Consumer savings rose to $3.6 billion in 2014, as consumer packaged goods (CPG) marketers increased the average coupon face value available to shoppers, according to NCH’s annual topline view of the Coupon Facts report. Marketers for both food and non-food products strategically offered consumers more savings value with their coupons while also managing the redemption impact to their budgets.
While both food and non-food marketers increased the average face value available through their coupon promotions, only non-food increased the total number of coupons distributed in 2014. Additionally, only non-food received a positive redemption increase. The net effect was a 2.9 percent – or $100 million – overall increase in consumer redemption savings.
In an effort to work within 2014 budgets, marketers issued a total of 310 billion CPG coupons, down 1.6 percent from the previous year. Marketers achieved a total of 2.75 billion coupons redeemed in 2014, down 1.8 percent, through a strategic combination of media mix, product segment changes, offer tactics and various forms of retailer support.
The Free-Standing Insert (FSI) remained the dominant coupon vehicle, accounting for 92.2 percent of total CPG coupon distribution volume, as marketers leveraged the vehicle’s mass reach for its brand-awareness value. Although digital coupon distribution increased, it remains less than 1 percent of total coupon distribution.
Unlike in previous years, the tactical changes marketers made to coupon offer characteristics were focused on face value. Average face value distributed rose a healthy 6.2 percent to $1.72, while offer duration fell only slightly and multiple-purchase requirements were relatively unchanged.
Similar to the recent past, year-over-year variability in the products promoted via coupons affected the annual trends. In the non-food segment, marketers distributed 3.5 percent more coupons in 2014. This led to substantially more non-food coupon redemption, which was up 11.4 percent, reversing a prior year decline.
In the food segment, conversely, marketers distributed 10.4 percent fewer coupons and redemption fell by 10.3 percent from 2013. With 43 percent of food coupons requiring the consumer to purchase two or more items, a drop in redemption volume had an even greater impact on the quantity of product moved with a coupon for food marketers and retailers.
The overall reduction in food coupons had the largest impact on retailers in the grocery and mass merchandiser retailer channels, which experienced a 5.1 and 3.3 percent decline in total redemption volume, respectively. Yet, the vast majority of redemption – nearly 80 percent – occurred in these two channels.
While retailers and CPG companies have increased investment in digital paperless coupons, it was not enough to compensate for the other factors reducing total redemption volume in the food segment.
The increase in non-food coupons benefited the drug retailer channel, which saw a 16 percent increase in total redemption volume during 2014. The smaller “all other” retailers channel, which includes dollar stores, also saw a similar redemption volume increase.
CPG marketers managed their budgets in 2014 to balance their coupon promotion objectives of consumer motivation, brand awareness and retailer trading partner support. At the same time, many have also invested more in the analysis, enhanced controls and risk mitigation areas that were all required to manage their coupon expenditures and optimize coupon performance to benefit brands, retailers and consumers.
NCH will publish the 50th edition of the Coupon Facts report in 2015. For access, and to opt-in to receive future email notifications, please visit www.NCHResourceCenter.com. More details on 2014’s coupon trends, including client-exclusive analysis opportunities, may be obtained by contacting a NCH rep.