December 05, 2011

Kantar Media reports that more than 272 billion Free Standing Insert (FSI) coupons were distributed in 2011 which represents a 6.5 percent decrease in activity versus 2010. This decline in FSI coupon activity follows two consecutive years of annual increases of 8.0 percent in 2009 and 7.2 percent in 2010. Despite an overall decrease in FSI coupon activity, retailer promotion pages within the FSI vehicles recorded a 30.7 percent increase to more than 17.0 billion pages in 2011, continuing the significant annual increases in retailer promotion activity which began in 2007.

“Consumer packaged goods manufacturers continue to include FSI coupons as part of their marketing mix to reach millions of households with a relevant brand message and purchase incentive during a specific week,” said David Hamric, General Manager, Kantar Media Marx. “Increasingly, manufacturers and retailers are participating in cooperative events to influence the shopper on their path-to-purchase, making FSI coupons an important lead indicator of competitive promotion tactics, creative brand messaging, and retailer promotion alignment.”

Retailer promotion events continued to evolve as a promotion tactic in 2011. Seven out of nine areas reported by Kantar Media increased the use of retailer promotion pages in 2011 including Frozen Products, Personal Care and Health Care areas. The number of manufacturers utilizing this tactic increased 16.9 percent in 2011 and has more than doubled since 2007. “To provide more actionable insights into how retailer programs are influencing shoppers in the home where they are building shopping lists and planning shopping trips, Marx will introduce DirectHEATTM Retail Insights in January 2012. DirectHEAT Retail Insights integrates retailer advertising, retailer FSI promotion events, and digital coupons distributed on retailer websites to provide new insights into how retailers and manufacturers are working together to drive trips, transactions, and profits,” said Hamric.

FSI coupon support was included as part of 291 new product introductions during this period, down from 344 during 2010. “FSI coupons continue to be an important advertising and promotion vehicle to create brand awareness and to incent trial purchasing for new product introductions,” noted David Hamric.

In 2011, the frequency of FSI events declined slightly with activity occurring on 47 of 52 weeks. The “pre-Mother’s Day” promotion week of May 1 had the greatest activity with a weighted average circulation of 156 pages. October 2 was the second most heavily weighted week with a total of 137 pages followed by the “pre-Labor Day” promotion week of August 28 with 126 pages.

During 2011, more than $421 billion in consumer incentives were delivered via FSI coupons, down 6.7 percent from 2010. During the same period, over 272 billion coupons were distributed within more than 205 billion FSI pages. For the first time in at least the last ten years, FSI coupon average Face Value did not increase. At $1.55, it showed a 0.2 percent decline versus 2010. Average Expiration (Fuse) continued a steady downward trend with a decrease to 8.1 weeks, down 5.2 percent versus a year ago. These trends indicate that manufacturers are managing their financial exposure by maintaining current offer values, reducing the number of coupons distributed, 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 73.5 percent share, followed by Direct Response, which includes general advertising activity, and Franchise, comprised of restaurants, portrait studios, and other businesses. CPG pages distributed decreased for the first time since 2006, down 4.4 percent. Also continuing a downward trend, Direct Response posted a 3.9 percent decrease versus 2010; however, Franchise pages increased 4.2 percent after flat activity levels in 2010.

Top 10 Retailers based on Pages Circulated

Retailer promotion pages increased 30.7 percent to more than 17.0 billion pages in 2011. Walmart took the top spot from Dollar General with a 746.1 percent increase to 3.9 billion pages. Dollar General, in the second spot, was up 23.5 percent to 2.8 billion pages while Target dropped to third having remained flat at 2.2 billion pages. Walmart and Kmart had the largest jumps within the top 10, each moving up 6 spots to 1 and 10 respectively. These trends reflect the overall growth of retailer promotion within traditional FSI vehicles to drive shopping trips, transaction size, and overall profits across channels and retail formats.

Top 10 Categories for New Product Activity

During 2011, there were 291 new products that delivered FSI coupons across 590 event dates as part of their introduction, averaging 2.0 event dates per new product. This activity is down from 344 new products, 709 event dates, and 2.1 event dates per new product during 2010. Beverages tied with Alcoholic Beverages with the greatest number of new products in 2011, each having 18. Cereals followed with 17 new products and Snacks was fourth with 16 new products.

CPG Non-Food vs. Food

In 2011, Non-Food categories distributed more than 164 billion coupons, down 5.3 percent versus a year ago, driven by the 13.9 percent decline within the Household Products area. Food categories distributed more than 108 billion coupons, representing a decrease of 8.5 percent, led by the 17.9 percent decline for the Refrigerated Foods area. Seven of the nine areas defined by Kantar Media reported declines in Coupons Dropped during this period with Health Care and Personal Care areas remaining flat in 2011 versus 2010.

Manufacturers are increasing the value of the offers being delivered to consumers in the Food segment while reducing them slightly in the Non-Food segment. Weighted Average Face Value (WAFV) for Non-Food dropped 1.6 percent to $1.90 and was combined with a 1.8 point increase in Multiple Purchase Requirements (MPR) resulting in Weighted Average Face Value Per Unit (WAFVPU) decreasing 3.1 percent to $1.65. WAFV for Food increased 2.2 percent to $1.01 and was combined with a 3.0 point increase in MPR resulting in WAFVPU remaining flat at $0.74. 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.

Top 10 FSI Product Types in 2010 (by Coupons Dropped*)

The top 10 product types based on Coupons Dropped accounted for 35.9 percent of all FSI coupon activity during 2011. Pet Food & Treats ranked first and decreased 7.1 percent to distribute more than 13.9 billion coupons. Combination/Personal products (comprised of Personal Care brands which are promoted across multiple individual Personal Care categories) maintained second place with a 9.0 percent decline to 13.4 billion coupons.

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