CPGmatters: Pressure Mounts to Leverage ’09 Surge in Distribution
By Al Heller
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
One bright side to the nation’s economic turmoil is the increased attention on couponing as a promotional vehicle for CPG brands, and the attendant greater efforts to distribute these offers in alignment with retailer go-to-market strategies within trading areas.
U.S. consumers redeemed 1.6 billion coupons in the first half of 2009, a 23 percent jump from the same year-ago period, reported Inmar, the coupon processor. According to Inmar and reported by The New York Times: Redemption of printable coupons from web sites grew 308 percent in the first half of 2009, off of a small base. The face value of coupons rose by 9 percent, and food makers in particular distributed 29 percent more coupons in the first half of 2009 versus a year ago.
That’s blazing coupon heat, as CPG brands issue them to compete with private label and help consumers save money. A Valassis executive noted recently that two of its largest CPG clients added incremental 8- to 12-page coupon events that weren’t planned at the start of the year, specifically to offset the threat of private label.
"In today’s environment, the stigma of redeeming coupons is clearly less of an issue for people, who get them from newspapers, mail, online, and offers placed directly onto their frequent-shopper cards," Tom Murray, vice president and general manager of the free-standing insert business at Valassis, also told an audience at an Association of Coupon Professionals (ACP) conference. "Whatever you do, don’t make coupons less accessible."
Data from The Nielsen Company data supports his view.
"With more consumers looking for value and savings – and CPG retailers and manufacturers collaborating to enable easier coupon access – coupons are back in vogue," noted Todd Hale, senior vice president, Consumer & Shopper Insights, Nielsen. "It’s important for manufacturers and retailers to understand who is using coupons and how frequently. For example, while some might think fervent coupon clippers are only interested in a good deal, our research shows this was the only group to show an increase in overall purchases – with or without a coupon – suggesting real benefits to companies deploying coupons in their marketing mix."
Four of 10 affluent households (earning $70,000-plus annually) are "super-heavy coupon users" (39 percent) and "coupon enthusiasts" (42 percent) vs. just 35 percent of total U.S. households in each group, according to Nielsen Homescan Panel. The "super-heavy coupon users" bought between 51 and 103 items using coupons during the first-half 2009, while "coupon enthusiasts" bought 104 or more.
"Without question, coupon usage is undergoing a renaissance," added Mr. Hale. "More consumers are looking for value and lower prices. Retailers and manufacturers are distributing more coupons and making it easier for consumers to leverage technology to access coupons they want with less effort."
Despite some consumer pushback (see www.bringbackthecoupons.com), Mr. Murray sees shared mail becoming more important in the coupon mix because of the sliding circulation among so many newspapers.
Discussion Questions: What adjustments should be made to maximize coupon effectiveness in light of declining newspaper circulation and emerging online technologies? Second, for national brands, how critical and worthwhile are coupons as a tool against store labels?