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'Non-foods brainchild' boosts sales.

For years Howard Ricketts had watched drug chains and mass merchandisers make hay with coupon books. It's about time, he thought, for food stores to get into the act.

Ricketts, the merchandise manager of the general merchandise department of Associated Grocers of Seattle, took the idea to his boss, Gil Harding, GM director, received his blessing and traipsed over to the co-op's marketing department. Interest was quickly generated--especially, recalls Grocery Merchandise Manager Jack Borell--"because the other outlets have been featuring food products, which makes us burn."

The wheels began turning in early spring and by early September the gears were tightly engaged. Some 300,000 side-stapled booklets, 160 pages thick and valid for three weeks, Sept. 15 through Oct. 8, 1983 were produced by Associated Grocers' marketing and advertising departments and mailed by an outside agency.

Each of the 53 participating retailers was allocated 4,500 free copies for mailing and 500 for in-store distribution. Mailed copies were occupant-labeled and sent third-class to designated zip code areas. Additional giveaway copies were available to store owners at cost.

The booklets measured 3-1/2 by 6-3/4 inches and featured a glossy cover (customized to retailer participants) and a thick sheaf of perforated pages, all illustrated with line drawings of the featured products as well as their prices.

The left-hand pages carried general institutional messages: "We Guarantee Our Products 100%," "We Feature the National Brands You Know and Trust." Several pages were devoted to Associated Grocers' private label line as well as more specific non-foods messages. These included: "Capture Special Moments With Kodak Film in Our Photo Section," "Pamper Your Pet...We Feature a Complete Line of Hartz Mountain Pet Foods & Supplies," as well as departmental slogans--"Take a Trip Down Our Automotive Aisle for Car Care Products," and "Check Our Complete Line of Quality Housewares."

The promotional impact came from the hot prices featured on the 73 right-hand pages. Grocery's 34 items included two dairy and two frozens items in a wide range of products including Pepsi-Cola six-packs, $1.39; Libby 12-ounce corned beef, $1.27; Glad sandwich bags, 150 count, 79 cents; and eight house label items.

Non-foods' 39 features--intermingled throughout the book--included 16 for HBA (such items as Prell shampoo, 11-ounce liquid or 5-ounce concentrate, $1.89; Intensive Care lotion, 15 ounces, $2.47; and Q-Tip cotton swabs, 300 count, $1.77) and 23 items in general merchandise. These rnaged from GE Miser four-pack, $1.97; Hoyle poker playing cards, 99 cents; Magada ironing set, $2.44; Eveready twin-pack C or D batteries, two for $1; Rubbermaid dust pans, 99 cents; and Mead 125 count writing tablets, two for 99 cents.

Retail prices ranged from a low of 58 cents for the house brand of a 1-pound box saltine crackers to $10.88 (excluding a $4 mail-in refund) for Conair mini hair dryers. All items were limited, most to two per coupon, some up to six. An Unqualified Success

The promotion's results, according to Associated Grocers officials and several operators, scored as "outstanding," "dynamite," "successful beyond our expectations." Sales in participating stores increased up to 20% during the period, operators reported to Associated headquarters.

A four-store evaluation study, in which every redeemed coupon was counted, found redemptions ranging up to 15% for the most successful items.

Some figures from the GM department show the impact at the warehouse level. With only 53 stores participating out of the 325 stores supplied, leading non-foods items in the coupon book promotion included: Valvoline motor oil, priced at 79 cents for 10-40 quarts (plus a rebate), a 28-fold increase over normal warehouse movement; Style hairspray, with a choice of six 8-ounce items offered for 99 cents, a 36-fold increase; St. Ives twin-pack, choice of four items, sold 26 times normal; Mr. Coffee filters 200-count package sold 41 times normal; and private label wet wipes leaped 12 times above the average.

The department had ordered 120-dozen Teflon cookie pans for sale at two for $3 and in one week had to order 100 dozen more. This was just one example of some under-ordering by the buyers. Barnes-Hind wetting solution and the St. Ives combo packs were among others that had to be reordered.

Rainchecks were issued to cover the stockouts. While admittedly this disappointed customers, the promotion's overall success was deemed as far outweighing the inconvenience.

The same attitude prevailed over another problem: the slowdown at the checkouts as customers matched coupons to products. Six coupon messages helped prepare customers for the matching process ("Save Time at the Checkouts... Have Your Coupons Ready") and each coupon was coded with a special number for scanning registers.

The format for drugstore coupon books sometimes incorporates cents-off coupons rather than a lower price per se and often groups products on a weekly basis to entice repeat customer visits.

According to Ricketts, Associated Grocers took the lower-price route in lieu of cents-off coupons to obtain a sharper price image. The three-week redemption period offered two advantages: It gave customers time to plan their purchases and it helped spread out purchases, reducing the problem of stockouts during what was essentially a first-time experience with an untried promotion.

With many of the coupon book items (particularly the grocery products) sold near cost, the promotional margins were "modest" for grocery and about 13% for non-foods. Of course, low margins are not unusual for hard-hitting promos on this scale. Choosing the Items

Selecting the promotional items was a process in itself. Ricketts explains that items were chosen on the basis of sales and traffic appeal (spiced with some relatively profitable items) and on available deal and volume allowances.

"We didn't have much trouble lining up non-foods manufacturers," recalls Ricketts, "probably because they were accustomed to the books put out by their drug accounts. But when we asked grocery to go partners with us, there was some doubt at first that their product manufacturers would go along." As it turned out, according to Borell, "We received a much better response than we anticipated." In fact, he adds, "I teased non-foods that we really didn't need them anymore."

What do manufacturers think of coupon books? Of six executives questioned, only one was opposed, saying, "We prefer to do our own couponing. That way we can better control the demographic and geographical selection."

A marketing man for a major HBA supplier says the coupon books are "convenient for the shopper." The book coupons are easily handled, he says, and the shopper can organize her purchases--and adjust her budget--weeks in advance. He adds that "sales aside, the coupon book technique is cheap for us to work with compared to the handling costs of our own coupons and easier to administer than many co-op programs."

A coupon specialist with another prominent HBA manufacturer says coupon books "get action," but issues a warning. "We certainly don't want to run afoul of the Robinson-Patman Act. Manufacturers must make sure that coupon book participation--as for any promotion--is legal and proportionate for all retailers. We all offer a variety of promotional monies. There's no reason why book couponing can't be just another variation on the theme--just as long as the retailer performs."

Associated Grocers' program, incidentally, included supplying p-o-s material for all items, and many stores erected off-shelf displays of the features.

How does the future look for coupon books at AG? Definitely bright as others are slated for early this year. It's expected that the number of participating stores will be double last year and that distribution will be in the 600,000 range.

Roy White, editor of "HBA Insights," a monthly video cassette program of news and marketing trends, recently reported on coupon book promotions by drug chains. He says the technique is widespread and growing and unlike circulars and rotos are "new and fresh" as a promotional vehicle.

Ricketts sums up his point of view this way: "We're proud to say the coupon book is a brainchild of non-foods. It's another example of how non-foods has become a full-time member of the supermarket family."
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Title Annotation:grocery coupon books
Author:Snyder, Glenn
Publication:Progressive Grocer
Date:Feb 1, 1984
Words:1337
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