Get Your Shoebuy.com Coupon Code Here!!!
The United States is the largest coupon market in the world, with the number of coupons redeemed in 1990 exceeding the world population. There are more than 3,000 manufacturers currently using coupons in the United States, a 50 percent increase over the last 10 years.
Many changes and record growth have taken place within the consumer promotion industry during the last decade. This growth occurred as manufacturers discovered that consumer promotions effectively increased and maintained brand sales. Retailers added to this growth by supporting and initiating couponing efforts, which in turn provided them with increased sales and profits.
The free-standing insert (FSI) has become the dominant distribution method in the United States, overshadowing the once-prominent newspaper medium. The share of coupons distributed within magazines is less than 20 percent of the 1980 share. While the use of in-ad coupons are not covered in this report, they are a growing market.
Throughout the past decade, we have seen many lifestyle changes. More women are choosing careers outside the home, and men are staying at home with their children. People are waiting longer to get married and have children. Preserving the environment has become a growing concern. With computers in many homes, and telephones in cars, the world has experienced a variety of technological advancements. This technological growth has also affected the coupon industry. For example, barcoding has assisted in the "computerization" of coupon promotions.
The past decade provided many economic fluctuations, from a recession in the early 1980s to regained consumer confidence during the mid-to late 1980s. With the end of the decade, however, came another decrease in consumer confidence in the economy. Sales of big-ticket items were down in the last quarter of 1990, and this trend has continued in 1991. NCH has studied the relationship between coupon redemption and the general health of the economy and has found that coupons are redeemed more heavily in times of economic recession.
Coupon Distribution
There were 279.4 billion coupons distributed in 1990, a 4.4 percent increase over the 267.6 billion coupons distributed in 1989. Total coupon distribution has almost tripled over the last 10 years, with a growth of more than 190 percent. Record expansion in coupon distribution occurred during the 1980s, with an average annual growth of 18.2 percent from 1981 to 1983. Mid-decade increases continued at a rate of 12.4 percent for the years 1984 to 1986. The latter part of the decade was characterized by a somewhat slower growth rate of 5.6 percent. The average annual growth rate during the 1980s was 11.4 percent.
The enormous growth rate in coupon distribution in the 1980s is the result of many factors, including:
* A shift in manufacturer promotion spending from media advertising to consumer promotions.
* The realization that couponing produces results and can be a more strategic and effective tactic than price cuts.
* Couponing's ability to induce trial of new and improved products and to gain sales volume in a competitive economy.
* The versatility in reaching virtually all target groups through a variety of media choices, and in implementation with any size promotional budget.
* Retailer interest in coupon promotions.
Over the last decade there has been a shift in manufacturer promotional spending from traditional media advertising to trade and consumer promotions. This trend continues today.
According to Donnelley Marketing's 13th Annual Survey of Promotional Practices, the decrease in media advertising budget allocations is partially attributed to changes in the economy and world events.
Additional survey findings include:
* A greater percentage of manufacturers are using coupons and cents-off promotions, while the use of money-back offers/cash refunds, sweepstakes and premiums is on the decline. This shift may be an indicator of consumer demand for promotions which provide more immediate gratification.
* Higher levels of in-store consumer promotions were recorded between 1982 and 1990. Thirty-six percent of consumer promotion expenditures were in-store promotions, nearly double that reported in 1982, reflecting the growing importance of the retailer.
* Couponing continues to be highly supported by the companies surveyed, with 65 percent planning to maintain or increase coupon budget allocations in 1991.
Marketers are faced with the challenge of deriving growth from a slowing economy. A promotional strategy including the use of coupons can increase sales volume and build brand loyalty.
Due to increased competition and costs in the marketplace, manufacturers are moving away from "mass marketing" techniques and toward more targeted, segmented methods of reaching their consumers. Through a great variety of distribution avenues, coupons can reach virtually any target group. Targeted database marketing is on the rise and becoming more sophisticated: With barcoding technology and the use of personal identification numbers (PIN coding), couponing is more than a sales generator; it is a method of gaining vital information on consumers who are purchasing products and a means for developing valuable mailing lists of target consumers.
The variety of media and cooperative distribution programs available allows coupon programs to be implemented within most promotional budgets.
The increasing growth and consolidation of retail trade power has increased pressure on manufacturers to work with retailers on merchandising and promotional activities. These cooperative coupon promotions can produce increased sales and profits for both the retailer and the manufacturer.
Distribution By Media
Media selection for coupon distribution has changed dramatically since 1980. Early in the decade, newspaper was the primary medium used, accounting for 48.2 percent of all coupons distributed. Other popular distribution methods in 1980 included FSIs, 18.4 percent; magazines, 13.3 percent; and Sunday magazine supplements, 9 percent. By 1985 a shift had occurred, with newspaper coupon distribution falling to a 20.2 percent share and FSIs growing to almost 60 percent. The use of Sunday magazine supplements dropped to 2.1 percent, and the use of magazines decreased to 8.6 percent. There were only minor fluctuations in the media mix during the latter half of the 1980s.
Because of their cost-effectiveness to manufacturers and visual appeal to consumers, FSIs continue to be the dominant distribution media, increasing in share every year. Overall, the 1990 FSI share of coupon distribution represented 79.9 percent of the total market, more than four times its 1980 share.
The coupon distribution share through newspaper ROP/Solo and Co-op for all products in 1990 was 6.5 percent, a slight increase over the 1989 share of 6.4 percent. However, the 1990 newspaper media share represented only a fraction of its 1980 distribution share.
Direct mail coupon distribution has fluctuated only slightly since 1980, when it represented 3.4 percent of total distribution for all products. The 1990 direct mail distribution share was 4 percent, a slight decrease from 4.3 percent in 1989.
The use of magazines for distribution has decreased significantly since 1980, when it represented a 13.3 percent share of the total. In 1990, coupon distribution by magazine represented 2.4 percent of the total, down from the 1989 share of 3.3 percent.
In-and on-pack coupons have also decreased in popularity, dropping from a 7.7 percent share of distribution for all products in 1980 to a 3.5 percent share in 1990.
One medium that has experienced growth since 1986 is the handout coupon (electronically dispensed coupons, tearoff pads, shelf pads and coupons handed out at the retail location). The use of bounceback coupons, which are sent to consumers at their request, also became more popular in 1990. Typically, proofs of purchase and the consumer's name and address are required to recieve the coupon. Handouts and bouncebacks are graphically represented within the "Others" media category, which increased from 2.4 percent in 1989 to 3.7 percent in 1990.
Face Value
The face value of a coupon in one factor that affects the performance of a coupon offer. One might assume that the higher the face value, the higher the consumer redemtion. There is not, however, a one-to-one relationship between the face value of a coupon and the redemption rate achieved. For example, a 50 percent increase in face value will no produce a corresponding 50 percent increase in the redemption rate. Face value is more of a contributor rather than a primary influencer of redemption rate performance.
NCH's analysis of thousands of coupon offers indicates that there are many factors influencing consumers' decisions to purchase a product for which they have a coupon.
Consumers seem to give primary consideration to the product itself, their interest in it and their "need" for it, rather than making their decision solely based on the face value of the coupon.
There are, however, minimum threshold values which should not be reduced if a coupon offer is to be effective. This minimum face value varies by product category and depends on marketing strategy. If brand switching or trial is the goal, higher face values are generally required than for a promotion whose goal is to maintain current brand users.
NCH encourages manufacturers to conduct controlled tests to further investigate the relationship between face value and redemption rate. Selective newspapers across the country allow for A/B split runs, where manufacturers can run two different coupon offers simultaneously in one geographic area. The face value of a coupon can be altered while other offer variables, such as medium, geographic area and copy, remain the same. Through this type of test, a correlation can be established between a particular brand's redemption rates and face values utilized.
This type of controlled analysis can provide brand managers with valuable insight into "appropriate" face values and will provide assistance in coupon offer planning and budgeting.
Expiration Date Trends
New trends during the 1980s were the use of shorter expiration dates and a decrease in no-expiration-date coupons. The average duration of all coupons decreased by one month over the last three years, from 5.9 months in 1988 to 4.9 months in 1990. The duration categories with growing distribution share have been the one-to-three-month category, growing from 30 percent share in 1988 to 42.1 percent share in 1990, and the four-to-six-month category, growing slightly from 31.4 percent in 1988 to 32.7 percent in 1990.
The longer duration categories have all decreased in share over the last three years. For example, in 1908, 9.3 percent of coupons distributed had no expiration date, while in 1990 only 3.7 percent of all coupons had no expiration date.
Variables Affecting Redemption
Since 1987, coupon duration has dropped 10.3 percent a year, from an average of 6.8 months in 1987 to 4.9 months in 1990. This means consumers have fewer usable coupons at any given period. Adjusting the distribution figures to account for the decline in duration, one can see that consumers actually have fewer valid coupons to redeem today then they did in 1987.
The plateau in redemption and the resulting decline in the redemption rate are not indicative, as one might suppose, of a consumer lack of interest in couponing but rather of the consumer adjusting to using shorter duration coupons. In fact, if distribution were adjusted for the coupon duration, one would see an increase in redemption rates.
Another important factor that influences the redemption of coupons is the general health of the economy. Consumers use more coupons when the economy weakens. To test this, NCH developed a statistical model designed to measure the effect of the economy on coupon redemption. The model showed two variables as significantly affecting coupon redemption: coupon distribution and the change in the real gross national product (GNP). Coupon distribution accounted for 90 percent of the model's predictive power, while the change in real GNP accounted for 10 percent. The model also showed an inverse relationship between coupon redemption and the change in the real GNP. That is, when real GNP is low, coupon redemption tends to be higher than expected. Conversely, when real GNP is high, coupon redemption tends to be lower than expected.
During the early 1980s, the recessionary environment contributed to the period of growth in coupon redemption. During the late 1900s, we experienced economic prosperity and a plateau in redemptions. Given the current economic recession, one would anticipate a growth in coupon redemption. In fact, we have already begun to see an increase in coupon redemption and anticipate continued coupon growth. In order to help us assess this growth, NCH commissioned a study on consumer attitudes toward the current economic situation and the impact on grocery shopping behavior. According to the study, 75 percent of primary grocery shoppers said they would increase their use of cents-off coupons in response to the recession, while fully 89 percent of these primary grocery shoppers said they had already changed their shopping behavior. This study supports our model's findings and underscores the importance of using coupons in our current economic environment.
The United States is the largest coupon market in the world, with the number of coupons redeemed in 1990 exceeding the world population. There are more than 3,000 manufacturers currently using coupons in the United States, a 50 percent increase over the last 10 years.
Many changes and record growth have taken place within the consumer promotion industry during the last decade. This growth occurred as manufacturers discovered that consumer promotions effectively increased and maintained brand sales. Retailers added to this growth by supporting and initiating couponing efforts, which in turn provided them with increased sales and profits.
The free-standing insert (FSI) has become the dominant distribution method in the United States, overshadowing the once-prominent newspaper medium. The share of coupons distributed within magazines is less than 20 percent of the 1980 share. While the use of in-ad coupons are not covered in this report, they are a growing market.
Throughout the past decade, we have seen many lifestyle changes. More women are choosing careers outside the home, and men are staying at home with their children. People are waiting longer to get married and have children. Preserving the environment has become a growing concern. With computers in many homes, and telephones in cars, the world has experienced a variety of technological advancements. This technological growth has also affected the coupon industry. For example, barcoding has assisted in the "computerization" of coupon promotions.
The past decade provided many economic fluctuations, from a recession in the early 1980s to regained consumer confidence during the mid-to late 1980s. With the end of the decade, however, came another decrease in consumer confidence in the economy. Sales of big-ticket items were down in the last quarter of 1990, and this trend has continued in 1991. NCH has studied the relationship between coupon redemption and the general health of the economy and has found that coupons are redeemed more heavily in times of economic recession.
Coupon Distribution
There were 279.4 billion coupons distributed in 1990, a 4.4 percent increase over the 267.6 billion coupons distributed in 1989. Total coupon distribution has almost tripled over the last 10 years, with a growth of more than 190 percent. Record expansion in coupon distribution occurred during the 1980s, with an average annual growth of 18.2 percent from 1981 to 1983. Mid-decade increases continued at a rate of 12.4 percent for the years 1984 to 1986. The latter part of the decade was characterized by a somewhat slower growth rate of 5.6 percent. The average annual growth rate during the 1980s was 11.4 percent.
The enormous growth rate in coupon distribution in the 1980s is the result of many factors, including:
* A shift in manufacturer promotion spending from media advertising to consumer promotions.
* The realization that couponing produces results and can be a more strategic and effective tactic than price cuts.
* Couponing's ability to induce trial of new and improved products and to gain sales volume in a competitive economy.
* The versatility in reaching virtually all target groups through a variety of media choices, and in implementation with any size promotional budget.
* Retailer interest in coupon promotions.
Over the last decade there has been a shift in manufacturer promotional spending from traditional media advertising to trade and consumer promotions. This trend continues today.
According to Donnelley Marketing's 13th Annual Survey of Promotional Practices, the decrease in media advertising budget allocations is partially attributed to changes in the economy and world events.
Additional survey findings include:
* A greater percentage of manufacturers are using coupons and cents-off promotions, while the use of money-back offers/cash refunds, sweepstakes and premiums is on the decline. This shift may be an indicator of consumer demand for promotions which provide more immediate gratification.
* Higher levels of in-store consumer promotions were recorded between 1982 and 1990. Thirty-six percent of consumer promotion expenditures were in-store promotions, nearly double that reported in 1982, reflecting the growing importance of the retailer.
* Couponing continues to be highly supported by the companies surveyed, with 65 percent planning to maintain or increase coupon budget allocations in 1991.
Marketers are faced with the challenge of deriving growth from a slowing economy. A promotional strategy including the use of coupons can increase sales volume and build brand loyalty.
Due to increased competition and costs in the marketplace, manufacturers are moving away from "mass marketing" techniques and toward more targeted, segmented methods of reaching their consumers. Through a great variety of distribution avenues, coupons can reach virtually any target group. Targeted database marketing is on the rise and becoming more sophisticated: With barcoding technology and the use of personal identification numbers (PIN coding), couponing is more than a sales generator; it is a method of gaining vital information on consumers who are purchasing products and a means for developing valuable mailing lists of target consumers.
The variety of media and cooperative distribution programs available allows coupon programs to be implemented within most promotional budgets.
The increasing growth and consolidation of retail trade power has increased pressure on manufacturers to work with retailers on merchandising and promotional activities. These cooperative coupon promotions can produce increased sales and profits for both the retailer and the manufacturer.
Distribution By Media
Media selection for coupon distribution has changed dramatically since 1980. Early in the decade, newspaper was the primary medium used, accounting for 48.2 percent of all coupons distributed. Other popular distribution methods in 1980 included FSIs, 18.4 percent; magazines, 13.3 percent; and Sunday magazine supplements, 9 percent. By 1985 a shift had occurred, with newspaper coupon distribution falling to a 20.2 percent share and FSIs growing to almost 60 percent. The use of Sunday magazine supplements dropped to 2.1 percent, and the use of magazines decreased to 8.6 percent. There were only minor fluctuations in the media mix during the latter half of the 1980s.
Because of their cost-effectiveness to manufacturers and visual appeal to consumers, FSIs continue to be the dominant distribution media, increasing in share every year. Overall, the 1990 FSI share of coupon distribution represented 79.9 percent of the total market, more than four times its 1980 share.
The coupon distribution share through newspaper ROP/Solo and Co-op for all products in 1990 was 6.5 percent, a slight increase over the 1989 share of 6.4 percent. However, the 1990 newspaper media share represented only a fraction of its 1980 distribution share.
Direct mail coupon distribution has fluctuated only slightly since 1980, when it represented 3.4 percent of total distribution for all products. The 1990 direct mail distribution share was 4 percent, a slight decrease from 4.3 percent in 1989.
The use of magazines for distribution has decreased significantly since 1980, when it represented a 13.3 percent share of the total. In 1990, coupon distribution by magazine represented 2.4 percent of the total, down from the 1989 share of 3.3 percent.
In-and on-pack coupons have also decreased in popularity, dropping from a 7.7 percent share of distribution for all products in 1980 to a 3.5 percent share in 1990.
One medium that has experienced growth since 1986 is the handout coupon (electronically dispensed coupons, tearoff pads, shelf pads and coupons handed out at the retail location). The use of bounceback coupons, which are sent to consumers at their request, also became more popular in 1990. Typically, proofs of purchase and the consumer's name and address are required to recieve the coupon. Handouts and bouncebacks are graphically represented within the "Others" media category, which increased from 2.4 percent in 1989 to 3.7 percent in 1990.
Face Value
The face value of a coupon in one factor that affects the performance of a coupon offer. One might assume that the higher the face value, the higher the consumer redemtion. There is not, however, a one-to-one relationship between the face value of a coupon and the redemption rate achieved. For example, a 50 percent increase in face value will no produce a corresponding 50 percent increase in the redemption rate. Face value is more of a contributor rather than a primary influencer of redemption rate performance.
NCH's analysis of thousands of coupon offers indicates that there are many factors influencing consumers' decisions to purchase a product for which they have a coupon.
Consumers seem to give primary consideration to the product itself, their interest in it and their "need" for it, rather than making their decision solely based on the face value of the coupon.
There are, however, minimum threshold values which should not be reduced if a coupon offer is to be effective. This minimum face value varies by product category and depends on marketing strategy. If brand switching or trial is the goal, higher face values are generally required than for a promotion whose goal is to maintain current brand users.
NCH encourages manufacturers to conduct controlled tests to further investigate the relationship between face value and redemption rate. Selective newspapers across the country allow for A/B split runs, where manufacturers can run two different coupon offers simultaneously in one geographic area. The face value of a coupon can be altered while other offer variables, such as medium, geographic area and copy, remain the same. Through this type of test, a correlation can be established between a particular brand's redemption rates and face values utilized.
This type of controlled analysis can provide brand managers with valuable insight into "appropriate" face values and will provide assistance in coupon offer planning and budgeting.
Expiration Date Trends
New trends during the 1980s were the use of shorter expiration dates and a decrease in no-expiration-date coupons. The average duration of all coupons decreased by one month over the last three years, from 5.9 months in 1988 to 4.9 months in 1990. The duration categories with growing distribution share have been the one-to-three-month category, growing from 30 percent share in 1988 to 42.1 percent share in 1990, and the four-to-six-month category, growing slightly from 31.4 percent in 1988 to 32.7 percent in 1990.
The longer duration categories have all decreased in share over the last three years. For example, in 1908, 9.3 percent of coupons distributed had no expiration date, while in 1990 only 3.7 percent of all coupons had no expiration date.
Variables Affecting Redemption
Since 1987, coupon duration has dropped 10.3 percent a year, from an average of 6.8 months in 1987 to 4.9 months in 1990. This means consumers have fewer usable coupons at any given period. Adjusting the distribution figures to account for the decline in duration, one can see that consumers actually have fewer valid coupons to redeem today then they did in 1987.
The plateau in redemption and the resulting decline in the redemption rate are not indicative, as one might suppose, of a consumer lack of interest in couponing but rather of the consumer adjusting to using shorter duration coupons. In fact, if distribution were adjusted for the coupon duration, one would see an increase in redemption rates.
Another important factor that influences the redemption of coupons is the general health of the economy. Consumers use more coupons when the economy weakens. To test this, NCH developed a statistical model designed to measure the effect of the economy on coupon redemption. The model showed two variables as significantly affecting coupon redemption: coupon distribution and the change in the real gross national product (GNP). Coupon distribution accounted for 90 percent of the model's predictive power, while the change in real GNP accounted for 10 percent. The model also showed an inverse relationship between coupon redemption and the change in the real GNP. That is, when real GNP is low, coupon redemption tends to be higher than expected. Conversely, when real GNP is high, coupon redemption tends to be lower than expected.
During the early 1980s, the recessionary environment contributed to the period of growth in coupon redemption. During the late 1900s, we experienced economic prosperity and a plateau in redemptions. Given the current economic recession, one would anticipate a growth in coupon redemption. In fact, we have already begun to see an increase in coupon redemption and anticipate continued coupon growth. In order to help us assess this growth, NCH commissioned a study on consumer attitudes toward the current economic situation and the impact on grocery shopping behavior. According to the study, 75 percent of primary grocery shoppers said they would increase their use of cents-off coupons in response to the recession, while fully 89 percent of these primary grocery shoppers said they had already changed their shopping behavior. This study supports our model's findings and underscores the importance of using coupons in our current economic environment.
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