December 10, 2012

Kantar Media reports that more than 274 billion Free Standing Insert (FSI) coupons were distributed in 2012 which represents a 0.8 percent increase in activity versus 2011. FSI pages increased 1.4 percent overall with the Consumer Packaged Goods (CPG) and Franchise sectors increasing 2.4 percent and 10.2 percent respectively, offsetting an 8.0 percent decline in the Direct Response sector. FSI coupon support for new products within the CPG sector increased 23.2 percent versus 2011 while retailer FSI promotion pages also increased 5.2 percent.

“Over the past 10 years, FSI coupon distribution has grown by 18.0 percent, reinforcing the role that FSI coupons have on delivering advertising impact , retailer alignment, and purchase incentives within an overall marketing mix,” said David Hamric, General Manager, Kantar Media Marx.

Manufacturers returned to promoting new products in 2012 after decreases in new product FSI coupon activity during the past few years. The number of categories participating in new product activity was up from 82 to 93 and the number of new product event dates was up 23.2 percent to 727 in 2012. The number of manufacturers utilizing this tactic increased to over 190, a 9.9 percent increase in 2012. “During the challenging economic conditions experienced during the past several years, manufacturers focused more of their FSI promotion support on core brands. However, we are seeing new product innovation increasing and FSI coupon support is a proven tactic for building retail distribution, creating brand awareness, and encouraging trial purchasing for new product introductions,” noted Hamric.

Retailer pages increased 5.2 percent while the number of manufacturers participating in retailer events declined from 390 to 352 in 2012. “Manufacturers and retailers are participating in cooperative events to influence the shopper on their path-to-purchase. However, retailers are increasingly seeking unique or exclusive programs with manufacturers during key promotion weeks and within strategic categories to engage with their shoppers and win key shopping trips,” said Hamric.

In 2012, the frequency of FSI events increased slightly with activity occurring on 48 of 53 Sundays. The “pre-Super Bowl” promotion week of January 29th had the greatest activity with a weighted average circulation of 134 pages. The weeks of September 30th and the “pre-Thanksgiving” promotion week of November 11th were tied for the second most heavily weighted week with a total of 125 pages during each of these weeks. .

Overall FSI Activity

During 2012, more than $419 billion in consumer incentives were delivered via FSI coupons, down 0.4 percent from 2011. During the same period, more than 274 billion coupons were distributed within more than 208 billion FSI pages. FSI coupon average Face Value decreased, down 1.2 percent to $1.53. Average Expiration (Fuse) continued a steady downward trend with a decrease to 7.3 weeks, down 9.0 percent versus a year ago. These trends indicate that manufacturers are managing their financial exposure by maintaining similar levels of coupons distributed but decreasing the purchase incentive and shortening the length of time that these offers are available in the market.

Sector Activity

The Consumer Packaged Goods (CPG) sector remained the largest user of FSI pages with a 74.3 percent share, followed by Direct Response, which includes general advertising activity, and Franchise, comprised of restaurants, portrait studios, and other businesses. CPG pages distributed increased by 2.4 percent in 2012 after a 4.4 percent decline in 2011. Also contributing to the overall increase in Pages Circulated, Franchise posted a 10.2 percent increase versus 2011 which is the largest percentage increase for this Sector since 2005. However, Direct Response pages decreased 8.0, continuing a steady downward trend that started in 2007.

Top 10 Retailers based on Pages Circulated

Retailer promotion pages increased 5.2 percent and accounted for more than 17.9 billion pages in 2012. Walmart held the top spot with a 47.3 percent increase to 5.8 billion pages. Walgreens moved up to the second spot with a 42.6 percent increase to 2.4 billion pages and Target maintained the third spot with 2.3 billion pages. Family Dollar and Dollar General had the largest changes in rank within the top 10, with Family Dollar up 3 spots to 4 and Dollar General down 3 spots to 5.

Top 10 Categories for New Product Activity

During 2012, there were 348 new products that delivered FSI coupons across 727 event dates as part of their introduction, averaging 2.1 event dates per new product. This activity is up from 291 new products, 590 event dates, and 2.0 event dates per new product during 2011. Cereals had the greatest number of new products in 2012 with a total of 25. Snacks followed with 22 new products and Pet Food & Treats was third with 15 new products.

CPG Non-Food vs. Food

In 2012, Non-Food categories distributed more than 171 billion coupons, up 4.2 percent versus a year ago, driven by the 12.5 percent increase within the Personal Care area. Food categories distributed more than 103 billion coupons, representing a decrease of 4.5 percent, led by the 14.1 percent decline for the Refrigerated Foods area. Six of the nine areas defined by Kantar Media reported declines or remained flat in Coupons Dropped during this period. However, three areas, including Other Packaged Goods, Personal Care and Shelf Stable Beverages, posted double digit increases in 2012.

Manufacturers are decreasing the value of the offers being delivered to consumers in the Non-Food segment while remaining flat in the Food segment. Weighted Average Face Value (WAFV) for Non-Food dropped 3.1 percent to $1.84 and was combined with a 1.7 point increase in Multiple Purchase Requirements (MPR) resulting in Weighted Average Face Value Per Unit (WAFVPU) decreasing 3.8 percent to $1.59. WAFV for Food was flat, down 0.2 percent to $1.01 and was combined with a 2.6 point increase in MPR resulting in WAFVPU decreasing 3.5 percent to $0.71. These promotion tactics are designed to increase the number of products the consumer purchases per coupon to potentially increase brand loyalty or preempt competitive purchasing for a longer period of time.

CPG Non-Food vs. Food

The top 10 product types based on Coupons Dropped accounted for 36.8 percent of all FSI coupon activity during 2012. Combination/Personal products (comprised of Personal Care brands which are promoted across multiple individual Personal Care categories) ranked first and increased 0.8 percent to distribute more than 13.4 billion coupons. Pet Food & Treats dropped to second place with a 10.6 percent decline to 12.4 billion coupons.

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