Trends in American coupon usage revealed

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By: Wise Marketer Staff |

Posted on April 24, 2003

Trends in American coupon usage revealed

The total number of manufacturer coupons printed and distributed in the US by consumer packaged goods (CPG) companies grew by 3.8% to 248 billion in 2002, according to coupon processing firm, NCH Marketing Services.

The Health and Beauty Care segment saw the biggest increase in coupon usage during the year, rising by 15.9% in total. Coupon volume was driven up by large companies who issued coupons through Sunday free standing inserts.

According to NCH, the second half of 2002 saw a big rebound for coupon events, which grew by a little under 10% compared to the second half of 2001 (which had been impacted by the September 11th terrorist attacks in New York, as well as the general economic downturn and an overall decline in advertising spending).

The positive rebound in 2002 was seen in a number of coupon media types including in-pack, on-pack, internet, electronically dispensed, run-of-press newspaper, and free standing inserts.

Free standing inserts Free standing inserts continued to increase, rising to 86% of the 248 billion coupons issued during 2002. Most notable was the volume of coupons issued for national corporate events, such as Procter & Gamble's Brand Saver insert, and Kraft's Food & Family insert.

Other large corporations such as Campbell's, ConAgra, and Nestle, with many brands spanning several categories, also created corporate group events that featured many of their products in one cooperative campaign.

Others Internet coupons saw continued growth of more than 50% over each of the previous three years, while handout coupons remained the second most frequently used medium (including in-store, on-shelf, electronically dispensed, and those distributed with product samples).

"Consumer interest in all types of coupons grew in the past year, as primary grocery shoppers looked for ways to economise on their family budget, choosing couponed brands that they know and trust, and forming positive connections with new products," said Charles Brown, vice president of marketing for NCH.

Consumer uptake Some 84% of North American shoppers told NCH that they use coupons while shopping for groceries, health care products, and household items at supermarkets, mass merchandisers, and drug chains.

Consumers' attitudes toward coupon values are also changing, with 71% agreeing that coupons save them a lot of money, compared to only 51% in 2001. This perception may, however, be more due to the need to economise than the actual savings offered.

Multi-brand coupons Coupons that are either good for multi-brands or good universally across an entire product group saw a significant increase in usage among marketers last year, rising 22% in total distribution volume.

"This type of multi-brand coupon first became popular when the Post brand of cereals introduced a universal coupon in 1996," explained Brown. "And, although we had seen a declining usage of the technique in the previous two years, there was a big upswing in 2002."

The return on investment (ROI) for the marketer using multi-brand coupons can be good due to their higher perceived face values. In 2002, however, NCH asserts that the complexity and clutter of multi-brand and universal coupons actually worked to suppress redemption, as the average redemption rate for those offers dropped to 1.5% (from 1.8% in 2001).

Multi-brand and universal coupons carrying purchase requirements of two or more items grew to 40% of all such coupons distributed, which no doubt also contributed to the decline in redemption noted by NCH.

Highest redemption The grocery channel accounted for the biggest portion of all coupons redeemed during the year, even though the share of coupons going through traditional supermarkets has been declining as more shopping shifts to other channels.

According to NCH, the evidence of this can even be seen within the top five retail coupon redeemers in the US (1st: Kroger, 2nd: Wal-Mart, 3rd: Ahold, 4th: Military Commissaries, and 5th: Safeway).

"As more and more consumers shop for grocery items in alternative channels like discount, dollar, and drug stores, I expect to see Wal-Mart outpace Kroger as the largest redeemer of coupons," predicted 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 counter-productive to competing with the emerging channels."

New products Coupons continued to be used successfully for new product launches, particularly among health and beauty care items; Seven of the ten fastest growing categories for coupon distribution were HBC products.

The highest growth in coupon distribution volume for 2002 came in the Oral Hygiene category where many promotions were seen for the introduction of teeth whitening products.

While health and beauty care products saw a 15.9% increase in total coupon distribution volume, grocery products declined by a total of 2.7%. Among the categories with the largest volume of coupons distributed, Prepared Foods and Detergents moved up the ranks to second and third place respectively, following Household Cleaners, which held the top spot for two years running.

Full details of the category trends, and an analysis of the factors influencing the coupon markets of Canada, Italy, Spain, Germany, the United Kingdom, and the United States are available in NCH's annual report, Worldwide Coupon Distribution and Redemption Trends.

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