The Checkout 3.10 - Coupons Issue

inside the in-store experience

ISSUE 3.10 | COUPONS

IN THIS ISSUE
Coupons: How savvy shoppers are
finding value and making decisions
• The causality dilemma: Do shoppers decide
what to buy first and then seek coupons or vice
versa? The answer is yes, it’s both.
• Men utilize technology when seeking and
using coupons while women go the more tradi-
tional route.
• Not all coupons are created equal. The structure
of the coupon offer plays a large role in shopper
preferences.

• Shoppers rank the brands and retailers that
have the best coupons. See who makes the list.

Prolonged recessionary pressures have caused
many shoppers to come up with creative coping
mechanisms to stretch the family budget. Of those
mechanisms, coupons, a staple in the brand mar-
keters and retailers tool kit, have begun to make a
significant resurgence. While the U.S. seems to be
on the path to economic recovery, shoppers are
likely to continue to employ many of the money-
saving techniques they have developed, into the
near-term. This issue of The Checkout delves into
the world of the modern coupon user— who they
are; how couponing fits into their lives; and more
important, what brand marketers and retailers can
do to meet their shoppers needs.

Issue 3.10 powered by The Integer Group® and M/A/R/C® Research

2
page

Shopper mindsets and behaviors
change along the path to purchase
The shopping process has changed dramatically in the last decade. Our sources of product and
brand information have multiplied exponentially. We trust the opinions of complete strangers,
shop online with our social network, and even become “fans” of brands. We watch commercials
on YouTube, then skip over them with TiVo and satellite radio. We read reviews on Amazon,
then go and play with the products in-store, check in on FourSquare, take a vote of Facebook
friends, buy them with our mobile phones, and then Tweet about our experiences with our
friends. Where, then, is the First Moment of Truth?
page

The Shopper ContinuumTM is Illustration 1.0 The Shopper ContinuumTM

a proprietary Integer framework Pre-Tail™
that helps us understand and Entering a store or
Web site
articulate the role of communi-
cation and marketing actions
during three distinct phases of
shopping behavior. Browsing,

Retail
comparing,
researching
and selecting

Pre-Tail™ includes all the
items

actions people take when
preparing to shop and se-
lecting a retailer, including
how we respond to all the
things brands and retailers = points of action, behaviors
Post-Tail™ Using the
ing t
g th
product
Purchase
rch
h
moment
do to inﬂuence us.
Copyright © 2010 The Integer Group

Retail is all the activities
that take place in a real
or virtual retail environment. This includes the behavior of the shopper and the actions of
the retailer and brands on the shelves (real or virtual).

Post-Tail™ encompasses what happens after a purchase. It includes what retailers
and brands can do to reinforce and celebrate the purchase and encourage shoppers to
repeat their behavior.

The Shopper ContinuumTM framework is one of the tools employed by The Integer Group
to identify the questions we need to ask about our shoppers, how we go about getting those
answers (the data), and then what we do to improve our strategy (the analytics).

Issue
issue 3.10 powered by The Integer Group® and M/A/R/C® Research
powered by The Integer Group ® and M/A/R/C ® Research

3
page

Despite the economic rollercoaster,
shoppers are begining to enjoy the ride
Falling off the frugal wagon
Thrifty shopping has dipped to its lowest
point since February 2009, as consumers
continue to show signs that they’re ready to
move away from the frugal-spending mind-
set. Men continue to appear more willing to
spend, but the trend seems to be picking up
steam among women as well. Compared to
Q4’09, January’s ﬁgures show a signiﬁcant
decline in frugal-shopping behavior among
female shoppers, increasing the importance
of brand marketers understanding and Copyright © 2010 The Integer Group

nurturing the fragile shopper mindset. A mis-
step can erode shopper trust and cause the
shopper to purchase a competitor’s brand.

Issue

4
page

Female shoppers are driving the coupon
boom through traditional media
Combing for coupons primarily a woman’s task
Coupons fit into the lives of male and female shoppers differently. They search for coupons in
different media, redeem them in different channels, and use them to accomplish different shop-
ping objectives. Across both gender groups, newspapers and direct mail/
circulars hold the top spots for finding deals (62% and 58%, respectively).

60%
However, women are clearly more involved in clipping coupons, surpass-
ing males in just about all coupon sources except mobile phones. Interest-
ingly, when it comes to technology and coupons, men start to become more
involved in the shopping process with coupon, retailer, and brand Websites
coming in right behind newspapers as places where they actively seek out
coupons. The increased interest in online coupons indicates that men who
The percentage of shoppers who look
for coupons before entering the store,
are seeking coupons online during their Pre-TailTM (pre-planning and research)
indicating that coupons are still largely a stage of the Shopper ContinuumTM are more open to marketing messaging if
preplanning mechanism. provided with the right amount of benefit. In this case, the coupon would not
serve as an awareness-raising vehicle or customer-acquisitions device but as
a driver to CRM marketing programs, like frequent-buyer clubs and member-
ships.

Coupons used to justify brand selection
In general, it appears that most shoppers perceive coupons as rewards for products they typi-
cally buy as well as incentives to try new or alternative brands or products. Convenient and

Issue

5
page

Coupons serve as both incentives to try
new brands and as loyalty rewards
useful, coupon consumption is largely geared toward spending less money overall rather than
buying a larger quantity of products except for attached-coupled (married; living with partner)
and lower-income households (below $50,000 annual HHI). Female shoppers are more likely
than males to use coupons as a gateway to trying new brands and products. In fact, women
are twice as likely to say they ‘always’ use coupons as a means for trying new brands.

Coupons are a shopper’s best
friend
Nearly three out of four shop-
pers (74%) report using coupons
because they are convenient and
useful, while 26% say coupons
take too much effort to find and
use. Older shoppers (50+ years)
use coupons often and are more
likely to use them to buy famil-
iar brands and products, yet a
significantly higher amount (32%)
report that coupons take too much effort to find and use. Interestingly, shoppers are split when
addressing the issue of whether coupons cause the brand decision or the brand decision drives
the coupon search.

Shoppers who report that cou-
pons are ‘convenient and useful’
are using them for items that
they buy and re-stock often (e.g.
paper products, cleaners, ce-
real). For items that have a larger
repurchase cycle (e.g., furniture,
electronics, motorcycles), cou-
pons may not be as useful to the
shopper unless they receive them
at precisely the right time when
they are considering a repurchase or close to a repurchase point that it lead into another Pre-
TailTM shopping phase.

Issue

6
pag e

Shoppers want it all: coupons that offer
high-value and are simple to use
Cash is king
Not surprisingly, coupon value is the most motivating factor driving consumers to switch from
their preferred product or brand. Though the value of a coupon is the most compelling aspect,
brands must still be aware of their brand
positioning in the marketplace and need to
align their promotional couponing with their
category entry strategies. If a new product
is more high-end, then extensive couponing
may only serve to cheapen the brand and
thus tamper with the overall brand position-
ing.

A small percentage of respondents (3%) say
that the most compelling aspect of using a
coupon to buy a new product is the ability
to use the coupon online or save it to their
loyalty card. While these digital capabilities are not yet mainstream, trends show consumers
are increasingly making more big-ticket purchases online. For product categories like comput-
ers, electronics, and DVDs, the ability to use coupons online might have a stronger inﬂuence on
shoppers.

Shoppers seek simplicity
In terms of incentives, instant discounts or two-for-one deals resonate strongly with consum-
ers (75% and 72%, respectively). Shoppers want coupons that are easy to ﬁnd, simple to
understand, and effortless to use. Shoppers favor coupons that word their discounts in terms of
actual dollars off versus the potentially confusing percentage-off type of discounts.

Issue

7
page

Coupons have become an integral part
of shoppers’ coping strategies
Discounts applied to future visits as well as (e.g., FIFA World Cup, Super Bowl, etc.) Over-
those incentives that require multiple or bulk all, this synergy realized from couponing, fea-
purchases, are the least popular coupon ture, and display is a win-win for the brands,
type; implying an inverse relationship between the retailer, and the shopper.
the number of cognitive or physical ‘hoops’
that the shopper has to jump through. Channel selection tied to coupon usage
It’s no surprise that almost half of all shoppers
However, from a brand and retailer stand- (47%) think coupons are ‘extremely important’
point, there are other reasons for alternative when shopping at grocery stores. However,
coupon structuring beyond simple discount- of interest is the significant drop in the impor-
ing. For example, in the wine and beer tance coupons hold when comparing grocery
category, “Buy one, get different item free” stores to mass merchants such as Walmart or
or “Mail in rebate discount off multiple items” Target, where 29% of shoppers say coupons
executions drive incremental sale of comple- are extremely important. Coupon importance
mentary products (e.g. beer and salty snacks) among drug and clothing stores, as well as
for the retailer that provides the financial online websites is similar— about 20% of
incentive for future shopper marketing efforts. shoppers think coupons are ‘extremely impor-
Legally, beer brands cannot sell directly to re- tant’. Office supply, home improvement, and
tailers, meaning they have limited control over convenience stores each report similar levels
the displays being placed in stores. of reduced coupon importance. As expected,
significant differences exist along gender lines,
By cross merchandising in a display, the with female shoppers indicating that coupons
brand creates a one-stop shop for shoppers are at least ‘very important’ when shopping at
that can be tailored to a specific occasion grocery stores, Walmart or Target, drug stores,
and clothing retailers.

Issue

8
page

Retailers are picking up the coupon
game and driving shopper awareness
Retailers get aggressive...and smart
The top five retailers in this list frequently send out high-face-value coupons to their existing cus-
tomer base where the likelihood to return to the particular retailer is high. During Pre-TailTM, these
coupons serve as a shopping starter and trip driver and aid the shopper in the channel and
retailer-selection process. Sophisticated retailers will utilize direct mail as just one component of
an integrated marketing campaign and setup in-store displays with the product featured by the
coupon alongside other products with historically high basket interaction. Retailers would use
the coupon as a loss leader in order to increase shopping-basket dollar amount through incre-
mental sale of complementary products. Additionally, retailers can identify high-value shoppers
by tracking coupon redemptions and incremental sales in their CRM database during Post-TailTM
programming to ensure that their most profitable shoppers continue to receive the best offers
through properly tailored messaging.

Coupons justify brand selection
The influence of coupons on brand selection is enormous, with almost nine out of ten shoppers
(86%) reporting that coupons are at least ‘somewhat influential,’ about half of those say coupons
are either ‘very’ or ‘extremely influential.’ Females tend to be more influenced by coupons than
their male counterparts, with nearly half (49%) indicating that coupons are either ‘extremely’ or
‘very’ influential when making purchase decisions versus males at 39%. This gender split raises
the issue of brands effectively utilizing gender-based targeting when it comes to couponing.

Table 1.0 Top 20 Retailer Brands for Coupons

RANK BRAND
1 Bed Bath & Beyond
2 Target
3 Macy s
4 Borders
5 Costco
6 Kroger
7 Kohl s
8 Walmart
9 The Gap
10 CVS
11 Old Navy
12 Safeway
13 Best Buy
14 Walgreens
15 JCPenney
16 Express
17 Michaels
18 Publix
19 Barnes & Noble
20 Banana Republic

Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,241 www.shopperculture.com

Issue

9
page

CPG firms take top honors as shoppers
rate them as having the “best” coupons
Products that target the male shopper (e.g., Chart 1.7 Coupon Influence on Brand
beer, energy drinks, men’s razors) may
find that their redemption rates index lower 14%

compared to rates for the general market.
For this reason, both brand marketers and 28%
retailers alike need to carefully distinguish
between the shopper and the consumer,
who are different in many cases (e.g., dia-
pers and dog food). 44%
Extremely influential
Very influential

When asked which brands come to mind as
Somewhat influential
Not very influential
11 %

offering the “best” coupons, Procter & Gam- 3
Not influential at all
%

ble is the top mentioned company by over Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study

1,200 respondents. Not surprisingly, most
N = 1,091 www.shopperculture.com

shoppers think the best coupon deals are
on food-and-beverage brands like Kraft®, General Mills®, Kellogg’s®, and Pillsbury®, which round
out the top five. Interestingly, health and beauty brands like L’Oreal®, Oil of Olay®, and Gillette®,
also find their way onto the Top 20 List, potentially indicating a relationship between purchase
frequency and category involvement, with the perceived importance of coupons to shoppers.

Table 1.1 Top 20 Product Brands for Coupons

RANK BRAND
1 P&G
2 Kraft
3 Kellogg s
4 General Mills
5 Pillsbury
6 Campbell s
7 Tide
8 Yoplait
9 Post
10 Colgate
11 Johnson & Johnson
12 Betty Crocker
13 Coca Cola
14 Green Giant
15 Crest
15 L Oreal
15 Bounty
18 Oil of Olay
19 Scott
20 Gillette

Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,241 www.shopperculture.com

Issue

10
page

Implications for brands and retailers

Shoppers Brands Retailers

1
The prolonged recession has Understand the consumer along the In-store circulars, direct mailers,
caused many shoppers to adopt Shopper ContinuumTM, how your and FSIs are strong trip drivers for
new coping mechanisms; cou- category is shopped, and how the shoppers across multiple catego-
pons are being used to level the coupon best fits into the overarch- ries. Understand the trip types and
economic playing field by shop- ing marketing mix. channel shifting behaviors. At-shelf
pers seeking to maximize value. and on-pack coupons drive “plus-
one more item” basket strategies.

2
Shoppers are increasingly using Branding campaigns that use out- Organize direct mail and FSI cou-
coupons to drive their brand deci- of-store and in-store merchandizing poning strategies to begin mes-
sions before entering stores. strategies need to be synchronized saging and price incentives that are
in order to cohesively build top-of- consistent all the way from home to
mind awareness, influence consid- shelf; allow coupons to be saved to
eration set, and ultimately drive trial. loyalty cards to drive CRM partici-
pation.

3
CPG manufacturers and beauty Couple frequently purchased HH Specialty retailers can use coupons
brands are percieved by most products with adjacent high-involve- to increase trip frequency or change
shoppers to have the “best” ment products with lower shelf ve- trip type all together. Reposition the
coupons. locity (e.g., health-focused breakfast weekend smoothie into a daily office
cereal with nutritional diet shakes). breaktime treat with a “BOGO for a
friend” reusable coupon.

4
When coupons are simple and Keep it simple. Cross-category Drive basket ring and trip frequency
easy to redeem, they are three promotions can greatly benefit by by offering simple percentage-off
times more likely to resonate driving basket ring through simple coupons, usable on and offline
with shoppers. Recession-weary BOGO offers across multiple SKUs. through the entire category.
shoppers want it simple! Don’t make your shopper jump
through hoops.

5
Shoppers are using technology Develop multilayered and cohesive Retailer coupons that are accessible
as a platform for their money- promotional programming targeted and usable across mutliple media
saving strategies; retailer, brand, to shopper microsegments; catch channels have greater opportunity
and coupon aggregating websites shoppers while they are reading to get into the hands of the shop-
are quickly becoming Pre-TailTM (even writing) reviews, conducting per; FSIs, direct mail, online, mobile,
destinations. research, using mobile apps, or and loyalty-card coupons need to
checking out at the register. be in sync.

Issue

11
page

Shopper summary tables

Issue

12
page

The Integer Group® is one of America’s M/A/R/C® Research is a brand develop-
largest promotional and retail marketing ment ﬁrm dedicated to helping clients create,
agencies and a key member of the TBWA evaluate, and strengthen their brands. Our
Marketing Services portfolio. The Integer teams design and execute qualitative and
Group resides At the Intersection of Branding quantitative, traditional, and online solutions
and Selling® and creates strategic marketing while adhering to a client-service ethic built
solutions for clients in categories that include on being easy to work with and delivering
beverage, packaged goods, telecommunica- what is promised. Our core competency is
tions, fast food, home and shelter, and power measuring attitudes and behaviors to accu-
sports. Join Integer® in a conversation on rately explain and predict market share,
shopping culture and brand strategy at: revenue, and bottom-line impact of a client’s
actions. We help our clients address con-
The Integer Group sumer, channel, and B2B marketing issues to
Craig Elston launch better products and services attract
Sr. VP, Insight & Strategy and retain valuable customers, and build
celston@integer.com stronger brands. Our proven, marketing-is-
7245 West Alaska Drive sue-focused solutions support clients’ brand-
Lakewood, CO 80226 building efforts.
tel +1.303.393.3474
M/A/R/C Research
Randy Wahl
EVP, Advanced Analytics
Visit us at www.shopperculture.com Randy.Wahl@MARCresearch.com
1660 North Westridge Circle
Download the Shopper Culture application from the Irving, TX 75038
iTunes store today

Join The Shopper Culture group on Linked-in Visit us at www.MARCresearch.com/thecheckout

Friend us on Facebook
The Checkout is based on a nationally representative survey of
1,200 U.S. adults conducted monthly by M/A/R/C Research. Please
contact us to learn more about the data we collect or additional
Follow us on Twitter at twitter.com/shopperculture analysis.

©2010 by The Integer Group® and M/A/R/C® Research. All rights reserved.
The data contained in this report may be reproduced in any form as long as the data is cited from The Integer Group and M/A/R/C Research.
www.ShopperCulture.com.

Issue

The Checkout 3.10 - Coupons Issue

Recomendados

Recomendados

Mais conteúdo relacionado

Mais de The Integer Group

Mais de The Integer Group (9)

Último

Último (20)

The Checkout 3.10 - Coupons Issue