ELECTRONIC COUPON DISTRIBUTION RISING: SURVEY

DEENA AMATO-McCOY

LINCOLNSHIRE, Ill. -- While freestanding inserts remain the primary method for distributing coupons to consumers, their redemption rates continue to decline. By contrast, redemption rates for electronic coupons -- which can be more easily targeted to specific consumer groups -- are on the rise.

These were among the findings of the 31st annual "Worldwide Coupon Distribution and Redemption Trends" survey, a review of coupon industry trends conducted by NCH NuWorld Marketing here.

The report was compiled by accumulating coupon distribution and redemption data from more than 3,000 manufacturers nationwide, providing a complete picture of coupon activity in the market, according to Charles Brown, vice president of corporate communications and external affairs for NCH NuWorld.

While specific survey data is complete only through 1996, analyses include information from the first half of 1997, he said.

In the area of coupon distribution, while FSIs still dominate as the most common form of coupon distribution, they declined to 81.5% of the total coupons distributed in 1996, from 83.3% in 1995.

The growth of on-shelf coupon machines and point-of-sale electronic coupons may have contributed to this decline. They continued a pattern of growth, from 5.3% of the 1994 total, to 6.0% in 1995, reaching a 7.6% share in 1996.

Discounts provided via a retailer's frequent-shopper program, as well as clipless coupons typically distributed at the point-of-sale or via in-store kiosks, were part of the growth of this category.

In addition to declining distribution, FSI coupons also experienced a decline in redemption rates, falling slightly to 1.6% in 1996 from 1.7% the previous year, according to the survey. The average redemption rate for electronically dispensed coupons, however, was 8.3% in 1996.

Higher distribution and redemption rates for electronic coupons could also be due to the increasing number of frequent-shopper programs. The NCH survey quotes a study by Retail Systems Consulting, Naples, Fla., that more than 4,235 supermarkets in the United States offer frequent-shopper programs.

By using electronic coupons in conjunction with these customer-loyalty programs, retailers are able to target individual shoppers with specific manufacturer discounts.

These promotions enable both the retailer and the manufacturer to motivate brand trial and build shopper loyalty, the NCH NuWorld report said.

NCH's results also indicate that consumers in the Mid-Atlantic region are more promotion-sensitive than those in other parts of the country.

These consumers are more likely to participate in frequent-shopper programs and to shop in stores that offer bonus coupon values than the average consumer, according to the survey.

One reason for higher participation in this region may be its concentration of customer-loyalty programs. The survey shows that approximately 30% of retailers in the Mid-Atlantic region offer a frequent-shopper program, compared with the national average of 14%.

The survey was released to the supermarket industry late last month, according to Brown. NCH NuWorld was formed in January 1997 through a merger between NCH Promotional Services, Schaumburg, Ill., and NuWorld Marketing Ltd., San Diego.