The Hispanic Coupon Market To Clip or to Click: That is the Question

The future of print coupons is the subject of highly fertile debate these days. There are some out there who say that it is just a matter of time before the coupon culture of the Sunday morning paper is but a memory. The advent of online digital coupons will render print coupons obsolete, they say. Whereas digital coupons can be delivered to targeted audiences with laser-like precision, the flurry of assorted print coupons like those found in the paper more resembles a buck-shot approach. This large-scale, mass of offers is the most inefficient approach possible, they point out. And there may be truth in some of their claims.

The Hispanic coupon market is even more complex, and redemption rates are almost universally lower than those for the general market, with a few exceptions. The reason for this is partly cultural, and partly having to do with misdirected advertiser efforts regarding what brands to promote, and in what manner to do so.

Overall, it is estimated that a whopping 99% of the 300 billion coupons distributed annually end up in the trash---or hopefully in the recycling bin, but that’s another story.

Even so, there are still some very real barriers hindering the proliferation of digital coupons, such as the inability to directly redeem one’s coupon. For online offers, one must still print the coupon out and bring it to the store.  So what we are looking at is the current Hispanic coupon market, and how it is bound to evolve in the days and years ahead in the face of technological innovation.


All that’s fit to print

Marketers say that Hispanics are less likely to redeem coupons than the general U.S. population, mostly because less acculturated Hispanics tend to be less responsive. It is very difficult to get hard data on coupon redemption rates among Hispanics.

However, data obtained by Portada® from consumer packaged goods companies shows that in the northeastern United States, Hispanics have a coupon redemption rate 25% higher than for the general market. In Southern California the redemption rate is 20% lower than for the general market. Differences in redemption rates could be related to differences in the educational levels of Hispanics in these regions.

But some suggest that the reasons for lower coupon redemption rates among Hispanics have more to do with culture. “For one thing, many first generation U.S. Hispanics are less acculturated and hail from countries where coupons are not really offered, so when they come to the U.S., couponing is completely unfamiliar terrain,” says Matthew Tilley, director of marketing for CMS, a coupon transaction processing company out of North Carolina. That would help explain the significantly lower coupon redemption rates in Southern California, which is home to a large number of un-acculturated Hispanics. “Another reason for lower redemption rates is the perception, particularly among Hispanics, that coupon users are poor and unable to provide for their families,” adds Tilley.

Dr. Anne Brumbaugh, a Professor of Marketing at Wake Forest University in North Carolina, recently conducted a study on Hispanics’ use of coupons. She says that the study confirmed the conventional wisdom, which is that Hispanics redeem coupons at lower rates, on average, than the general market consumer. It also revealed some other interesting factors affecting Hispanic coupon redemption. One finding was that, oftentimes, the items being advertised - such as processed foods - are not high-demand items for Hispanics.

However, coupons for perishable items such as produce and refrigerated goods saw considerably higher redemption rates than CPGs (Consumer Packaged Goods), since Hispanic cooking relies greatly on fresh ingredients. Another finding was that redemption rates were higher when there was not a multiple item purchase required for the discount. For instance a “buy two, get one free” type of offer did not garner high response rates. The reason, Brumbaugh asserts, is because many Hispanic coupon users are less-acculturated, have less income than others, and therefore have less space to store surplus items.

Dr. Brumbaugh also pointed to market discrimination as having an adverse effect on Hispanic redemption rates. For example, a middle-class white woman who uses coupons might be viewed as a savvy shopper and treated well at the check-out counter, whereas a middle-class Hispanic woman might be viewed and treated poorly for redeeming coupons. This negative reinforcement has a negative impact on Hispanic coupon redemption, according to Dr. Brumbaugh.

One approach that was shown to have a positive effect on redemption rates were in-store promotions with product samples and representatives handing out the coupons personally. “Hispanics are very social in their shopping patterns. They like to buy familiar products and feel a personal connection with the product or the place of purchase,” notes Brumbaugh.

One way that some companies have tried to establish such a personal connection with Hispanics is through custom publishing efforts. General Mills recently launched Que Rica Vida, a magazine aimed at Latina mothers. The magazine’s content covers education, health and wellness, recipes, and also coupons.

Kraft publishes a similarly-focused publication called Comida y Familia, which covers a variety of topics such as healthy living, family life and recipes. Advertisers are able to include inserts and customize distribution of the insert based on zip code, household income, and other criteria. Comida y Familia includes coupons for Kraft products as well as for advertisers’ products. Although they do not disclose redemption rates, a spokesperson commented that they are generally happy with the response to their programs.

Marla Skiko, media buyer for Tapestry Marketing Co., says that some of her clients have developed circulars that are best served via online newspapers.

Although it is hard to determine the effectiveness of these initiatives without hard data, their very existence testifies to greater awareness on the part of advertisers that in order to capture Hispanic business, they must be sensitive to the desires of this market and establish some sort of bond with the consumers that comprise it.

Going Digital

According to the Promotion Marketing Association, use of digital online coupons is rising by more than 50% per year. In addition, 61% of Hispanics aged 12-34 reported being somewhat/very likely to use wireless coupons or special offers. There are even plans in the works to bring coupons to mobile handsets. This could be promising for the Hispanic markets as studies show that particularly younger Hispanics over-index in cutting edge wireless services such as customized ringtones and web-surfing technology.

Dr. Brumbaugh says that she remains “very skeptical” about mobile couponing’s potential because it is so intrusive. John Morgan, executive director of the Association of Coupon Profesionals (ACP), is also less than enthusiastic for the time being about the potential for mobile coupons: “The restraints in this field really exist at the processing stage. Currently, there is the infrastructure in place and widely available to process paper coupons. Thus far, that infrastructure is not widely available to process mobile coupons. But it is something that’s on the horizon, and something we’re watching closely,” says Morgan.

As if the situation weren’t rocky enough, Google has now entered the picture and shaken up the status quo by offering local businesses who utilize the Google Maps service the ability to offer coupons free-of-charge.


Google Account Executive Sarah Carberry says that the new service “will greatly impact CPG marketing programs on the local level by enabling our partners to promote and tie-in grass roots events, promotions, deals, and special events.” The Google coupon program is still in the beta phase, but Carberry notes that “multi-lingual iterations are on the way.”

Even still, Shayne Walters, president of Carmen’s Cupones, is unfazed: “There’s still something to be said for coupons arriving in the mailbox at one’s home. Mail has an immediate call-to-action right on your lap, so no matter what happens electronically there will always be a space for hard coupons.” Walters is hedging his bets, though, and acknowledges that Carmen’s has its own online beta testing underway.

Carmen’s Cupones y Consejos has another element that Walters hopes will shield it from the technological onslaught that some predict may bury it. It has to do with cultural relevance: that troublesome, nebulous concept that marketers strive so ardently to achieve in reaching out to Latinos: “Carmen’s program is about a lot more than just coupons and savings. Carmen has become a brand of her own and taken on an identity that people relate to. Our mailings not only include coupons, but newsletters covering everything from finances to personal health. As a result, Carmen’s has a relationship with its audience that would be very difficult, if not impossible, for Google to achieve.”

Asked whether he thinks digital coupons will ultimately supersede print coupons, the ACP’s John Morgan responded that it is doubtful: “There are always new start-ups saying that they are going to replace the FSI, but the Sunday paper’s coupons is really a part of our culture that I don’t see going away any time soon. But digital couponing will certainly be a key component of tomorrow’s coupon landscape.” Interestingly, as mentioned earlier in this article, the Sunday paper’s coupons are not nearly as much a part of Hispanic culture, so it is possible that the latest digital coupon technology will be more readily embraced by this group than by the general market.


Ways to drive traffic to the store

 

Vehicle

Relative Cost

Redemption Rate vs. General Market

Advantage

Disadvantage

Print Coupons

Direct Mail (Solo and Shared Envelopes)

Expensive (Particularly solo mail)

High (Particularly for solo mail)

-Some branding effect

-Can be taken to the store

-Hispanic “believe” in printed material

Hispanics, in general, still Coupon-averse.

 

FSI in Newspapers

Medium

NA

NA

NA

 

FSI in Magazines

Medium

NA

NA

NA

Digital Coupons

Websites (e.g. Google Maps); Mobile Phones

Low (performance based)

Low, relative to Print

Highly-targeted; Inexpensive to distribute; Hispanics over-index in cell phone usage

Still paper component; must print out. Mobile coupon infrastructure under-developed


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Editorial Staff

Portada Staff

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