Coupons cut a bigger future

Those little pieces of paper offering money off grocery brands are finally coming of age. Brand owners have been promoting their products using coupons for nearly 40 years in the UK. But they have had a poor image, because they are seen as too fiddly. Consumers have to cut them out, pin them to the noticeboard and then remember to take them with them when they go shopping.

But the advent of supermarket loyalty cards has sent a flurry of money-off coupons to millions of homes around the country. The 6 million shoppers who have signed up to the Tesco Clubcard regularly receive special magazines featuring all manner of money-off coupons, and the evidence shows that shoppers are getting more accustomed to using them.

However, outside the supermarket loyalty cards, this year has seen a marked change in the way coupons are being distributed.

New figures from NCH Promotional Services show that while distribution of coupons increased in the first six months of 1996, redemption has fallen (see graphs).

Looking at coupon volumes against media for the first half of the year, coupon distribution in magazines is up by two-thirds on last year. Distribution through newspapers has also grown significantly, at the expense of sending the coupons directly to shopper’s homes, or including them in the product packaging.

Since coupons in magazines and newspapers tend to be redeemed less than those sent straight to the home or included in the product pack, this accounts for the fall in redemption levels this year.

Newspapers and magazines are deemed to be the safest vehicle for distributing coupons.

The increasing use of print media for handing out coupons comes as supermarkets and brand owners need to respond ever faster to the activities of their competitors.

Sending coupons direct to the home is a cumbersome process by comparison, and putting them in the product packaging needs even longer term planning. With a little bit of prepared artwork, brand owners can have their coupons in a newspaper overnight, enabling them to react to their competitors’ activities at lightning speed.

There has also been a growth in alternative ways of distributing coupons. These include scratchcard promotions and distributing them at events such as BBC TV’s Good Food Show. These new methods have accounted for nearly a fifth of the distribution of coupons in the first six months of the year.

Coupons can be one of the most successful ways of promoting products, as they lead the consumer to make a choice before arriving at the store. And, where retailers fund the coupons, they can even encourage the consumer to choose one store over another.

Coupons have an important advantage over other forms of promotions. Cutting the price of a product on the supermarket shelf can lead to a price war with other brands, which can lead to a spiral of fall ing prices, without any player gaining an increase in market share.

The result is merely a reduction in margin. Once that point is reached, who will be the first to revert to the pre-campaign price levels? Coupons, by contrast, are recognised by consumers as a short-term offer. In addition, a price reduction can be offered through coupons without damaging the product’s brand values.

But it is important to see coupons as part of the whole marketing activity for the brand. They should reflect brand values, build on national advertising and extend brand recognition. Coupons should never be seen as an alternative to other marketing activities – they are complementary, not substitutional.

In the US, where coupons have been used for over 100 years, shoppers use them six times more than in the UK. Americans tend to put their coupons straight into their wallets, whereas the British put them in a draw or pin them to a noticeboard.

The growth of coupons distributed through supermarket loyalty schemes could lead to Britain becoming more coupon friendly.