Commentary

Non-Food CPG Products Garnered 25 Million More Coupons

According to NCH’s 2014 Mid-Year CPG Coupon Factsreport, consumers redeemed 25 million more coupons, primarily for non-food products, compared to the same period last year. Redemption volume across the grocery and mass merchant retailer channels was relatively flat, while other smaller redemption channels (such as drug stores, military commissaries and dollar stores) saw larger rates of change.

Total U.S. CPG Coupon Distribution (In Billions/All Media)

 

Distribution Growth

Period (First Half)

Volume ($Billion)

Percentage

1st Half 2010

178

12.7%

2011

167

-6.2

2012

165

-1.2

2013

168

+1.8

2014

171

+1.8

Source: NCH Marketing Services, September 2014

While it’s not uncommon for the total industry distribution and redemption volumes to move in tandem, it’s coincidental that their actual rates of change have been identical to date in 2014, at +1.8% for each, says the report. This was especially unique given the amount of variability that the study observed at the individual brand, company and category levels.

Coupon Distribution By Market Segment

Segment

1st Half 2013

1st Half 2014

Non-Food Products

 

 

   Share

62.5%

64.9%

   Volume Billion$

$105

$111

   % growth

 

+5.7%

Food Products

 

 

   Share

37.5

35.1%

   Volume Billion$

63

$60

   % growth

 

-4.8%

Source: NCH Marketing Services, September 2014

The parallel movement of distribution and redemption marked a reversal of recent divergent trends in those measures at the industry and product segment levels. The overall market growth was driven by non-food coupons, which saw a 5.7% increase in distribution and a corresponding 8.7% increase in redemption. Whereas, food product coupons declined in both distribution and redemption, which indicated that marketers and consumers were generally in step with one another.

Total U.S. CPG Coupon Redemption (In Billions/All Media)

 

Redemption

Period (First Half)

Volume ($Billion)

Percentage

1st Half 2010

1.700

+7.9%

2011

1.750

+2/9

2012

1.550

-11.4

2013

1.425

-8.1

2014

1.450

+1.8

Source: NCH Marketing Services, September 2014

Retailers and manufacturers continued to grow their use of mass-market coupons to reach consumers to influence where they shopped or which brand they purchased. The free-standing insert (FSI) coupon vehicle distributed 92.5% of all coupons in the first half of 2014, up from 91.1% in the first half of 2013. Digital coupon distribution also continued to grow – at a rate of more than 30% – but comprised less than 1% of the total

market distribution volume.

Coupon Distribution by Media (1st Half 2014)

Media

% of Total

   FSI

92.5%

   All handouts

3.3

   Magazine

1.5

   Direct mail

1.3

   Other

<2.0

Source: NCH Marketing Services, September 2014

Marketers leveraged the coupon advertising space of an FSI to carry more coupons, with more multi-brand and cross-sector coupons as an increasingly popular choice for marketers in many types of coupon distribution media. Yet, single-purchase, single-brand coupons remained the primary type of coupon offer issued by marketers, and redeemed by consumers, says the report.

More than 80% of total redemption occurred in traditional grocery and mass merchant retailers, which  experienced minimal change year-to-date at the industry channel level. Varying retailer strategies for merchandising, shopper, marketing and coupon redemption policies produced a wide range of individual change within the top 10.

Percent of Redemption Volume by Media (1st Half 2014)

Media

% of Total Redemption

FSI

49.3%

In/on pack & cross-ruff

18.6

All Handouts

13.3

Direct mail

3.4

Digital print at home

6.4

Digital paperless

4.4

Digital blended

1.2

Military

2.0

Other

<2.0

Source: NCH Marketing Services, September 2014

Overall, the coupon market demonstrated positive trends through the first half of 2014, as marketers at retailer and manufacturer companies built upon the couponing momentum of last year, partially in response to the overall slow sales growth in many CPG product segments. Digital coupon media continued to grow at a strong pace, driven by consumer adoption and its ability to fulfill the total-reach objectives of an integrated media plan.

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