The great majority of consumers continued to cling to coupons, advertising rebounded as a percentage of promotional activity, and account-specific programs found more retailers on radio and TV. Those are some of the major findings of Cox Direct’s 20th Annual Survey of Promotional Practices, which tracked promotion practices in 1997 and forecasts for 1998.
Every year, the Largo, FL-based company surveys packaged goods executives, retailers, and consumers in an effort to take the promotional temperature of the consumer marketplace. Results of the 20th survey were released this month
Expenditure allocation of the promotional pie increased for media advertising by five points to 26 percent of marketers’ budget.. The gain came at the expense of trade promotion (down 3.3 points) and consumer promotion (off 1.9 points). Trade spending accounted for 50 percent of the total, and consumer promo outlays 24 percent.
Cox Direct sent questionnaires to 165 top U.S. packaged goods companies and received 44 usable replies for a response rate of 27 percent.
Coupons continued to be a marketing mainstay, with more than four in 10 marketers (43%) increasing their level of coupon dollars in 1997 over 1996. Couponing was used by 100 percent of packaged goods respondents in 1997.
Their levels of coupon spending, however, is another matter. For the fifth consecutive year, FSI couponing was one of the two consumer promo practices to show a marked decline in usage (down nine points from the previous year).But industry experts told PROMO [small]this was due to increased targeting. NCH NuWorld has reported that targeting has had “tremendous impact on coupon distribution quantities” over the past few years. Since 1993, the number of coupon offers has increased 5 percent while the average offer size has declined by more than 12 percent. The outlook for 1998 is positive with 66 percent of manufacturers planning to use the same amount of coupons (34%) and 32 percent planning to use more.
Over one half (52%) of manufacturers engaged in multi-brand coupons within a single promotion, while an even higher share (64%) floated “universal” coupons redeemable for a choice of a manufacturer’s brands.
Co-marketed coupons offered jointly by manufacturers and retailers were strong, used by 48 percent of the manufacturers responding to the Cox poll.
Product sampling, though expensive, gained in influence – no doubt because of the tactic’s popularity among retailers. A whopping 84 percent of manufacturers used it to support both new and established products. Forty percent of manufacturers polled said sampling was a primary marketing tool, while 54 percent regarded it a secondary tactic deployed to complement other promotional activities.
Marketers are also split on the preferred venue for their sampling efforts: 57 percent stated that their sampling activities are conducted in-store, with the remaining 43 percent favoring out-of-store.
Account-specific marketing accounts for approximately 31 percent of trade promotion dollars for those manufacturers involved in the practice. Account-specific dollars come from multiple sources: Almost 50 percent of marketers used part of their trade marketing budgets to fund such promos; 43 percent tapped their headquarters marketing budgets; and 37 percent dipped into their field sales budgets.
The most popular account-specific activities include category management (66%), local radio tie-in advertising (58%), and loyalty programs using retailers’ shopper databases (42%). Loyalty programs using shopper databases are slated for the largest planned increase (24 points).
Retail Roundup Media advertising accounted for the largest share of retailer promotional outlays, zooming to 72 percent of funds from 50 percent in 1994. It’s a trend no doubt fueled by an exponential increase in co-marketing activities. In-store promotion and out-of-store promotionhave been jockeying for the larger share of the remaining promotional funds over the past four years.
Cox Direct polled 175 grocery retailers working for chains with 11 or more stores. The surveys drew a 33 percent response rate.
In-store promotions ( couponing, sampling, handouts, shelf dispensers) and local event (regional/community) promotions are the promotional practices ranked most important by 98 percent of all retailers.
Retailers shared with manufacturers a very positive outlook for product sampling. More than one-half of all retailers (53%) expectedtheir sampling budget allocations to increase this year.
Retailers reported employing a variety of kiosk offerings. More than two thirds (68%) were offering product recipes via kiosks, while 58 percent are offering manufacturer’s coupons.
More than three-quarters (78%) of retailers increased the shelf space allocation of prepared food/meals solutions. Other key gains were seen in gourmet foods/premium products (54%) and health and natural products (46%).
Nine in 10 retailers have ventured into Cyberspace. Nearly one-half have Web pages, and 20 percent of the rest plan to create them this year.
Consumers and coupons In spite of a booming economy (traditionally a down time for coupon usage), coupons were employed heavily last year by 85 percent of all consumers for grocery and HBC products.
To get its consumer outlook, Cox hired NFO Research to mail questionnaires to 1,075 members of its national household panel. It received 757 replies, or a 70 percent response – a statistically strong sample, notes Cox research manager Bethany J. Stanley. Seventy-six percent of respondents were female and 34 percent were male.
No matter the amount of its detractorys, couponing continues to influence shopping and brand choice decisions. Some 52 percent of consumers said they usually look through their coupons when planning to shop for groceries or HBC products. Forty-three percent said they will purchase a brand for which they have a product coupon, and another 43 percent said they would consider switching brands if they liked a free sample.
Consumers continue to see coupons as a way to stretch family dollars, the survey reports. More than half of consumers (58%) agreed that, by using grocery coupons, they feel they are helping their families budget. Fully 63 percent of consumers said they prefer Sunday newspaper color leaflets as a way of obtaining coupons, and 51 percent said they preferred direct mail as a coupon conduit.
Coupon face value definitely influences coupon usage, according to 62 percent of consumers. Another 49 percent said that they preferred coupons good for a large number of brands – for example, $1.50 off any two General Mills cereals. Only 28 percent of consumers rated coupon expiration dates as a big influence on their rates of coupon use.
More than one in five (22 %) of consumers said that they would not use coupons if they were good only at specific stores, and 13 percent said they would forgo using a coupon if there were multiple purchase requirements (e.g. buy two, get 50 percent off).
Direct mail efforts are preferred by 70 percent of consumers as the delivery system for product sampling, according to the Cox survey, ranking higher than in-store handouts (which came in second at 39%).
Less than half of consumers (43%) said they would consider switching brands if they liked the free sample, and 41 percent agreed that they “often became aware of new or improved products through samples or coupons.” Three out of four consumers ranked receiving a free sample in the home as being important in determining their ultimate brand purchase decisions.
The Cox study’s contention that consumers strongly favor direct-mail samples was challenged by Art Averbook, president of Miami-based Co-Op Promotions and co-chairman of the Product Sampling Council of the Promotion Marketing Association. “That’s an absurd conclusion,” argued Averbook. “Consumers like samples any way they can get them.”
Averbook adds that many items – because of size, weight, or postal codes – cannot be mailed.
Price vs. promotion When it comes to shopping, consumers surveyed said that supermarket product pricing is the most important concern, with 83 percent preferring “specials on different items each week,” while 59 percent preferred “low prices on all items everyday.” Forty-one percent liked supermarkets’ savings clubs that offer discounts when a card is presented, but only 38 percent said that high-tech initiatives like receiving coupons at the checkout after purchase were an important factor in choosing a supermarket.
But Carey Siegel, marketing chief of Catalina Marketing Corp., the St. Petersburg, FL-based purveyor of Checkout Coupons, sees that 38 percent as “a positive, not a negative number.” He says that according to Catalina’s research, 39 percent of consumers had named receiving coupons at checkout as their third preference for picking a store out of 25 to 30 other options. The Nos. 1 and 2 preferences in the Catalina research, says Siegel, were “having specials on different items each ‘week” and “having low all-around prices everyday.”
Regarding brand choice decisions, 80 percent of consumers indicated that price is the most important factor, while 77 percent named good value for the money, and 53 percent and 59 percent respectively named special store displays and special values for card club members as being very important. Less than half (45%) named “trust in the company” as important. Product demonstrated in-store was called important by almost half (48%).
As for consumer participation in promotions, 53 percent said they would be willing to fill in a card requesting a sample, 50 percent said they would be willing to call a toll-free number, and 43 percent said they would provide companies with information about the products their families use.
Three-fourths of packaged goods companies say they’re marketing on the net, though only 19 percent are providing online coupons, either through their own Web pages or a third party’s.
Only 12 percent of consumers searching the Web for grocery and/or HBC coupons actually found any, according to Cox Direct’s 20th Annual Survey of Promotional Practices. But consumers clearly want couponing: 32 percent rated the ability to receive grocery coupons online to be “very beneficial.” Forty-four percent attached that appellation to the ability to sign up for consumer samples.
Online activity by packaged good manufacturers appears to be intense, according to the survey. More than eighty percent of manufacturers presently have a Web page, and nine percent of those remaining are either planning to create a Web page in the next 12 months
Fully three-fourths of manufacturers are using external vendors to develop their Web pages while 25 percent are developing them in-house.
Nearly nine out of 10 retailers were involved in the Web. At least 49 percent have a Web page, and 20 percent plan to create within the next 12 months.
Cox Direct, which produces the Annual Survey of Promotional Practices, is one of the country’s leading cooperative direct mail companies, known widely for its Carol Wright Cooperative couponing and sampling programs.
The targeting trend reported in its survey has landed heavily at the Largo, FL-based company. Cox Direct spent most of last year constructing a smaller, more targeted database to upgrade the Carol Wright product. “We’re trying not to be so reliant on packaged goods,” says Cox Direct President Peter Burgess. “We’re trying to broaden the spectrum of our advertising base.”
Carol Wright now mails to 25 million households with children 10 times a year. [versus what?]It has reduced the number of envelopes but increased the number of inserts, counting coupons. “We’re after upscale families, which is why we have offers for groceries, eye wear, toys, movie tickets, airline tickets, and long distance phone call service, ” Burgess notes.
Cox has initiated aggressive niche marketing for seniors with its Enjoying Life mailers and young families with As they Grow and Just Delivered co-op programs. This year, Cox expects to mail over !2 billion [is that supposed to be 12?] coupons.
Network
