Report reveals customer habits in wake of credit crisis
A new report on UK coupon activity has revealed a rise in consumer demand for coupons and smarter promotional marketing.
The Valassis 2008 Coupon Report findings relate heavily to the current credit crunch and consumers’ attitude towards this and has revealed changes in how consumers regard sales promotions.
Against the backdrop of a weakening economy, consumers were asked if the slowdown is making them more or less promotionally responsive than they were a year ago.
The research by UK promotional sales business Valassis found that 30% of consumers are more actively seeking out promotions and 75% of these respondents cited a rise in the cost of food and the general cost of living as the main reasons for their being more promotionally responsive.
The report found that the coupon industry is growing, and even expanding, as marketers become aware of this heightened consumer demand for ways to save money. Also, marketers are giving greater weight to their promotional investment to accommodate reduced budgets while keeping ahead of their competitors.
The key findings of the 2008 Coupon Report include:
– 29% growth in coupon distribution, including growth in every category of distributor and a new category of ‘pubs and restaurants’
– 20% growth in total value redeemed from £400m in 2006 to £479m in 2007
– A marked increase in door drop activity which could be attributed to it becoming a more targeted distribution vehicle than it has been in the past
– Direct mail continues to dominate distribution with 47.1% market share, whilst direct mail redemption rates climbed to 15% compared with 8.5% industry average - 54% of coupons distributed via direct mail in 2007 carried a unique identifier enabling the redemption to be tracked, indicating that marketers are realising the importance of demonstrating return on investment
– Promotions containing offers from multiple brands are increasingly popular with 20% share of distribution
Charles D’Oyly, MD of Valassis, commented on the findings: “2007 saw a significant change in the attitude of marketers to their promotional marketing. Not only are marketers recognising the value of promotional investment in a culture where consumers are increasingly concerned by the economy, they are asking the right questions to design more successful promotions, and implementing the tools that achieve a meaningful analysis of campaign performance to meet boardroom demands for quantitative results.”
He added that it was encouraging to find that marketers are thinking more carefully about who they are targeting, to maximise the return on their investment in coupons. For example, the report showed a significant rise in door drop activity from 2.4% of distribution in 2006 to 16.4% in 2007. Door drop has become a lot more targeted which makes it an attractive alternative to the more expensive methods of distribution.”
The report also indicates a rise in the use of unique identifier codes on coupons distributed by direct mail. This empowers the marketer with a greater understanding of the purchasing behaviour of the consumer, and allows them to target non-redeemers with alternative offers to engage them.
The Report has revealed some significant changes in a number of industry sectors:
– For the first time retailers’ share of coupon distribution has overtaken that of manufacturers
– After a number of years in decline, manufacturers returned to coupons in vast numbers
– Food and alcohol continue to grow their shares of coupon distribution causing further erosion of the dominance of newspaper coupons
2007 also saw the emergence of a new category of distributor. As a result of the smoking ban, which came into effect on 1 July 2007, pubs and restaurants are using mass door drops to drive footfall into their venues.
D’Oyly concluded: “Overall, the 2008 Coupon Report reveals that the coupon industry is thriving. Marketers are recognising that wise investment in couponing can deliver quantitative results and unique insights to satisfy competing demands in this increasingly challenging marketplace.
“By developing partnerships with the right agencies, and with the right measurement tools in place to understand promotional effectiveness at an individual consumer level, marketers can transform their promotional return on investment.”