P&G'S ZERO-COUPON MOVE SPARKS RELATED CUTBACKS BY COMPETITORS;POSITIVE RESULTS OF N.Y. TEST LURE GENERAL MILLS, CLOROX ACTIONS

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Procter & Gamble Co.'s zero-coupon test in upstate New York is bringing good results, influencing other marketers to pull back on their own consumer coupons.

Since P&G axed coupons on all brands early last month in Buffalo, Rochester and Syracuse, area supermarkets have reported solid sales of P&G brands, said marketing experts who are working closely with local retailers.

Now, Clorox Co. and other marketers are also paring their coupon use in the area, say analysts, who expect the tactic to spread among more marketers and to other regions as part of a growing move to replace national coupons with account-specific and in-store promotional efforts.

"Clorox has cut back its couponing on bleach and cleaning products in the upstate New York area, and General Mills is experimenting there with replacing national coupons for cereal with Catalina Marketing's electronic in-store coupons, all with good results," said Burt Flickinger, analyst with Price Waterhouse & Co.'s Management Horizons.

Clorox and General Mills couldn't be reached for comment.

P&G'S JAGER SPEAKS OUT

P&G President-Chief Operating Officer Durk Jager was so emboldened by initial test results that he reportedly said at the National-American Wholesale Grocers' Association meeting in Orlando earlier this month: "About 40% of total coupon spending never reaches the consumer. We decided coupons have to go."

A P&G spokeswoman refused comment on Mr. Jager's speech, but said P&G's studies show coupons are an "inherently inefficient way to promote products."

P&G has cut spending on coupons by as much as 50% in recent years, both in value and frequency. It vowed in 1992 to curtail couponing, but in many instances retreated when competitors seized the opportunity to increase market share and supermarkets waffled on their commitment.

SUPERMARKETS ON BOARD

This time, however, analysts say supermarkets are on board with the program and are equally interested in getting rid of the costly operational aspect of processing coupons in exchange for programs oriented around the retailer's needs and product mix.

"Everybody's fallen out of bed with national coupons because marketer spending has shifted to niches and retailers don't want to hassle with coupons that don't address their specific strategies," said Frank Everett, president-CEO of Reach Marketing, Westport, Conn.

COUPONS STILL IMPORTANT

Despite the movement away from heavy reliance on national couponing, marketers and analysts agree the coupon remains an important tool when used strategically for new-product trial and brand conversion.

More than 3 billion coupons are circulated nationally each year, and less than 3% are redeemed, says coupon processor NCH Promotional Services.

Coupon industry players are reluctant to concede P&G's stance will spread to other marketers and regions.

Newspapers in upstate New York that previously carried P&G coupons in weekly national free standing inserts refused to comment on test results.

Contributing: Jack Neff.

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