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Coupon Connection Big Changes Are On The Way As ‘Couponing’ Becomes More Modern

By Jan Ellen Spiegel Colorado Springs Gazette Telegraph

They cascade out of the newspaper each Sunday, usually scattering in nothing short of a mess.

Coupons. Sheets of coupons. Coupons for smoked sausage and frozen chicken. Coupons for snack cakes, sauces and seasoned mashed potato flakes.

There seem to be hundreds, but believe it or not, Americans aren’t getting as many as they used to. Coupon distribution has been falling for the past five years. Last year, 268.5 billion coupons were distributed nationally - down 8 percent from 1995 - and only 2 percent of them were redeemed.

The average face value of coupons is also dropping, to 67 cents last year - down 2 cents from 1995. And the expiration dates are tighter; an average of three months last year, compared with 10 months in 1980.

It’s not that coupon distributors are getting stingy. They’re just getting more precise about who gets which coupons - targeting, they call it - and how they are delivered. Newspaper inserts once were the delivery vehicle of choice. Today, some coupons come by mail, some are in the store and some seem destined to be online.

The changes in “couponing” are part of the carefully constructed world of grocery marketing. The goal is to make couponing more efficient, and the first step is to figure out what consumers want most from them.

“New products” is the clear answer, says Charles Brown, marketing vice president at NCH Promotional Services, an Illinois-based coupon processor.

“From our consumer behavior study, we know consumers use coupons quite often for trial,” he says. “It takes some of the risk away from consumers.”

Coupons also are used to counteract competitors, says Todd Waters of Waters Molitor Inc., a promotional agency in Minneapolis that handles Pillsbury and Ralston.

One tactic is the use of Catalina Marketing coupons, which are distributed with the grocery receipt at checkout. They’re electronically triggered if you buy a competing product; for instance, if you buy Minute Maid juice, you might get a coupon for Tropicana. They’re also used to promote other products in a company line; the purchase of a Pillsbury cake mix might trigger a coupon for Pillsbury refrigerated biscuits.

Coupons also are used to promote what’s known as “pantry loading,” stocking up on a product a manufacturer thinks consumers will need in quantity. That’s why you may see coupons for two bags of stuffing mix a few weeks before Thanksgiving.

A few manufacturers have cut back on coupons, preferring instead to reduce prices and advertise them as “everyday low prices.” Most notable has been Post cereals, which did that last April with great fanfare. Proctor & Gamble Co. has gone a step further: For a year, the company has experimented with no coupons and lower prices in three upstate New York cities.

But most manufacturers continue to offer coupons.

“They’re a good advertising vehicle even if the customer doesn’t use it,” says Mary Lou Chapman, president of the Rocky Mountain Food Dealers Association.

The complicating factor is that time-challenged consumers rarely make neat little shopping lists before heading to the store anymore. They arrive couponless and frazzled after work, trying to find something for dinner.

To capitalize on that, manufacturers have started placing coupon machines in stores and offering in-store specials. But they’ve done it reluctantly, says Richard Burton, director of consumer brand marketing for Noble and Associates, a Missouri marketing firm that handles Bordens, Mrs. Smith’s pies and Del Monte.

“In delivering coupons, you are assured of delivering savings to the consumer and maintaining control,” he says. “In-store features or off-shelf displays are really giving control to the retailer.”

One of the thornier challenges to brand-name manufacturers is overcoming competition from high-quality, inexpensive store brands. Waters says consumers strayed from old brand loyalties during the 1980s, when money was tight and store brands improved.

“It reached the point where it was an all-out price war,” he says. “Now manufacturers have turned and said, ‘OK, we want our promotions and our advertising to build our brand loyalty again.”’

Even with coupons, national brands aren’t always cheaper than store brands.

“That is a real challenge,” says Burton. “How do you market your brand? You need to generate compelling food news and make sure the benefit the product offers is relevant to consumer needs.”

But Burton believes discounters, many of whom do not accept coupons, are the biggest challenge to manufacturers. His answer: Use coupons for what they do best - introducing new products.

“For short-term savings, coupons will stick around,” he says. “It’s the vehicles for how they’re delivered that will change.”

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