Showdown at the Asda till: Bar codes will shoot out rival coupons in the battle of the brands. Russell Hotten reports

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The Independent Online
ASDA has become the first UK retailer to introduce a radical new marketing tool that enables rival manufacturers to attack competitors' products the moment they are purchased. The system, which has already swept US supermarkets, could revolutionise shopping in Britain and sharpen price competition between manufacturers of basic household items.

It is based on discount coupons that are printed on machines next to supermarket check-outs. Computers linked to barcode scanners eavesdrop on shopping baskets, and vouchers for rival products are given to shoppers along with their till receipts. The aim is to persuade consumers to buy the rival product next time.

Take a hypothetical example: every time a jar of Nescafe Gold Blend coffee passed through the cash register, it could trigger the printing of a 50p discount voucher for a rival brand, perhaps Maxwell House.

The system revolutionised retail marketing in the US, with one analyst at Paine Webber, the investment bank, calling it 'the cleverest, most measurable and tightly targeted marketing tool around'.

Asda has begun trials in six stores. A spokeswoman said: 'The system is proving very successful. We hope to give it to as many of our customers as we can as soon as possible.' She said the system could be introduced in all Asda's 200 stores.

At least 35 manufacturers are believed to have signed up to the system, including Kraft General Foods, Spillers, Britvic and Dairy Crest. About 74 of Britain's top 100 best-selling brands are covered by the discount coupons.

It was first introduced in America by a Californian company, Catalina Marketing, and is now installed in more than 6,000 supermarkets. About 30 million coupons are printed each week. Turnover at Catalina, launched on the New York stock market last year, has topped dollars 50m ( pounds 33m), and profits doubled in three years from dollars 600,000 to dollars 5m.

In the UK, Catalina is run under licence by managing director John Eustace, whose retail background includes spells at Procter & Gamble and Mars. He said that in the US about 10 per cent of vouchers are redeemed. However, Asda's trials have seen a higher percentage redeemed.

One problem of introducing the system to Britain is that there are far more own-brands than in America, and UK retailers may not wish to undermine sales of their own products. But Mr Eustace said the Catalina system was not just about attacking competitors. 'The retailer can use the technique to direct customers to different parts of the store. If a shopper spends pounds 25 but has no alcohol in the basket, they can be given a discount drinks voucher valid for their next big purchase. Or, if the weather forecast says it's going to rain, a shop could print umbrella vouchers.'

Customers can also be lured to complementary products: when they buy a toothbrush, they get a toothpaste voucher.

Mr Eustace said he is talking to the other retailers, though not to another supermarket. 'The system is an excellent way for brand managers to narrow down their target audience.'

But there is a risk for manufacturers if consumers gain advance knowledge of which purchases come with a voucher. Shoppers might be tempted to buy one product just to get another at a discount.

(Photograph omitted)

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