PROMOTIONAL INSIGHTS

Carol Angrisani

Consumers are so price-conscious that 54% said they don't mind when retailers track their loyalty-card purchases if it means they'll get a discount, according to a new survey conducted by SN and Experian, an information company based in Costa Mesa, Calif.

The 2003 Survey of Manufacturer Promotional Practices, based on an online poll of 100 primary household shoppers, also revealed that 43% of those surveyed said they like it when they are automatically entered in a contest or sweepstakes through their shopper cards.

Too, contrary to what consumer advocacy groups believe and media have been reporting on consumers' fear of privacy invasion through loyalty-card use, just 5% of respondents said they would only shop at retailers without loyalty cards so that their purchases aren't tracked.

"This shows that consumers are placing their trust in retailers not to abuse their privacy, and that they appreciate being rewarded for their loyalty," said Don Stuart, partner, Cannondale Associates, Wilton, Conn., a sales and marketing consulting firm.

The vast majority of consumers don't mind giving up some privacy if they will receive offers that are meaningful to them, added Barry Kotek, managing partner, Retail Systems Consulting, Naples, Fla.

Similar to last year's findings, the study shows that consumers are reducing spending, and responding to cost-savings promotions.

Here are some of the survey's top-line results:

Twenty-two percent are spending more than $100 a week on grocery, household, health and beauty care products, down from 34% who said the same in last year's study.

Retailer Web sites and in-store kiosks are two areas where consumers would like to see more coupons available.

Fifty-four percent of consumers try most of the product samples they receive.

Fifty-four percent are buying store-brand products more often.

Fifty-one percent are buying discounted items more often.

Forty-one percent are more interested in free samples.

Seventy-seven percent agreed that they become aware of new/improved products through samples or coupons.

Seventy-one percent agreed that price is more important than brand names.

Shopping Behaviors

Financial concerns continue to influence shopping patterns, as 75% of respondents agreed strongly or somewhat strongly that they are helping their family budget by using coupons.

More than half (54%) agreed that they tended to buy more store brands this year than before, up from 31% who said the same in 2002.

However, 81% (up from 71% in last year's study) said they usually buy the same brands. Nearly half (47%) said they prefer well-known national brands (up from 38% last year), and are willing to pay more for them.

Most consumers (61%) spend $50 or more a week on grocery, household, and health and beauty care products, but fewer are spending over $100 (22%) this year than they did in 2002 (34%).

Bonus Packs

Bonus packs (e.g., 30% more product in a package) are the No. 1 promotion consumers said they purchased this year. Eighty-two percent of consumers reported buying a bonus pack in 2003, up from 68% who said the same in last year's survey.

Stuart of Cannondale confirms the bonus-pack trend, saying use of this package has increased among Cannondale's clients. Specifically, he said, manufacturers are creating account-specific bonus packs.

"There's been a wild proliferation of special packaging tailored to meet the needs of specific retailers," he said.

The reason for this is that the tactic benefits both the manufacturer's consumer and customer relationships, said Stuart. Retailers, for instance, are more apt to give exclusive bonus packs more support and display space because such packaging helps them differentiate themselves from the competition.

On the consumer side, bonus packs have long-lasting effects because they're viewed as tangible savings.

Consumers may not associate a product with a cents-off coupon or temporary price reduction, but they will be reminded of a bonus-pack savings virtually every time they use a product, Stuart said.

"Bonus packs reinforce savings on an ongoing basis," he said.

Along with bonus packs, other promotion activities are top-of-mind among consumers. Rounding out the top five are coupons (72%), price discounts on a package (62%), product samples (55%) and gifts attached to the package (46%).

Samples

Forty-one percent of consumers said they're more interested in free samples than they have been in the past.

Almost one-fourth (22%) claimed to have tried every product sample received, while more than one-half (54%) said they try about three-fourths. Just 4% said they do not try samples. These trends are similar to those found in last year's study.

Almost one-fourth (22%) said they often purchase a product after trying a sample. And 20% said they frequently give samples to family and friends for products they do not use.

Half (56%) indicated receiving samples in the mail, which is how over two-thirds (68%) said they prefer to get them. They also prefer, albeit to a lesser degree, receiving samples inside/on a package (55%), handed out in-store (51%), over the Internet (30%) and with the newspaper (25%).

Still, 18% of respondents said they have not obtained any of the listed samples in the past year.

Coupons

More than half (51%) of the respondents said they use "a few" grocery, household or HBC coupons in a month; 19%, one or two weekly; 14%, three to seven weekly; 1%, eight to 10; 8%, 11 or more.

Seven percent indicated that they don't use coupons.

Slightly more than one-quarter (27%) indicated that they are relying on coupons more. This is a decrease from last year's study, in which 34% of consumers indicated increased reliance.

This corresponds to national coupon-redemption trends. Consumer packaged goods manufacturers distributed 248 billion coupons in 2002, a 3.8% increase. However, just 3.8 billion were redeemed, a 5% decrease, according to NCH Marketing Services, Deerfield, Ill.

When it comes to preferred coupon-distribution methods, more than half (52%) said they like to get coupons in the mail. The Sunday paper (freestanding inserts) came in second, with 44% indicating that this is the preferred method of distribution.

This is a switch from last year's study, when the Sunday paper was ranked No. 1 (69%), and "in the mail" came in second (54%).

The change could be due to the fact that consumers are looking for coupons that are more relevant to them, said Bethany Stanley, senior industry marketing manager, Experian.

Stuart of Cannondale agreed that the shift reflects a consumer who is responding more to offers that fit his/her lifestyle.

"Consumers don't want to be wallpapered with empty promises and messages with no meaning," he said.

In-store kiosks and retailer Web sites are two areas of opportunity in the coupon business. Eight percent of respondents said they get coupons from in-store kiosks, though a greater amount (13%) said this is the preferred source. Similarly, while none of the respondents said they get coupons from a retailer Web site, 7% said this is the preferred source.

While the coupon industry needs to address the recent wave of Internet coupon fraud, e-coupons still hold plenty of potential. The reason for this is that they can reach the right consumer at the right time, said Stuart.

"Any type of online or kiosk coupon is one that the consumer specifically seeks out, so that means there will be a higher rate of redemption," said Stuart.

Internet and kiosk coupons must be targeted to meet the needs of specific consumers. One-size-fits-all programs, on the other hand, face an uncertain future.

"If the offers are the same for all on a retailer Web site or kiosk, the consumer may think of this as one more step to get what they used to get as a temporary price reduction," Kotek of Retail Systems noted.

Coupons can alter brand selection. Sixty-four percent of respondents said they look through coupons when planning their shopping trips, and 68% said they often purchase a brand because there is a coupon for it.

Internet Marketing

Nearly half of consumers (49%) use the Internet to get meal ideas. Similarly, 41% visit manufacturer Web sites for product samples; 38% frequent manufacturer sites for coupons. Twenty-six percent said they subscribe to CPG manufacturer e-newsletters; and 22% joined a Web site that offers free samples, coupons and other offers.

These numbers are likely to rise even higher as consumers get even more Internet proficient.

Over 70% of the U.S. population now has Internet access, with the average weekly use rising from 9.8 hours last year to 11.1 hours this year, said Kotek of Retail Systems. This shows that consumers are using the Internet as a partial replacement for more traditional media, he said. "The ease of use and the quantity of product information will continue to drive consumers to the Internet in the future."

Contests/Sweepstakes

Consumers are responding to contests and sweepstakes, especially those that are easy to enter. Forty-three percent said they like it when they're automatically entered through their loyalty card. Still, 33% said they don't like it.

Kotek of Retail Systems is surprised that 33% said they don't want to be entered via their shopper card.

"It could be that some consumers are only using the card for discounts, and are concerned about privacy issues," he noted.

Meanwhile, 17% said they buy certain brands if they're connected with a contest/sweepstakes. Nine percent said they shop at certain retailers that offer contests/sweepstakes.

Ethnic Foods

Consumer interest in ethnic foods is on the rise. Twenty percent said they purchase ethnic foods, up from 15% who said the same in 2002.

Additionally, 56% of consumers agree that they have noticed more ethnic foods/packaging in their grocery stores.

The popularity of ethnic foods is largely driven by the burgeoning U.S. Hispanic population. There are other factors as well, including increased international travel, the popularity of celebrity chefs, and growth of television food shows and channels. All of these are expanding consumer tastes, said John Stanton, a professor of food marketing at St. Joseph's University, Philadelphia.

"Consumers are telling us they are more willing to try ethnic flavors and foods," Stanton said.

One of the mistakes that food companies make is that they are too eager to jump on ethnic trends, such as Latino foods.

However, ethnic marketing is much more than that, said Stanton. Rather, manufacturers need to determine where their opportunity is and whether they can broaden the tastes of the consumers they serve.

"Every food manufacturer needs to examine which palates of the consumer they are satisfying, and whether or not they are missing a piece," Stanton said.

Value-Added Programs

Consumers are reacting to brands that give back to society and the consumer. Sixty-one percent agreed that they're more likely to purchase a brand associated with education programs like Upromise. Also, 44% agree that they buy brands that support certain charities and causes.

About the Study

Presented here is Part 1 of the 2003 Supermarket News/Experian Survey of Manufacturer Promotional Practices. The survey details consumer preferences to manufacturer promotional incentives such as bonus packs, samples, contests and sweepstakes, and value-add programs. In addition, the survey explores consumer shopping behavior patterns, use of the Internet and interest in ethnic foods. Published annually, the survey is the result of a partnership between SN and Experian, a global information solutions company with U.S. headquarters in Costa Mesa, Calif. Survey results are based on an online study of 100 primary shopper respondents. SN commissioned InsightExpress, Stamford, Conn., an online market research firm, to conduct the study in July 2003.

The data was weighted to represent the U.S. population in terms of age, income and household size. In Part 2 of the study, to be published in SN next month, manufacturers respond to questions about their promotional spending.