COUPON CONFIDENCE

DEERFIELD, Ill. -- Despite continued redemption losses, consumer packaged goods manufacturers increased coupon distribution in 2003, according to new data from NCH Marketing Services here.CPG marketers distributed $258 billion coupons in 2003, a 4% increase from 2002, according to NCH, a provider of coupon processing and marketing services. Redemption, meanwhile, slipped to 3.6 billion coupons, a

DEERFIELD, Ill. -- Despite continued redemption losses, consumer packaged goods manufacturers increased coupon distribution in 2003, according to new data from NCH Marketing Services here.

CPG marketers distributed $258 billion coupons in 2003, a 4% increase from 2002, according to NCH, a provider of coupon processing and marketing services. Redemption, meanwhile, slipped to 3.6 billion coupons, a 5.3% decrease from 2002.

Although redemption is falling, the increased distribution shows that marketers are beefing up promotional efforts, said Charles Brown, vice president, marketing, NCH, a division of Valassis, Livonia, Mich.

"There have been two years of rebounding [distribution] growth since 2001, when advertising and promotional spending took a big hit," said Brown.

While overall redemption may be down, marketers SN polled reported good results from their individual efforts.

"We've had very good redemption results," said Rob Lorys, vice president, consumer marketing, Georgia-Pacific Corp., Atlanta.

Among other 2003 coupon trends:

Freestanding inserts continue to represent the bulk (86.7%) of coupons, growing 5% over 2002.

Along with FSIs, coupons were also distributed via handouts, representing 5.9% of coupon distribution; in/on-pack promotions, 2.0%; magazines, 1.9%; direct mail, 1.9%; newspapers, 1.1%; and the Internet, 0.2%

The average coupon expiration date was 2.9 months, on par with 2002.

The number of coupons requiring multiple purchases held steady at 26%.

The average coupon face value was 82 cents, up from 80 cents in 2002.

The top 10 categories with the highest growth (exceeding 700 million more coupons issued in 2003 vs. 2002) in coupon distribution were oral hygiene (excluding toothpaste and toothbrushes); fresheners and deodorizers; pet treats; cereal; paper products; frozen ice cream novelties; hair care (excluding shampoo); laundry supplies; cough and cold remedies; and vitamins, respectively.

Couponing Goals

Consumer packaged goods marketers remain active in couponing for a variety of reasons. Del Monte Foods Co., San Francisco, for instance, uses coupons to attract new consumers and reward existing ones, according to Melissa Murphy, company spokeswoman. Del Monte uses a mix of couponing methods, including FSIs, direct mail, in-store and on-pack.

ConAgra Foods, Omaha, Neb., views couponing as an important way to drive trial on new products and get consumers to retry products after product improvements have been made, according to Chris Kircher, the company's vice president of communications. Couponing is also a way to suggest new usage occasions for products, Kircher added.

ConAgra distributes coupons through a number of methods, including FSIs, direct mail, in-pack, in-store and the Internet. "Our methods vary according to specific brand and portfolio objectives," Kircher said.

ConAgra is moving away from the use of coupons as a price subsidy on existing brands in favor of equity-building programs, Kircher noted.

At Georgia-Pacific, meanwhile, the main goal of couponing is to stimulate trial of new products and encourage pantry-loading of its brands.

The Internet

The Internet accounted for 0.2% of coupon distribution in 2003, on par with 2002. Despite the highly publicized cases of Internet coupon fraud in some markets last year, many marketers remain supportive of the Internet as a coupon distribution tool.

Georgia-Pacific is one of them. Internet couponing is an important part of the company's integrated marketing approach. One reason is that its target market is women with children, and this demographic spends a lot of time on the Internet, Lorys said.

Rise and Fall

Coupon distribution has rebounded since 2001, but redemption continues to slide

U.S. CPG Coupon Distribution (in billions)

1999: $256

2000: $248

2001: $239

2002: $248

2003: $258

U.S. CPG Coupon Redemption (in billions)

1999: $4.7

2000: $4.5

2001: $4.0

2002: $3.8

2003: $3.6

Source: NCH Marketing Services