Dealing With Coupons

Marketers issued an equivalent of 850 free-standing inserts for every U.S. citizen in 2004, distributing a whopping 251 billion coupons that offered deals on everything from cereal and cheese to coffeemakers, takeaway pizzas and restaurant meals.

The data, contained in the new Marx FSI Trend Report, estimates that coupon distribution rose 7.7 percent over 2003 and amounted to a potential per-person savings of nearly $1,000. FSI distribution registered a compounded 3.5 percent growth rate over the last five years, a 13 percent change overall, according to Marx Promotion Intelligence, a unit of TNS Media Intelligence. (FSIs, the coupon inserts in Sunday newspapers, account for the majority of U.S. couponing.)

During that time, non-food marketers—like those for household items and health and beauty aids—have significantly increased their coupon activity and now surpass food manufacturers. Led by a slew of product introductions in the oral care, cosmetic and household cleaning sectors, nine of the top 10 couponing brands in 2004 were non-food products.

Growth in the franchise sector outpaced that of consumer packaged goods in 2004, and now accounts for 11 percent of all FSI page distribution. That growth has been driven by wider acceptance of FSIs as a cost-efficient marketing vehicle for restaurants.

“Marketers outside the packaged-goods category appreciate the impression value of FSIs,” observes Wallace Marx Jr., director of marketing at MPI. “Restaurants like Red Lobster, Applebee’s and Chili’s will use a full-page ad to deliver a single coupon. It’s like a magazine ad, but one that reaches a Super Bowl-sized audience.”

While coupons are widely used for product launches, they also help categories that have commodified and need to keep their standing with retailers. “Coupons tend to follow innovation,” notes Marx. “But with products that have plateaued, they also have to coupon to keep up relations with the trade. They need to keep prices low and keep their place on the [store] shelf.”

Consumer packaged goods remain the largest user of FSI coupons, accounting for two thirds of all FSI page activity. But newer categories like high-value coupons and those for appliances are quickly catching on. The average value of a coupon in 2004 was $1.03 cents, rising above $1 for the first time, and up from 95 cents in 2003. The difference is that while consumers may be saving 25 cents off a bag of flour, they might also be using $30-off coupons for a diabetic testing kit.

Coupon printer and distributor Valassis says consumers saved more than $3 billion last year using coupons, and notes that the demographics of coupon clippers run counter to popular perceptions: Some 43 percent of them are men, and 32 percent live in households with above-average incomes of between $40,000 and $75,000.