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In 1992, 5.4 billion coupons were distributed to the U.K. market. This represents a decline of 33 percent from the exceptional level of 8 billion coupons distributed during 1991. However, the 1992 level represents a 6 percent growth compared to 1990, with a compound market growth of 3 percent over the last nine years.
Not surprisingly, coupon redemption also dropped in 1992 to 365 million coupons, a 19 percent drop from 1991. The overall coupon redemption rate was 6.76, percent, an increase over the prior year's rate of 5.56 percent. This is a direct reflection of the changes in media mix for coupon distribution in the United Kingdom.
A quality-rather-than-quantity approach to couponing has been seen throughout 1992 in the United Kingdom. Considerable postpromotion evaluation took place during the second half of the year.
This past year has made marketers in the United Kingdom increasingly aware of the need to target coupon activity more effectively by using the range of distribution vehicles available to those issuing coupons.
Newspaper and magazine distribution declined, with distribution growth coming from in/on-pack promotions and in-store media. Door-to-door coupon distribution remained stable at 18 percent of total distribution.
During 1992, the average face value of a coupon increased to almost 29 pence, the largest increase in three years. This has occurred despite research which has indicated that the optimum face value to drive usage at efficient cost is in the 15 to 20 pence range. As consumers become more active in collecting coupons, their main objective may change from saving on individual products to achieving acceptable discount levels off their total grocery bill. It is anticipated that the rate of increase will probably slow during 1993 as promotion budgets are used more effectively.
The effect of the increase in average face values is highlighted by the fact that coupon users saved almost 106 million pounds by using coupons, down only marginally from the 1991 value of 113 million pounds.
This past year the Food and Drink Federation and the British Retailers Association recommended a 15 percent increase in the retailer coupon-handling allowance, paid by manufacturers to retailers, to 26.50 pounds per 1,000 coupons. For the first time, this increase in the handling allowance reflects the manufacturers' commitment to coupons and the effort involved in retail handling.
Coupon redemption across media types has remained in line with distribution. Newspapers, magazines and FSI vehicles have seen a downturn in coupon redemption, with growth being experienced through in-store, in/on-pack and door-to-door methods. The "Others" category, with 1.4 percent of total redemption, tends to reflect the test marketing of new promotion vehicles. This means the volume of coupons redeemed via "other" media types remains relatively small as a proportion to the total.
A significant announcement made during 1992 was the decision of Tesco (a large U.K. retailer) to pursue point-of-purchase scanning of coupons to help control misredemption for retailer tailor-made coupons and reduce handling costs within the store. It is hoped that in time, the initiative will be developed to encompass misredemption control for all coupons.
A number of interesting new distribution vehicles were introduced in the United Kingdom during 1992, which included:
* Catalina's Checkout Saver
* Shoppers Friend FSI
* Money Savers FSI
Such innovations in the marketplace have increased U.K. distribution levels within the "Others" category. These new vehicles have also aided coupon issuers, who are searching for more effective means of distributing coupons to their consumers.
MARKET SUMMARY AND TRENDS IN ITALY
Coupon distribution in Italy continued to grow, reaching 621 million coupons in 1992. This represents a growth of 6.7 percent compared to 1991. The continued growth of coupon distribution in Italy is driven mainly by food manufacturers issuing more coupons.
The average face value of coupons distributed in Italy during 1992 grew just over 2 percent to 841 lira, compared to an average value of 822 lira in 1991.
Coupons distributed on a product package were still the media of choice for Italian manufacturers, with 38.1 percent of coupons distributed this way in 1992. Another 8.5 percent were distributed on a product package and were instantly redeemable.
The use of in-pack promotions grew in 1992, to account for 16.6 percent of total coupon distribution and door-to-door coupon distribution increased only slightly.
Magazine cou-pon distribution was cut in half in 1992, representing a 5.7 percent share of distribution, compared to a 12.8 percent share in 1991.
Coupon redemption continued its upward trend, reaching 89 million coupons in 1992. This represented growth of nearly 20 percent from the previous year.
The average face value of coupons redeemed in Italy increased only slightly to 875 lira, a 1.9 percent increase from the 1991 average of 859 lira. Italian consumers saved 77.9 billion lira on their grocery bills in 1992, up nearly 22 percent.
Similar to the United States, instant redeemable coupons commanded the highest average redemption rate at 39.1 percent. In-store coupons were the next highest at 32.3 percent, followed by in-pack promotions, which averaged 21.7 percent.
MARKET SUMMARY AND TRENDS IN SPAIN
The coupon market in Spain continued to decline, with coupon distribution dropping more than 25 percent to 106 million coupons. The Spanish economy has been extremely strong in recent years and there has been little need to stimulate sales by the use of consumer promotions.
The average face value of coupons distributed dropped more than 20 percent in 1992 to 32.3 pesetas, compared to 40.8 pesetas in 1991.
The use of newspapers and magazines to distribute coupons in Spain increased substantially, with these media accounting for nearly one-quarter of all coupons distributed in 1992. The distribution share of in/on-pack promotions also increased in 1992 to represent 43 percent of all coupons distributed.
Door-to-door coupons declined in popularity during 1992, dropping from a 49.9 percent share in 1991 to just 25.2 percent of total coupon distribution.
In 1992, the total number of coupons redeemed in Spain dropped 22 percent from 21.8 million coupons to 17 million coupons.
In contrast to the other top-line trends in Spain, the average face value of coupons redeemed increased more than 15 percent in 1992, growing from 34.5 pesetas in 1991 to 39.8 pesetas this past year. This allowed consumers to save 678 million pesetas on their grocery spcnding in 1992.
In/on-packs remained the highest redeeming medium in Spain, averaging 30.7 percent. In-store promotions averaged 28.2 percent redemption, while door-to-door coupons were redeemed at an average rate of 12.9 percent.
The outlook for promotions, and coupons in particular, is more positive for the future. The Spanish economy, having completed the Summer Olympics, is no longer showing substantial growth. Therefore, manufacturers must again fight for increased market share if growth is their goal.
MARKET SUMMARY AND TRENDS IN JAPAN
Coupon activities in Japan are still in the early stages. All restrictions on the print media carrying coupons have been lifted; however, reluctance on the part of retailers and consumers alike has kept the industry stagnant.
Coupon activity in Japan has been brief. The following information summarizes the major moves in the industry.
1990
* The restriction on newspaper ROP coupons was lifted. Maximum discounts, however, were limited to 50 percent of the normal price.
* SEIYU, Japan's #3 chain at the time, placed coupon advertisements within all the major daily newspapers. The chain included between five to 10 coupons in each paper. The coupons were valid for one week and redeemable only at SETYU stores in Tokyo and its vicinity. No information was available on redemptions.
1991
* The restriction on newspaper FSIs was lifted and two newspapers in Tokyo carried FSI coupons in a medium called "The Makers' Coupons."
* It is estimated that 103 million FSI coupons were distributed to subscribing homes. The coupons covered 14 different product types, were valid for one month and ranged in value from a low of 30 yen to a high of 380 yen.
* Video Research, the redemption agent/clearinghouse in Japan, estimated that 125,000 coupons were redeemed, an average redemption rate of 0. 12 percent. The highest food coupon redemption rate reached 0.27 percent, while the highest redemption rate for a health and beauty aid was 0.29 percent.
* Retail cooperation for this first FSI campaign was estimated at 17,000 retail locations.
1992
* In March, another FSI campaign was generated by Japan's two largest newspapers, Asahi Shimbun and Yomiuri Shimbum, covering the areas of Tokyo, Chiba, Saitama and Kanagawa.
* Retail chain cooperators reached 112, accounting for approximately 17,500 retail locations.
* Thirteen different coupons appeared in the FSIs, ranging in value from a low of 20 yen to a high of 200 yen. Each was printed in full color with a barcode and was valid for approximately one month. No information was available on redemption quantities.
* Subsequent similar FSI campaigns were distributed in May and September for a total distribution quantity in 1992 of 259.4 million coupons.
* Distribution of coupons via direct mail and magazines, in/on-pack promotions and retailer-sponsored coupons is very limited in Japan. Most coupons are redeemed through manufacturers or their appointed agents and redemptions are almost negligible in numbers.
* While the coupon market in Japan has begun to develop, it is growing very slowly. This is largely due to low consumer interest to use coupons and the lack of cooperation of Japan's #1 supermarket, DAIEI and #1 convenience store, Seven-Eleven.
1993 AND BEYOND
* It is estimated that three additional FSI campaigns will be run in 1993, much in the same fashion as the 1992 promotions.
* One positive factor for the coupon industry in Japan is its sluggish economy. It is speculated that the need for cost-consciousness among Japanese consumers will motivate consumers into an increased use of coupons.
OTHER COUNTRIES
In Portugal, there has been a growing interest in the use of coupons.
In France, only a small amount of couponing occurs. The retailer market is highly concentrated with a few retailers controlling the market. The cost of distribution is high and retailers have a fairly negative attitude toward coupons.
Although the population of France is similar to that of the United Kingdom, only 25 million to 35 million copies are redeemed annually.
The coupon market in the Republic of Ireland is very small, with the majority of the coupons issued by United Kingdom manufacturers and redeemed at retail locations within the United Kingdom.
Couponing became legal in Denmark only a few years ago. Therefore, this market is not yet being fully utilized by manufacturers and retailers.
In Germany, the discount given on a coupon cannot be greater than 1 percent of the product's value, so German consumers are not persuaded to use couponsregularly.
In the Commonwealth of Independent States, formerly the U.S.S.R., the lack of product availability, organized retail structure and little to no variety in advertising media provides an environment that is presently unsuitable for couponing.
In Belgium, environmentalists are trying to ban the household delivery of coupons. Annual redemption volume in Belgium is estimated at 70 million coupons.
In Holland and Switzerland, major retailers refuse to accept coupons; therefore, the coupon market does not exist in these countries.
In Greece, sales, marketing and retailing techniques are currently not sufficiently developed for couponing to be effective, so the market in these countries is limited.
In Sweden, Norway and Finland, the coupon market exists, with annual volume averaging 40 million.
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