Coupon Facts Report Provides Comprehensive Look at Marketers' Tactics and Consumer Response

LIVONIA, Mich., March 29, 2012 /PRNewswire/ -- Valassis (NYSE: VCI), one of the nation's leading media and marketing services companies, released today a comprehensive coupon report that provides insights into the scope and scale of the use of coupons in the consumer packaged goods (CPG) industry as a vehicle to promote their brands and consumer response results.

In total, $470 billion of coupon value was offered by CPG marketers to U.S. consumers last year – a 26% increase over the pre-recession period of 2007. The last three years represent the highest annual volumes of coupons distributed since the pre-recession period, according to the 2012 Coupon Facts Report, issued by NCH Marketing Services. NCH is a Valassis company.

Marketers are controlling and altering their tactics to accomplish their own unique, strategic objectives. The report, which includes reference tables and five-year trend graphs, also illustrates the different strategies employed in 2011 in the grocery and health and beauty care (HBC) segments. In 2011, grocery product marketers reduced the total quantity of coupons in the marketplace, while HBC marketers maintained a steady volume of coupons to promote their products to frugal-minded shoppers.

"While marketers continue to modify their tactics, they also must allocate sufficient marketing spending to ensure consumer demand for value is satisfied in this highly competitive environment," said Suzie Brown, Valassis Executive Vice President, Sales and Marketing.

In 2011, across all types of CPG products, 305 billion coupons were distributed in the United States, representing a decrease of 8.1% from 2010, a record-setting year for distribution. The decline, however, was entirely attributed to 13.1% fewer coupons distributed in the grocery segment versus the HBC segment.  Seven of the 10 highest growth distribution product categories were HBC products with year-over-year increases up to 56.5% (see chart below). Overall, 2011 distribution volume is comparatively very strong to 2007 with 20 billion more coupons – a 7% increase – available to consumers.

CATEGORIES WITH HIGHEST GROWTH  IN COUPON DISTRIBUTION VOLUME IN 2011

Value-conscious shoppers responded by redeeming $4.6 billion in savings, an increase of 12.2% over the year prior, and 58.6% higher than five years ago. This increased redemption has led marketers to balance consumer demand by modifying coupon offers:

• Expiration:  In 2011, the average offer duration was 9.9 weeks, down from 10.4 weeks a year ago. The average life of a grocery segment coupon was 10.2 weeks in 2011, relatively similar to 10.4 weeks in 2010; however, HBC product marketers shortened the fuse on their coupons to 9.6 weeks in 2011, down from 10.5 in 2010. This caused the duration of HBC coupons to be shorter on average than those for grocery products for the first time since NCH has been tracking coupon trends. Marketers tend to use shorter durations when they are promoting frequently, particularly in mass media vehicles.

• Face value: The average $1.54 face value offered remained the same as in 2010 with grocery cutting 3 cents off the average value to $1.17 and HBC coupons averaging $2.09. Within those segments, however, the trends don't all follow the same pattern. Some marketers increased the discounts available to consumers. The resulting $1.54 average face value across the CPG industry was 17.6% higher than the pre-recession savings offered on coupons in 2007.

• Purchase requirements: Last year, 27% of coupons distributed required multiple item purchases, up 2 points from 2010. Both grocery and HBC segments saw an increased share of multiple purchase coupons. This was achieved by reducing the volume of single purchase coupons distributed by 10.4% overall.

The Coupon Facts Report also reveals that mass merchant and drug channels increased their share of redemption volume at what appears to be an accelerated pace in 2011. This slowed down the growth of the retail channel that includes dollar stores and reduced share from traditional supermarkets. A combination of factors may have contributed to this trend, including an increasingly greater selection of food items available in the mass merchant and drug channels; consumer shopping choice migration; the influence of gas prices on shopping distance and frequency; and increased emphasis on marketing stores with coupon promotions.

The report provides benchmark averages for marketers to compare their own offer characteristics and redemption results to corresponding industry segments and category sectors. However, Charlie Brown, NCH Vice President of Marketing, said the benchmarks don't indicate the divergence of individual activity.

"The year was a very unique one for coupon trends in many respects," he said. "Overall trends were not representative of what marketers were doing across the board for every offer, brand, category or company. Many altered their course as the year progressed or changed their tactics. Much of the changing trends in 2011 were a result of marketers managing and leveraging heightened consumer demand for coupon savings."

Valassis' Suzie Brown also points out the value of coupons goes beyond its cents-off savings.  "Coupons attract new buyers and also build brand loyalty among existing buyers, making the promotion a key tool for brands to both defend and grow market share," she said. "They also provide brand equity opportunities to heighten awareness and motivate purchases that do not necessarily involve the use of a cents-off coupon."

The NCH Coupon Facts Report is available by registering at www.nchresourcecenter.com.

About The NCH Coupon Facts Report

NCH, a Valassis company, is the global leader in business solutions for the redemption, settlement and analysis of promotional offers. The Coupons Fact Report presents a review of annual coupon trends in the United States. This information is designed to provide detailed reference tables and charts. For ease of use, the report is divided into three main sections: distribution trends, redemption trends and product categories.

About Valassis

Valassis is one of the nation's leading media and marketing services companies, offering unparalleled reach and scale to more than 15,000 advertisers. Its RedPlum® media portfolio delivers value on a weekly basis to over 100 million shoppers across a multi-media platform – in-home, in-store and in-motion. Through its digital offerings, including redplum.com and save.com, consumers can find compelling national and local deals. Headquartered in Livonia, Michigan with approximately 7,000 associates in 28 states and eight countries, Valassis is widely recognized for its associate and corporate citizenship programs, including its America's Looking for Its Missing Children® program. Valassis companies include Valassis Direct Mail, Inc., Valassis Canada, Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH Marketing Services, Inc.  For more information, visit http://www.valassis.com, http://www.redplum.com and http://www.save.com. To learn about advertising opportunities with RedPlum, please call 1-800-437-0479.

Cautionary Statements Regarding Forward-looking Statements

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: price competition from our existing competitors; new competitors in any of our businesses; a shift in client preferences for different promotional materials, strategies or coupon delivery methods, including, without limitation, as a result of declines in newspaper circulation and/or increased competition from new media formats including digital; an unforeseen increase in paper or postal costs; changes which affect the businesses of our clients and lead to reduced sales promotion spending, including, without limitation, a decrease of marketing budgets which are generally discretionary in nature and easier to reduce in the short-term than other expenses; our substantial indebtedness, and ability to refinance such indebtedness, if necessary, and our ability to incur additional indebtedness, may affect our financial health; the financial condition, including bankruptcies, of our clients, suppliers, senior secured credit facility lenders or other counterparties; certain covenants in our debt documents could adversely restrict our financial and operating flexibility; fluctuations in the amount, timing, pages, weight and kinds of advertising pieces from period to period, due to a change in our clients' promotional needs, inventories and other factors, including, without limitation, high levels of coupon redemption rates; our failure to attract and retain qualified personnel may affect our business and results of operations; a rise in interest rates could increase our borrowing costs; possible governmental regulation or litigation affecting aspects of our business; clients experiencing financial difficulties, or otherwise being unable to meet their obligations as they become due, could affect our results of operations and financial condition; uncertainty in the application and interpretation of applicable state sales tax laws may expose us to additional sales tax liability; and general economic conditions, whether nationally, internationally, or in the market areas in which we conduct our business, including the adverse impact of the ongoing economic downturn on the marketing expenditures and activities of our clients and prospective clients as well as our vendors, with whom we rely on to provide us with quality materials at the right prices and in a timely manner. These and other risks and uncertainties related to our business are described in greater detail in our filings with the United States Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q and the foregoing information should be read in conjunction with these filings.  We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Valassis

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