ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, January 12, 1996 TAG: 9601120054
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
DATELINE: DETROIT
SOURCE: Knight-Ridder/Tribune
If a risky Procter & Gamble experiment succeeds, coupon-clippers who spend Sundays with a newspaper and scissors may need a new weekend pastime - and a new money-saving tactic.
Procter & Gamble Co. - the maker of hundreds of staples including Tide, Pampers and Folgers Coffee - will eliminate coupons for its products in three trial cities in western New York. Instead of coupons, it says, it will lower everyday prices.
Procter & Gamble direct-mail and newspaper coupons in Buffalo, Rochester and Syracuse, N.Y., will end Feb. 1. Grocers there will honor valid P&G coupons from national women's magazines and old newspapers, but P&G expects to eliminate 98 percent of coupons.
If the experiment reduces overhead without hurting sales, the company may end coupons elsewhere. If industry leader P&G can pull it off, experts predict other consumer-goods companies could follow.
Those are big ifs.
``It has a chance to work, but no one knows for sure,'' said Michael Johnson, marketing professor at the University of Michigan. ``The Krafts and General Foods are going to be watching this closely. So will consumers.''
Others predict the experiment will fail miserably. P&G has misjudged consumers' infatuation with coupons, said Gary Stibel, a former P&G manager who runs a Connecticut consulting company.
``This is one of the few occasions that Procter is absolutely wrong,'' Stibel said. ``Consumers love coupons. ... I think the consumer will punish Procter in the test market, and their competitors may also.''
For now, coupon-clippers needn't worry that the number of coupons they receive will drop. The average American sees about 1,000 coupons a month, according to P&G studies.
But the coupon craze, which reached new heights in the late '80s when supermarkets overdosed on coupon promotions, doubling and even tripling the discounts, is showing signs of decline. Many local chains, such as Farmer Jack, encourage shoppers to join no-coupon-required savings clubs instead. Kroger is considering starting a club.
In fact, P&G research indicates coupon redemption rates fell from 3.5 percent in 1983 to 2 percent in 1994. P&G has cut spending on coupons in half since 1991.
More families have two spouses with full-time jobs, and parents aren't willing to spend hours hunting coupons when the savings amount to spare change, experts say. Also, the warehouse revolution has led many people to shop at wholesale clubs, where coupons are usually invalid.
Consumer-goods producers have aggressively plowed a path toward coupon-free shopping because coupons are costly to print and distribute. U.S. companies spent $6.5 billion last year to pass out coupons - and more than half of that went to administrative overhead.
Consumer-goods companies dislike coupons because they discourage brand loyalty. Coupon-clippers hunt for the lowest price instead of returning to their favorite cereal or the most effective cleaner, said Anthony Hebron, spokesman for Battle Creek, Mich.-based Kellogg Co., which has been reducing dramatically the number and value of its coupons since November 1994. Cereal coupons are one of the most popular kinds of coupons, according to grocers.
LENGTH: Medium: 64 linesby CNB