Redemption market is beginning to stabilize: Coupons

July 8, 2014

Coupons continue as
viable sales and
marketing tool

 

BY Dennis Schick  | Special to Publishers’ Auxiliary

If you read in the subject line of an e-mail that 315 billion (that’s BILLION) coupons were distributed in the U.S. during 2013, might that get your attention? Might you wonder if your newspaper was (or could be) part of that distribution? Might you stop and read that e-mail?

That’s what happened to me recently. It continues my five-decade (yes, I’m that old) love affair with coupons. I sold them when I worked for newspapers, I taught how to use them as a college teacher, and I advised and promoted them during my 25 years as executive director of the Arkansas Press Association.

And even now in retirement, I continue to promote the use of this under-loved and often under-utilized valuable marketing tool. In the May and June 2008 issues of Publishers’ Auxiliary I wrote two articles about coupons—“Newspapers are losing out on coupon revenue,” and “Tips and ideas on creating effective coupon ads” (If you want a PDF of either or both, let me know). So, recently when I received that e-mail, I opened and read it and sent it to Stan Schwarz, Pub Aux managing editor. He asked me to summarize it.

The e-mail came from Valassis, which created the first cooperative freestanding insert, in 1970, revolutionizing the coupon industry. The company was founded in a suburb of Detroit. In 2003, it acquired NCH Marketing Services, a coupon clearing and marketing services company which issued the report. Valassis reached $1 billion in sales in 2004, and acquired ADVO in 2007, among other highlights.

This spring, the company issued its 49th annual review of coupon distribution and redemption trends in Consumer Packaged Goods in the U.S. Included in the report:

• The number of coupons issued to consumers in 2013 for Consumer Packaged Goods was 315 billion. This was a 3.3 percent increase from 2012.

• The percent of consumers who reported using coupons regularly in 2013 remained steady at 80.9 percent.

• Among consumers who reported using more coupons in 2013, 45.7 percent of them said it was because more coupons were available.

• Among consumers who said they used fewer coupons last year, the No. 1 reason (49.1 percent) was they could not find coupons for products they wanted to buy.

• Among the media mix used to distribute coupons, the Free Standing Insert continued to be the dominant median, accounting for 91.2 percent of all coupons distributed.

• Although digital coupons (including print-at-home, mobile, social, and downloadable to a loyalty card) showed double-digit growth, they still only accounted for less than 1 percent of all coupons distributed.

• CPG marketers continued to shorten the amount of time consumers had to redeem coupons, declining from 9.3 weeks to 8.6 weeks. (Shorter times tend to suppress redemption.)

• The total volume of CPG (food and non-food) coupons redeemed in 2013 in the U.S. fell by 3.4 percent, to 2.8 billion. (That’s still a bunch.)

• There was a shift during 2013 away from food coupons to non-food coupons, but the demand for both remained strong.

• The share of coupon redemption volume by media was led by freestanding inserts, followed by in/on-pack, handout in-store, other media (including newspapers), Internet print-at-home, paperless, direct mail, and military.

These are only some of the major conclusions given in the report. The report is packed with charts and graphs with all sorts of interesting tidbits. For instance, grocery stores had the greatest percentage of coupon redemption, followed by mass merchandisers, drug stores, and military commissaries. The top 10 retail coupon redeemers were Walmart, Kroger, Target, Publix, Walgreens, CVS, Ahold, Defense Commissary, Safeway and Meijer. This kind of information should help sales reps target primary users.

The complete 2014 NCH Coupon Facts report is available at www.nchresourcecenter.com. You have to register on the site to receive the information, but registration is free. The main section is the U.S. Market Analysis (in PDF format). The second part includes comprehensive online reference charts. And the third part includes PowerPoint charts, providing an easy way to incorporate the research into personalized presentations.

The report concludes that after several years of uncertainty and tumultuous activity, “It appears that the overall coupon redemption market is beginning to stabilize.” This includes an increase in the number of coupons distributed by retailers and manufacturers.

There is clear evidence in the report that coupons continue to be popular with consumers, and that they are a powerful motivation tool for all marketers to generate (1) product and service trial, (2) product selection, (3) repeat purchase, and (4) brand loyalty. The good news is that coupons continue to be used to activate consumer purchases, and that’s what newspaper advertising is all about. © Dennis Schick 2014

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