in-store distributed coupon code.

Should all in-store distributed coupons be coded using the EAN-99 in-store distributed coupon code?

No, only in those stores where the retailer has specifically asked for that format. This format is not meant to be mandatory and is therefore used only by retailer request.  

What are the Advantages and Disadvantages in selecting the appropriate distribution

Below are several of the distribution vehicles and the advantages and disadvantages for each distribution method from CouponInfoNow.com sponsored by CMS.  

Free Standing Insert (FSI) Coupons

Advantages

Disadvantages

Direct Mail Co-op Analysis

Advantages