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Part Five Developing the Integrated Marketing Communications Program
Belch: Advertising and
Promotion, Sixth Edition
Exhibit 16-16 Catalina
Marketing promotes its
checkout coupons
V. Developing the
Integrated Marketing
Communications Program
16. Sales Promotion © The McGraw−Hill
Companies, 2003
much lower for instant cross-ruff coupons, as it averages around 5 percent. Instant
coupons give consumers an immediate point-of-purchase incentive, and can be selectively
placed in terms of promotion timing and market region. Some companies prefer
instant coupons to price-off deals because the latter require more cooperation from
retailers and can be more expensive, since every package must be reduced in price.
Another distribution method that has experienced strong growth over the past 10
years or so is in-store couponing, which includes all co-op couponing programs distributed
in a retail store environment. This medium now accounts for around 8 percent
of total coupon distribution. Coupons are distributed to consumers in stores in several
ways, including tear-off pads, handouts in the store (sometimes as part of a sampling
demonstration), on-shelf dispensers, and electronic dispensers.
Most of the coupons distributed in stores are through ActMedia’s Instant Coupon
Machine. This coupon dispenser is mounted on the shelf in front of the product being
promoted. It has blinking red lights to draw consumers’ attention to the savings
opportunity. These in-store coupons have several advantages: They can reach consumers
when they are ready to make a purchase, increase brand awareness on the
shelf, generate impulse buying, and encourage product trial. They also provide category
exclusivity. In-store couponing removes the need for consumers to clip coupons
from FSIs or print ads and then remember to bring them to the store. Redemption
rates for coupons distributed by the Instant Coupon Machine are very high, averaging
about 6 to 8 percent.
Another popular way to distribute in-store coupons is through electronic devices
such as kiosks or at the checkout counter. Some electronically dispensed coupons,
such as Catalina Marketing Corp.’s Checkout Coupon, are tied to scanner data at each
grocery store checkout. When the specified product, such as a competitive brand, is
purchased, the consumer receives a coupon at the checkout for the company’s brand
(Exhibit 16-16). Companies also use this system to link purchases of products that are
related. For example, a consumer who purchases a caffeine-free cola might be issued a
coupon for a decaffeinated coffee.
Major advantages of electronically dispensed checkout coupons are that they are
cost-effective and can be targeted to specific categories of consumers, such as users of
competitive or complementary products. Since 65 to 85 percent of a manufacturer’s
coupons are used by current customers, marketers want to target their coupons to users
of competitive brands. Redemption rates are also high for electronically dispensed
coupons, averaging around 5 to 7 percent.
Couponing Trends Over the past four years the number of coupons distributed
has declined by nearly 20 percent. While the average American household is still
being barraged with nearly 3,000 coupons per year, many marketers have cut back on
their use of coupons because of concerns over costs and effectiveness. Critics argue
that coupons cost too much to print, distribute, and process and that they don’t benefit
enough consumers. Consumers redeemed less than 2 percent of the 239 billion
coupons distributed in 2001. Former Procter & Gamble CEO Durk
Jager echoed the sentiment of many consumer-product companies when he
said, “Who can argue for a practice that fails 98 percent of the time?” 32
Despite the growing sentiment among major marketers that coupons are
inefficient and costly, very few companies, including Procter & Gamble,
are likely to abandon them entirely. 33 Although most coupons never get
used, consumers use some of them and have come to expect them. More
than 80 percent of consumers use coupons and nearly one-quarter say they
use them every time they shop. With so many consumers eager for coupons,
marketers will continue to accommodate them. However, companies as
well as the coupon industry are looking for ways to improve on their use.
Marketers are continually searching for more effective couponing techniques.
General Mills, Kellogg, and Post replaced brand-specific coupons
with universal coupons good for any of their cereal brands. For example, to
make its couponing spending more efficient, Post began using universal
coupons worth $1.50 off two boxes (matching the average cereal-coupon
discount of 75 cents) and cut coupon distribution in half. Even though Post