In North America, coupons are the most popular consumer promotion. Over the years, there has been some concern about their effectiveness due to declining redemption rates (which have struggled to get much above 2%). Through it all, however, coupons remain a valuable tactic that every promotion manager relies on to incite purchase.
But big changes are coming to marketers who rely on free-standing inserts (FSIs) and other coupons. Work is underway to redesign coupons to make them more effective. A key change will be a new barcode called RSS (Reduced Space Symbology) that will be packed with more information for enhanced promotions.
Coupons bearing only the RSS code won’t be issued until 2007. But there are several steps between then and now that need to be taken to help manufacturers, retailers and processors make the transition with the least degree of confusion. It’s important to take action now so the change can be gradual and without disruption to day-to-day transactions.
What’s prompting the change in barcodes? First and foremost is the move to global data synchronization of all product and promotion information. A major step in this process is called Sunrise 2005, which kicked off on Jan. 1. On that date the Uniform Code Council (UCC) urged all brand marketers and retailers in the U.S. and Canada (who had been scanning the traditional 12-digit UPC symbol) to step up their capability to scan the EAN 13-digit symbol already used outside North America.
This change will eventually allow U.S. and Canadian retailers to scan imported products at checkout without requiring those packages to bear the traditional UPC code as well. In conjunction with this change, the UCC will begin to issue manufacturer identifier numbers (MINS) that are up to 11 digits long.
The current coupon barcode can only handle a six digit MIN — and that is the driving factor behind a comprehensive barcode redesign. The new RSS barcode will solve this issue along with many other longstanding shortcomings in the current coupon barcode.
The new coupon will offer the following benefits to coupon issuers (CPG, franchise and direct response) and to retailers:
Accurate bar coding of more complex offers, improved purchase validation, multiple manufacturer promotions, improved date checking at the point of sale to reduce early or late coupon redemption, new options for “with this coupon” and “free up to maximum value” offers, better enforcement of coupons only good at a specific retailer, improved audit capability, and fraud reduction.
Ultimately, it is envisioned that the new coupon will enable manufacturers to retrieve purchase requirements and offer information from a local or remote database rather than the paper coupon. This would result in a more tamper-proof offer because offer details will not be included in the paper coupon’s barcode. This will provide a solid base for electronic coupon clearing.
The new coupon will result in better scanning accuracy at checkout and reduced fraud and mis-redemption, as well as allowing for full-offer tracking and more efficient retailer-specific promotions. The new compressed barcode symbol also enlarges the artwork space available on coupons to encourage design creativity.
Much work needs to be done before these benefits are realized. Promotion managers must get involved in designing the new coupon by submitting ideas, questions and concerns to task forces created by the promotion industry trade associations. At retail and in clearinghouse operations, some scanner hardware will need to be updated or replaced to handle the new symbols.
This work is not optional. A new coupon is coming and the transition has already begun. The future of couponing is now.
Lawrence Fox is VP of Pinpoint Data, LLC, Watchung, NJ. He can be reached via pinpoint-data.com.
Timeline
The major milestones for implementation of the new RSS barcode standards are as follows:
January 2005: “Sunrise 2005” kicks off, as the UCC urges the industry to adopt 13-digit capability.
First half of 2005: Manufacturers, retailers, processors, and various industry associations expected to finalize and adopt the re-design plan.
2007: An interim barcode solution will be implemented that contains one of the current two UPC barcodes plus the new RSS barcode. This will permit a smooth transition and extended period of time for retailers and processors to be able to handle RSS barcodes.
Post-January 2008: Manufacturers will eliminate the UPC code, leaving a coupon containing only the RSS code.
