GROCERY WARS: THE ESSENCE OF FOOD COUPONING
New brand entrants into the grocery sector face an uphill battle to generate brand awareness and stimulate trial purchase. This is especially true given retailers provide new food entrants a short probationary period (6-9 months) to prove themselves and brand icons dominate most if not all of the categories. Yet, most new brand entrants neglect couponing as an integral component of their marketing strategy despite the role it can play in a brand’s success.
Contrary to what many may believe, couponing is not dead. In fact,
- 83% of Canadians have utilized a coupon in the past 3-months.
- 67% of consumers provided with a coupon purchase the product they have the coupon for in place of the product they originally intended to purchase.[i]
- Couponing has been identified as the second-best way to encourage Canadians to purchase a product they have never purchased before.[ii]
Welcome to “The Essence of Food Couponing”!
This month I had the pleasure to interview Mr. Nizam Walji, President of Web Saver (www.websaver.ca) as part of our “Grocery Talks” podcast series. Web Saver is a Canadian based digital coupon publisher and digital coupon distributor. They represent this countries largest coupon distributor on a digital platform reaching 2 million registered members, of which 1.44 million members being CASL Compliant – their brand partners allow them to market directly to them with offers and samples.
With the new digital age comes printable and digital coupons. As Nizam explained, “printable coupons on the computer are also dropped into that same digital bucket”. “Anything that starts digitally whether it is a mobile phone or desktop and delivers a coupon is considered a digital coupon”. “It starts electronically and ends electronically”. In 2015, Mintel revealed nearly half (49%) of Canadian consumers were interested in the ability to redeem coupons and/or promotions using smartphone apps.[iii] Chart 1 outlines what consumers think about digital coupons.
Chart 1: What Consumers Think about Digital Coupons[iv]
Millennials are more inclined than any other consumer segment to use online coupons. A 2017 survey undertaken of internet users by YouGov revealed:[v]
- 42% of Millennials (18-34) utilize digital coupons.
- 35% of Generation X (35-54) utilize digital coupons.
- 24% for Baby Boomers (+55) utilize digital coupons.
Though digital couponing is on the rise, a recent 2018 study revealed about half (48%) of adults agree that they prefer to get coupons in the mail. Chart 2 outlines consumers preferred sources of coupons.
Chart 2: Consumers Preferred Sources of Coupons[vi]
The question that brands may wish to ask themselves, why should couponing be an integral strategy in their marketing plan? As Nizam mentioned, couponing impacts 2 of marketing’s 4’P’s – promotion and price:
Promotion: Coupons assist in creating awareness and help create an offer for the general public.
Price: Provides a gentle nudge that this is a product I would like to try.
As part of our interview, he also explained how couponing does not degrade the “value of the brand” and cited a Rotmans Business School study that revealed consumers remember the lowest price of the product for a period of up to 2 years. For instance:
if you reduce the price of your $5.99 product by $2.00 in the store, the consumer now believes that product is a $3.99 product. Whereas if you have a $5.99 product and offer a $2.00 coupon, the consumer feels it is a $5.99 product and I am saving $2.00.
When a brand engages in a digital couponing program, they must understand there are three stakeholders involved in the process as identified by Web Saver:
Create programs that are easy to save and shop for the consumer.
The created program must meet the needs of the retailer.
Ensure the program targets the right customer at the right time.
For those brands interested in offering a couponing program, here are some key consumer behavioural statistics Nizam had to offer:
- The average redemption rate for digital coupons on food-based products is 20%.
- 90% of consumers redeem coupons.
- 59% of consumers state digital coupons sway them the most when it comes to influencing a purchase decision.
- 85% of consumers look for coupons prior to visiting a retailer.
- 83% of shoppers have made an unplanned purchase based on a coupon.
- 77% of consumers spend $10 – $50 more than anticipated when redeeming mobile coupons.[vii]
Coupons are considered a business necessity these days. “Never in the history of retail have coupons been more effective or demanded by customers than now”.[viii] They are a particularly valuable tool especially during economic downturns when consumers cut back on discretionary spending. For those brands that integrate couponing into their marketing strategy, here are 4 benefits they can anticipate:
- They help attract new business.
- Keep current customers coming back.
- Help re-activate former customers.
- Generate brand awareness.
We encourage you to listen to our complete interview with Mr. Nizam Walji below the footnotes.
[i] Grocery Talks Podcast Interview with Mr. Nizam Walji, December 2018
[ii] Tried and New, Consumer Insights, Canadian Grocer, May 2015
[vii] Grocery Talks Podcast Interview with Mr. Nizam Walji, December 2018
Grocery Talks: Interviewing Nizam Walji of Websaver