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Coupons have become somewhat crumpled. Evidence that misredemptions have been running at an average 27% have been a turn-off for marketers with a 33% fall in the number of coupons issued last year compared with 1991's record performance. But fresh initiatives in point-of-sale verification targeting and distribution are now or the scene to help iron out the crease and restore credibility and confidence
While acknowledging the problem of misredemption, Brian Barberton, UK managing director of NCH Promotional Services, Britain's biggest coupon handling firm, believes other factors have contributed to the downturn.
"The coupon market in the UK is very cyclical, almost fashionable," he suggests. Consumer goods marketers. after a period of heavy coupon distribution, look for variety in other promotional methods to meet their objectives.
NCH calculates that the number of coupons redeemed in 1991 was 451 million, on a distribution of 8.1 billion. The previous redemption peak was 1987, at 411 million. Distribution fell to 5.4 billion last year end redemptions to 365 million. There were other troughs in 1985 and 1988.
Barberton contends that the misredemption element is given more weight than it deserves. "In any promotional activity a proportion of the expenditure is wasted," he argues. "Wastage is an important measurement but more important is whether the activity sells incremental product and pays for itself."
Towards this end, NCH is looking for sales promotion partners to employ the new Scanpro modelling system developed by its parent company AC Neilsen. This is designed to measure incremental sales achieved by a specific promotional activity.
Last year, the coupon committee o the Institute of Sales Promotion sough to tackle misredemptions by calling on the main store groups to display warnings to shoppers. But the grocery giant failed to agree on this and committed chairman Peter Le Conte now admits "It is probably a non-starter."
He sees technology as offering the most promising route. After trialing barcode scanning to validate coupons against purchases, Tesco is extending the system to all its stores with electronic point of sale (EPoS) tills.
At present, only Tesco-specific coupons are fully validated. For others, the checks just extend to confirming that the store has a trading relationship with the manufacturer.
But Le Conte regards this as a step in the right direction. "It does help establish in consumers' minds that big retailers are scanning coupons and perhaps people will be less inclined to hand over coupons for products they haven't purchased," he says.
Coupons printed automatically at the point-of-sale against specific purchases is another approach. Catalina Electronic marketing has introduced a system from the US, where it is said to be in use at 6000 stores. This has been on trial by Asda. It allows manufacturers three categories of coupon promotions.
There is "own use", where purchase of a product triggers a money-off coupon against the next purchase. Then there is 'complementary', where a purchase of, say, nappies produces a coupon for baby food. More cut-throat is the 'competitive' category, where the buyer of one brand receives a coupon for a competing brand.
This last is "competition in its purest form," says Catalina managing director John Eustace. "If you take the top 100 brands on sale in the UK during the trial, 74 of these were either triggering or being triggered on."
Another method of producing coupons and messages as an add-on to EPoS tills is produced by Riva Systems. This also rejects coupons if the product has not been purchased or if the coupon is out of date. West Midlands Co-op has had it on trial in 50 lanes at four sites.
There is a legal dispute to be resolved between the two suppliers, Catalina alleging that Riva has infringed its patent.
Another US system is the Instant Selector, marketed in the UK by BLP Consultancy. This is for special promotions, in-store or elsewhere. Consumers complete questionnaires on their tastes or requirements and appropriate coupons are printed out.
From the targeted to the large scale distribution of coupons. This year has seen ambitious launches of free standing inserts (FSIs), another idea imported from the US. There are three major players in the UK.
First on the scene was The Coupon Book, from IPC Magazines (previously seen as Reed Coupon Book and distributed via fre newspapers). On its heels is moneysavers from Brand Movers, formed from the unlikely alliance of three newspaper groups, Mirror, Express and Telegraph. Third to appear from News International and Associated Newspapers is Shoppers' Friend.
The Coupon Book was issued with Woman 5 Own on February 15. The next issue is due out in both Woman's Own and TV Times on April 19 and 20. Then, in June, it is planned to add Woman's Realm as a third carrier.
Moneysavers made its debut in its sponsoring newspapers in March ,with a circulation of 9.6 million. It allows advertisers to regionalise and to have copy splits. The next issue is due in September. Shopper's Friend appeared at the weekend with a distribution of 8.2 million copies: further issues are scheduled for June, August, October and November.
"The Coupon Book is just one important element in an overall package from IPC Magazines," says its managing director David Flavell, previously publishing director of Woman's Own. "We can offer a range of opportunities and link them together to put forward total advertising/marketing solutions."
While it has the potential for a circulation of seven million by adding other magazines from the IPC portfolio, Flavell says this is not necessarily what the market wants and he will be guided by his clients.
Looking at the competitive situation, he comments: "I am not sure there will be three of us around in a year's time. If there is a market, The Coupon Book will be here and it will be the leader." This view is not, of course, shared by the other FSI publishers. Alan Kirkland, sales director of Brandovers, asserts: "Retailers are recognising the power of the FSI in National newspapers." But he adds: "It's a shame that more people haven't had the bottle to get involved with Moneysavers at the beginning. We would like to have been bigger to start with."
Dorothy Cumpsty, managing director of Shopper's Friend, contends: "It is the quality of the content that sells. And Shoppers' Friend has quality advertisers, including in the launch issue a major grocery retail chain."
Signs are that initial response from advertisers has been less than overwhelming. The Coupon Book contained 12 pages, moneysavers six pages and Shoppers' Friend eight.
But these are early days. The coupon publishers take heart from the success of FSIs in the US. These started back in the early 70s as single sheet inserts. Today, about 80% of coupons in America are distributed by FSI methods.
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