Coupon use is changing, in that more manufacturers are shifting to offers that are targeted at shoppers most likely to want and use them, according to a new SN survey.
Despite falling redemption rates, more than half (57%) of manufacturer respondents to Part 1 of SN's 2007 Survey of Manufacturer Promotional Practices said they still view couponing as a valuable promotional tool. Of these, about 80% said that's because coupons encourage product trial, while more than two-thirds (68%) said it increases brand awareness, and half (50%) said it boosts retailer support of their brands.
But the way they use coupons is changing. Nearly two-thirds (61%) of manufacturers said they are using more targeted forms of coupon distribution, a slight increase from the 58% that said the same in last year's survey.
Of these, nearly two-thirds (63%) are using retail loyalty data to target offers to specific consumers. And 57% said they are handing out coupons at targeted events, such as baby expos.
Nearly 80 manufacturers responded to the survey, conducted online in July and August. The majority of respondents (61%) represented companies that market food, and nearly two-thirds (64%) said their responses applied to their entire company vs. a single division. Part II, scheduled to be published in an upcoming issue of SN, will reveal how consumers respond to manufacturer promotions.
The findings come at a time when manufacturers are aligning their brands with coupon programs like Ukrop's “Savings Spot,” an in-store kiosk that provides personalized coupons and information based on the user's purchasing history.
Targeted coupons are also taking other forms. Minneapolis-based General Mills, for instance, is targeting coupons to the Hispanic market with its new Spanish-language consumer publication “Que Rica Vida” (“What a Rich and Wonderful Life.)”
Along with lifestyle tips and recipes, the publication includes coupons printed in both Spanish and English. Savings range from 50 cents to $1, and are good for a variety of products, including Nature Valley granola bars and Cheerios.
“The coupons deliver relevant trial offers to Hispanics,” Rudy Rodriguez, General Mills' multicultural marketing director, told SN. What's more, the publication provides step-by-step instructions on how to use them. This is an important component, as many unacculturated Hispanics are often intimidated by coupons.
A GROWING TARGET
Indeed, targeted couponing programs are growing at a rate of about 10% to 15% per year, compared with mass market programs, which are growing about 3% to 5%, according to ICOM Information & Communications, a Toronto-based provider of targeted communications for the CPG and over-the-counter pharmaceutical industries.
“Targeted coupons deliver higher relevance and better results,” said ICOM's marketing vice president, Peter Meyers.
The increase in targeted campaigns could be an effort to improve redemption rates. While CPG companies distributed 279 billion coupons last year, a 0.4% rise from 2005, redemption slipped 6.7% to 2.8 billion, according to NCH Marketing Services, Deerfield, Ill., a coupon processing and promotion marketing services company.
As for other survey results, respondents revealed continued promotional support. Nearly half (47%) said spending on consumer promotions will increase in fiscal 2008, while 42% said the same for trade promotions and 44% said so for media advertising.
Retail as a medium is growing in importance, as more than two-thirds (69%) of respondents said they are focusing more on retail-specific consumer promotions, up from 58% who said the same in last year's survey. Meanwhile, 40% said they are using more joint promotions with non-competing brands from other companies; 26% are using ethnic marketing, and 27% are doing Internet marketing.
Likewise, in-store media was the No. 1 response to the question, “Which media types most effectively support your consumer promotions?” And more than two-thirds (69%) said they plan to use in-store sampling next year, up from 62% of those who said they used this promotional tool over the last year.
FREQUENT SHOPPER DATA
While 47% of respondents said retailers are more likely to share frequent shopper information with manufacturers than in the past, 45% said the biggest hurdle to using the data is the amount that retailers charge for it. That's a big drop from last year, when nearly two-thirds (65%) said the same.
While it appears retail charges aren't as much of an issue, the efficacy of loyalty data is in question. Just 10% said obtaining frequent shopper data is worth the cost that retailers charge, down from 17% who said the same last year.
Promotions in Motion
Promotions and advertising will get strong support from marketers in 2008
Survey Question: For the 2008 fiscal year, do you expect your annual brand budget to increase, decrease or remain the same for the following:
Marketers are strengthening their commitment to consumer promotions customized for specific retailers
Survey Question: Which of the following types of consumer promotions are you focusing more on now than in the past?*
|Joint promotions with non-competing brands from other companies||40%|
|Joint promotions with sister brands||23%|
|* Respondents could select more than one answer|