STUDY: COUPON REDEMPTION, PRODUCT MOVEMENT DECLINED

DAN ALAIMO

LINCOLNSHIRE, Ill. -- Coupon redemption tends to be counter-cyclical, but consumers' desire to save money in last year's weak economy could not overcome a lack of attractive promotional offers, according to the annual coupon industry study by NCH NuWorld Marketing Limited.

Coupon redemption dropped 11% in 2001, while coupon distribution declined only 3.6%, making for a "unique year" in the coupon world, Charlie Brown, vice president of marketing, NCH NuWorld, told SN. Usually redemption and distribution changes tend to move approximately in tandem, he said.

The disparity was due to more coupons with multiple-purchase requirements that consumers did not embrace, a greater use of freestanding inserts than more targeted and effective media such as on-pack coupons, and a 27% reduction in the number of brand events per day, giving consumers fewer opportunities to clip coupons, according to the report. Manufacturer consolidation was a factor behind the promotional cutbacks, Brown noted.

All this negative activity resulted in 15% fewer products moved in the stores via coupon redemption, Brown said. "Supermarkets should hone in on the product-movement decline, because this is a first. The multiple-purchase strategy backfired and marketers crossed the break-even point. That's a big learning for both the manufacturer and the retailer. They have to make the offers attractive for the consumers to redeem them," he said.

The study found 51% of consumers agreed that that coupons "save them a lot of money" -- a new low for the NCH study -- and 70% of consumers said they ignore coupons that require them to buy more than they normally would.

Manufacturers count on fewer redemptions when they require more items to be purchased. But because so many manufacturers used the multi-purchase tactic and offered less to consumers in return, as a group they crossed the line separating successful and unsuccessful promotions, Brown said.

"Redemption was suppressed so greatly that fewer products were moved. That's not a good thing for the retailers and not what the marketer intended to do. It just got dialed up so high, it crossed that break-even point," Brown said.