Through special arrangement, what follows is an excerpt of a current article from CPGmatters monthly e-zine, presented here for discussion.
Are you ready for the new barcode on coupons? Two executives from Procter & Gamble and Ahold USA have called for CPG manufacturers and retailers to prepare to issue and handle the so-called GS1 DataBar that allows for more complex offers. A set of deadlines for specific action steps underscored their urgency.
"We need to be putting codes on coupons by June 2008," said Don King, associate director at P&G, recently speaking about his manufacturer peers in St. Petersburg, Fla. at the annual Coupon Industry Conference sponsored by the Association for Coupon Professionals (ACP). Said Alan Williams, vice president for applications development for Ahold USA: "What we're recommending to retailers is project planning for 2008. Put this on your agenda. You've got to deal with it. Get ready."
In May 2006, GS-1, the organization that sets standards to improve efficiency in the supply and demand chains, set January 2010 as the global sunrise date for GS1 DataBar codes and the unique GSI Application Identifier to identify the item as a coupon.
The GS1 DataBar is expected to solve many of the inefficiencies in the current coupon system. Among them:
- Unable to handle variable length company prefixes;
- Value code structure is limited;
- Validation with a single company prefix and family code only;
- No systemic expiration data checking;
- Casher intervention required to handle complex offers.
The GS1 DataBar will enable manufacturers to code more complex offers and give them more options for values and purchase requirements. It will allow coupons to be validated at checkout to ensure the manufacturer intended the purchase that was made.
Meanwhile, retailers will have better scanning accuracy. More specific coding and a reduction in human readable elements should decrease fraud and misredemption, while minimizing the number of "hard-to-handle" coupons. The DataBar will enable the coding of retailer-specific promotions, which now is almost impossible to do. Stores will be able to leverage offer tracking and provide improved purchase auditing back to the manufacturers.
The move to a new coupon bar code is part of a larger initiative of global data synchronization for product information, marked by the 2005 introduction of a variable-length manufacturer Company Prefix. The new identification numbers allow international trading partners to forgo repackaging products for sale in North America, but are not compatible with today's coupon bar code. The GS1-US Coupon Initiative addresses both this conflict as well as other long-standing shortcomings of the UPC-A/EAN-128 coupon bar code
Meanwhile, the change to the GS1 US DataBar parallels similar efforts in the meat, produce, and healthcare industries to take advantages of increased data capacity and improved scanning accuracy of a smaller bar code.
"There is a lot of change coming," said Mr. King, "and it is going to impact all manufacturers, retailers, processors, and everyone else associated with coupons in one way or another."
Discussion Questions: Do you think the new GS1 DataBar will adequately address former problems and shortcomings with coupon redemption? Do you see this reinvigorating the use of coupons among marketers?