ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, December 4, 1996 TAG: 9612040024
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: CINCINNATI
SOURCE: Associated Press
Procter & Gamble Co., one of the nation's largest advertisers, is trying to cut costs by reducing, and possibly eliminating, coupons for its household and health products.
``We believe they are an inherently wasteful product,'' said company spokesman Elizabeth Moore.
In an experiment in upstate New York, P&G early this year halted coupon promotions in the Syracuse, Rochester and Buffalo markets. The test is expected to run through next August.
P&G's products include Folger's coffee, Pampers diapers, Tide laundry detergent and Charmin bathroom tissue.
Moore said research has shown consumers prefer everyday low prices on groceries to coupons, prompting the company to slash its spending on coupons in half over the last five years.
She said 98 percent of the 325 billion coupons produced and issued annually in the United States are never redeemed by consumers.
``Any product that fails 98 percent of the time can't be considered efficient,'' she said. ``With only 2 percent of coupons being redeemed, there's just nothing attractive about that to us.''
She said the company has reduced prices nationally on its products by about 6 percent since 1991, when it began paring the number of coupons issued. ``That equates to $2 billion in list price reduction,'' she said.
Even so, P&G reportedly plans to mail batches of coupons to 70 million households soon.
Moore declined to say whether that signaled the company is backing off plans to reduce further outlays on coupons.
According to Advertising Age magazine, P&G was the biggest national advertiser last year, spending $2.78 billion in the United States.
Gary Stibel, a former P&G executive now with The New England Consulting Group, predicted P&G would never eliminate coupons, despite the New York experiment.
``Coupons are very popular,'' he said. ``Consumers want coupons - take a look at your Sunday newspaper.''
``The likelihood of Procter & Gamble learning that from that New York test is very high,'' he said. ``They want to reduce [their coupons], and one way to learn how to reduce is to go cold turkey and see how bad things can be.''
He said other companies also have cut back on coupons, but that P&G is the only one experimenting with eliminating them.
LENGTH: Medium: 52 linesby CNB