Magazine article Marketing

Redeeming Qualities of Coupons: In Attempting to Emulate the Huge Success of Money-Off Coupons in the US, the UK Market Faces a Potential Revolution

Magazine article Marketing

Redeeming Qualities of Coupons: In Attempting to Emulate the Huge Success of Money-Off Coupons in the US, the UK Market Faces a Potential Revolution

Article excerpt

REDEEMING QUALITIES OF COUPONS

Increased sightings of FSIs have been recorded throughout the UK this summer, and figures appear set to go even higher. FSIs have nothing to do with UFOs, though the culture is slightly alien. The FSI - jargon to add to the marketer's lexicon - is a free-standing insert, a supplement full of money-off coupons.

Coupons now dominate promotion in the US, and there is little doubt, free-standing inserts fuelled their success. Nielsen Clearing House, the major force in checking redeemed coupons on both sides of the Atlantic, says the volume of coupons distributed in the US has rocketed from around 20 billion in the early 70s when FSIs first appeared, to a staggering 268 billion last year.

That's more than 1000 a year for every man, woman and child in the US. Of these coupons, 80% now reach the consumer via FSIs.

With a population a quarter the size, the UK is where the US was 20 years ago. Nielsen forecasts that 5.03 billion coupons will be distributed here this year, with a face value of 1.2bn [pounds]. Newspapers and magazine ads are the main source, followed by door-to-door leaflets.

In 1989, however, an FSI - the Coupon Book - was tested across regions. It was created by Graham Morse and Ken Spedding, ex-directors of the sales promotion consultancy Masterguide, with the backing of Reed Regional Newspapers. National runs of ten million copies followed in April and June, with a third scheduled for this month.

A rival - the Pence Off Book, from Wheele Ridge Advertising - is also on the way. The launch has been put back from September to late October or early November. Henry Hicks of Wheele Ridge blames long print lead times. It will be distributed with Sunday supplements rather than the regional freesheets favoured by the Coupon Book. Other rivals are rumoured.

Why now? And are we going to see the same dramatic expansion here that had occured in the US? Mark Sherrington, a founder-director of marketing agency The Added Value Company, says there are cultural and trade differences which may limit their success, "but I certainly think they will get a lot bigger".

"People use coupons because they actually work," adds the ex-Lever Brothers marketer. "The thing about a coupon is that it is a controlled price reduction, and therefore in my book the best promotional method. And providing that the FSI publishers can get the right brands in their books - Levers, Kellogg, Mars - they'll find there is a halo effect. Consumers will value them and use them, rather than throw them away."

Morse, for the Coupon Book, says the proper infrastructure must be in place for FSI to work. He thinks it now is.

First, efficient clearing house facilities are crucial, and do exist here. An economical and reliable distribution medium is also needed. That's come about, so far as Morse is concerned, through the rapid growth of large, free newspaper chains in the past decade.

Hitching a lift with the freesheets halves distribution costs compared with conventional door-to-door drops, he claims. He quotes 82,000 [pounds] for printing and distributing ten million copies, against 160,000 [pounds] using a conventional door-to-door drop.

And the use of coupons needs to reach a certain critical mass. "Coupon distribution has doubled in the UK, from 2.29 billion in 1983 to the current forecast of five billion this year," Morse proclaims. "I think a 15% growth rate is feasible, doubling their use again in five years.

"Housewives like coupons. In the US, 77% of households use them, and here it's 70%. …

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