This & That

The Dark Side of Digital Marketing

While there has been a lot of hoopla recently about digital marketing and virtual coupons, online coupon fraud is on the rise. From 1986-2001, the Coupon Information Corp., the nonprofit agency that monitors the coupon industry, had only TWO CASES of coupon fraud. Even by 2007, there were only nine such incidents. In the past 18 months, 93 case files have been opened and the recession looks as though it’s going to make that worse. 1992 was the high water mark for coupon redemption (the end of the last major recession) with 7.9bn redeemed.

The losses aren’t virtual: Nestlé Purina Petcare Co. issued 250 coupons for a free bag of its adult dry dog food, and through early May, 2,754 coupons had been redeemed. Coca-Cola Co. had to withdraw a free 12-pack coupon from its “My Coke Rewards” program because of what it called “widespread counterfeiting,” and issuing a warning to consumers that “attempts to submit counterfeit coupons may result in civil action or criminal prosecution.” Counterfeiters reprint in-store coupons and smudge barcodes extending expiration dates. Coupon redemption is up 10% in the last quarter of 2008 (the latest stats available). Companies seeking to crack down on coupon abuse risk alienating customers who may not be aware the coupon they received from a friend or relative is bogus.

Without Sales There Are No Brand Impressions

With growing pressure on food retailers and manufacturers to cut costs and yet maintain margins, smaller food retailers are likely to see the amount of attention they receive from suppliers drop. Especially in areas like promotional support and personnel, marketers will be looking to cut costs and put their efforts into retailers with larger market share.

World News

The European Union (EU) has reprimanded the UK over import rules allowing irradiated food from non-EU countries that are processed in plants not pre-approved by the European Commission. Regulations state that EU countries can only accept food and food ingredients treated with irradiation from outside the bloc if they come from processing plants listed by the EC. No food safety issues are involved, but the “food police” are nonetheless adamant their viewpoint prevail. Britain insists new regs being promulgated this month will address the conflict.

The Chilean department-store chain La Polar rejected a proposed merger with supermarket chain Supermercados del Sur (owned by Latin American private equity fund Southern Cross). La Polar has rejected the models being pursued by competitors Cencosud and Falabella integrating department stores, supermarkets and other stores. La Polar has 40 department stores in Chile focused on the low end of the retail market, and is expanding into Colombia. Southern Cross bought La Polar in 1999, restructured its debt and took it public in 2003, but sold it again in 2006. Supermercados del Sur has 97 supermarkets in southern Chile with a 7% share of the national market.

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