Magazine article Marketing

Counting on Coupons

Magazine article Marketing

Counting on Coupons

Article excerpt

The coupon market is suffering from a cyclical downturn. Robin Cobb reports on technical and publishing ventures that aim to put fresh life in the sector

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 on the scene to help iron out the creases 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 and 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 of the Institute of Sales Promotion sought to tackle misredemptions by calling on the main store groups to display warnings to shoppers. But the grocery giants failed to agree on this and committee 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. …

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