Glossary of Deal Terms

Glossary of Industry Terms

 

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A

ACH Payment: A secure payment transfer system that connects all U.S. financial institutions. The ACH (Automated Clearing House) network acts as the central clearing facility for all Electronic Fund Transfer (EFT) transactions that occur nationwide.

Adjustment: Payment or denial made to a retailer transaction, which differs from the amount billed by or on behalf of the retailer.

Adjustment Reason Code: Coding assigned to retailer transactions to indicate why payment has been denied. Also known as Denial Reason or Reason Code.

Administration Charge: A charge assessed by retailer clearinghouses when manufacturers fail to issue timely payments for the coupons that have been submitted to them. Many retailers choose to pass this charge along to the specific manufacturers who have failed to pay on time.

All Commodity Volume (ACV): Represents the total annual sales volume (in dollars) of retailers that can be aggregated from the individual store-level up to larger geographical sets.

Association: Also known as a grocers’ association, an organization that represents and provides services to retailers, typically smaller independent retailers. Associations may sometimes serve as brokers of coupon clearing services.

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B

BOGO: A coupon promotion in which the consumer Buys One product and Gets One free.

Brand Development Index (BDI): Measures the relative sales strength of a brand within a specific market.

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C

Category Development Index (CDI): Measures the relative sales strength of a category within a specific market.

Class of Trade: Type of retail outlet or business, (e.g., chain retailer, independent, wholesaler, mass merchandise store, drug store, grocery store, etc.)

Chargeback: Transaction on behalf of a manufacturer to reverse a payment that has previously been issued to a retailer clearinghouse, or cancel a scheduled payment.

Co-op Newspaper Insert: See “Free Standing Insert.”

Consolidated Invoicing: A billing practice that is utilized by some retailer clearinghouses. It involves aggregating and consolidating billings on behalf of multiple retailer clients onto a single manufacturer invoice. The practice allows fewer invoices to be generated for more coupons, thereby enhancing the efficiency of the redemption process.

Consolidated Shipping: A method of shipping coupons that is utilized by most retailer clearinghouses. It involves aggregating and consolidating coupon shipments from multiple retailer clients into a single shipment before forwarding to the manufacturer or its agent. The practice allows the clearinghouse to make fewer shipments containing more coupons, which may reduce the clearinghouse’s average cost to transport and move coupons. (This lower cost may or may not be reflected in a clearinghouse’s billings to manufacturers).

Cost Per Coupon: A method of evaluating promotional spending in which all the costs of implementing a coupon campaign are divided by the total number of coupons redeemed.

Cost Per Unit Moved: A method of evaluating promotional spending in which the total cost of the promotion is divided by the total number of units sold during the promotion period.

Coupon: A certificate with a stated value that the consumer presents to the cashier in a store that entitles the consumer to a discount on a specified item at the time of purchase.

Coupon Broker: A reseller of coupon clearing services that operates as an intermediary between the retailer and the retailer clearing agent.

Coupon Redemption Policy: Written policy maintained by a manufacturer that explains the legal terms and conditions associated with the manufacturer’s coupon offers. The coupon redemption policy serves as an extension of the legal verbiage contained on the coupon.

Coupons Requiring Manual Invoicing: Coupons that cannot be electronically scanned and processed and, as a result, must be manually processed. There are a variety of reasons why a coupon may require manual invoicing: (1) defects in a coupon’s design or bar code may prevent it from being electronically scanned and processed; (2) the manufacturer may require information to be captured from a coupon that cannot be encoded in a GS1-approved bar code; (3) the manufacturer may fail to notify its redemption agent of a new offer before consumers begin redeeming the coupon at retail; (4) the manufacturer’s redemption agent may fail to provide the retailer’s clearinghouse with a fully up-to-date file of all offers that are authorized to be electronically processed; (5) the manufacturer may not have authorized participation in the electronic invoicing program that is offered by the retailer clearinghouse.

Cross Ruff Coupon: A coupon distributed in or on a product’s package that is good toward the purchase of a different product.

CSV File: Comma-separated value file. A CSV file is a way to store data so that it can be conveyed as input to another table-oriented application, e.g., Microsoft Excel. CSV files often have a ‘.csv’ file extension.

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D

Deduction: Wholesaler or retailer practice of reducing money paid for manufacturer product invoices in order to cover the cost of coupon denials.

Doubling (Double Coupon): Practice by some retailers of offering consumers double the face value of manufacturer coupons. Although less common, some retailers also employ the practice of tripling the face value of manufacturer coupons. When coupons are doubled or tripled, the retailer assumes liability for the additional discount beyond the face value of the coupon that is provided to the consumer.

Does-Not-Stock: Term referring to a manufacturer adjustment for a coupon billed on behalf of a retailer that does not stock the product featured on the coupon.

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E

Electronic Data Interchange (EDI): Standard format for exchanging business data.

Electronic Invoicing: A method of invoicing manufacturers for redeemed coupons. Also known as one-count or subcontracted coupon processing. In an electronic invoicing arrangement, manufacturer payments are based on electronic data from the retailer’s clearinghouse. These arrangements allow payments to be issued on behalf of manufacturers without waiting for the coupons to be physically transported and audited by the manufacturer’s redemption agent. As a result, the redemption process can become faster and more efficient. The brand name for NCH’s proprietary electronic invoicing solution is Veluno®.

Escheat: Legal process for the handling of unclaimed property such as retailer payments that are never claimed. Note that escheat laws vary by state and are applied according to the state in which the retailer (i.e., entity that has failed to claim the property) resides.

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F

Face Value: The discount offered by a coupon.

Family Code: Hierarchical system created and maintained by the manufacturer to allow retailers to validate that the correct product(s) are purchased with a coupon. The 3-digit code is embedded within the coupon’s bar code.

File Transfer Protocol (FTP): An electronic method of downloading files.

Foreign: Term referring to a manufacturer adjustment for a coupon that was billed to the wrong manufacturer.

FSI (Free Standing Insert): Coupons appearing in four-color, pre-printed advertisements in single or multiple page formats. The advertisements are inserted loose into a publication, typically the Sunday newspaper.

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G

Gang-Cut: Coupons that appear to have been cut by machine and submitted for redemption. A form of misredemption.

GMA Reason Code: Industry recommended coding assigned to retailer transactions to indicate why payment has been denied. Also known as Denial Reason, Reason Code.

Grace Period: The period of time after a coupon expires during which a manufacturer will still honor the coupon.

Grocers’ Association: See “Association.”

GS1 Company Prefix: The GS1 Company Prefix is a globally unique, 6- to 12-digit number licensed to a company/organization by the GS1-US. Company Prefixes vary in length to meet the needs of GS1 members. The GS1 Company Prefix is used as a foundation to create the identification numbers of the GS1 System. The GS1 Company Prefix is what makes the identification numbers of the GS1 System unique. See also “Manufacturer Identification Number” and “UPC Company Prefix.”

GS1 Coupon DataBarTM: A bar code that was developed to replace the UPC-A/GS1-128 coupon code. GS1 DataBar (formerly RSS) symbols can carry more information than earlier bar codes, thereby allowing more flexibility in promotional coding. Note that the application to coupons is only one of many uses for GS1 DataBar symbols.

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H

Handling Fee: A fee designed to cover the cost by retailers to handle manufacturer coupons. The last industry-sponsored study of retailer handling costs was published in 1992 and updated in 1993.

Hard-to-Handle Charge: Charge assessed to manufacturers for coupons that require manual intervention. Hard-to-handle charges are designed to encourage sound coupon design and redemption practices, so that more coupons may be electronically scanned and processed.

Headslip: See “Store Tag.”

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I

In-Ad Coupon: Coupon in a particular retailer’s newspaper ad or handbill that is redeemable only at the particular store or chain.

Instant Redeemable Coupon (IRC): A coupon offered to consumers in the store (often appearing on a product’s package) to be redeemed on the same shopping trip.

In-Store Coupon: Coupon distributed inside the store.

Internet Coupon: Coupon distributed via the Internet.

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K

Kiosk: A free-standing retail display offering services such as interactive information, recipes, photo processing, etc.

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M

Malredemption: A type of misredemption involving the misuse of coupons by consumers, e.g., coupons used for the wrong product or quantity.

Manufacturer Identification Number (MIN): A truncated version of the UPC Company Prefix. Since the UPC-A coupon code accommodates only a five-digit number to identify the manufacturer of the couponed product, longer UPC Company Prefixes must be truncated to fit the space limitations of UPC-A coupon code. This truncated version of the UPC Company Prefix is known as the Manufacturer Identification Number or MIN and is derived by using the second through sixth digits of the UPC Company Prefix. See also “GS1 Company Prefix” and “UPC Company Prefix.”

Manufacturer Coupon Redemption Agent: A company that provides specialized transaction clearing and settlement services for manufacturers that issue coupons. Responsibilities include auditing coupons or electronic data received from retailers and/or retailer clearinghouses to determine the amounts owed by manufacturer clients to different coupon submitters. The redemption agent is also responsible for providing redemption data and financial reconciliation to manufacturer clients.

Market Coding: A method of coding coupon offers, in which an coupon is distributed with different offer codes, each reflecting a different market in which the offer is distributed. Market coding can provide insight into consumer response by region and also help manufacturers to better uncover patterns of misredemption, such as out-of-area coupon submissions.

MINT: Coupons that are determined to be misredeemed because they appear to be new or unused, i.e., in mint condition.

Misredemption: Coupons submitted by a clearinghouse or retailer, which have not been used in accordance with the terms of the promotion.

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O

Offer Code: Manufacturer provided coupon code for tracking redemption liability. Also known as Promotion Code or Coupon Code.

Offer Validation File: File sent by a manufacturer agent to a retailer clearinghouse specifying valid offers that may be processed in a subcontracting/electronic invoicing relationship.

One-Count Processing: See “Electronic Invoicing.”

On-Pack Coupon: Coupon printed on a product’s package.

On-Pack Cross Ruff Coupon: Coupon printed on a product’s package for use on a different product.

Out-of-Area: Term referring to a manufacturer adjustment for a coupon submitted by a retailer that does business outside the geographic region in which the coupon was distributed.

Overage: The audited coupon values or coupon count exceed the amount being claimed by the retailer or retailer agent.

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P

Payment Policy: Manufacturer instructions for how the coupon redemption agent is to calculate payments to retailers. Includes toleration, expiration, grace period, miscellaneous fees and shipping reimbursement policies.

Payment Reversal: Transaction previously denied payment but is now being paid to the retailer authorized by the manufacturer.

Per-Coupon Fee Structure: A method of structuring certain fees that are charged by retailer clearinghouses, most notably fees associated with transporting coupons. Specifically, a fee is charged for each coupon that the clearinghouse processes. Because clearinghouse revenue is not tied to the number of invoices or store tags that are generated, there is no motivation to artificially inflate costs by generating more invoices or store tags. As a result, the redemption process is more likely to remain efficient and cost-effective.

Per-Invoice Fee Structure: A method of structuring certain fees that are charged by retailer clearinghouses, most notably fees associated with transporting coupons. Specifically, a fee is charged for each invoice that the clearinghouse generates. Because clearinghouse revenue is tied to the number of invoices generated, there may be some motivation to generate more invoices for fewer coupons. As a result, the redemption process may become less efficient and more costly.

Per-Store Fee Structure: A method of structuring certain fees that are charged by retailer clearinghouses, most notably fees associated with transporting coupons. Specifically, a fee is charged for each store tag that the clearinghouse generates. Because clearinghouse revenue is tied to the number of store tags generated, there may be some motivation to generate more store tags for fewer coupons. As a result, the redemption process may become less efficient and more costly.

PIN Code: Set of numbers assigned by the manufacturer to a specific consumer household whereby the manufacturer wants to track consumer usage of a specific offer. Also known as Personal Identification Number, Household ID.

P.O. Box Submitter: Retailers that do not utilize a retailer clearinghouse and who submit their coupons directly to the PO Box noted within the coupon’s legal verbiage.

Point of Sale (POS): The place where purchases are made within a retail store, including the system used to charge consumer for products purchased and provide discounts for coupons.

Proof of Purchase (POP): Documentation that identifies products purchased by the retailer from the manufacturer. Sometimes requested to substantiate coupon submissions from retailers.

Purchase Requirement: Specifies what the consumer must purchase to be eligible for the discount stated on the coupon.

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R

Receivable: Amount owed to a retailer for coupons that were previously submitted.

Redemption: The “cashing-in” of coupons to obtain discounts or premiums.

Redemption Policy: See “Coupon Redemption Policy.”

Redemption Rate: A weighted measure of consumer response to a coupon offer calculated by dividing cumulative redemptions by the total number of coupons distributed.

Retailer Coupon Clearinghouse: A company that provides specialized transaction clearing and settlement services for retailers that accept manufacturer coupons. Responsibilities include auditing and valuing the coupons received from retailer clients, invoicing manufacturers on behalf of retailer clients and providing financial reconciliation to retailers.

Reversal: See “Payment Reversal.”

Run-of-Press (ROP): Manufacturer coupon appearing in a newspaper advertisement.

RSS: See “GS1 Coupon DataBar.”

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S

Sales Lift: Measures the incremental sales increase directly attributable to the coupon offer.

SAS 70: Statement on Auditing Standards (SAS) No. 70 was the former industry standard for disclosing control activities and processes at a service organization. This standard was in place from 1992 to June 15, 2011 when the American Institute of Certified Public Accountants (AICPA) replaced it with SSAE 16 (see below).

Shortage: The audited coupon values or coupon count are less than the amount being claimed by the retailer or retailer agent.

SSAE 16: Statement on Standards for Attestation Engagements No. 16 (SSAE 16) is a standard developed by the American Institute of Certified Public Accountants (AICPA). SSAE 16 is the authoritative guidance that allows service organizations to disclose their control systems and processes to their clients and their client’s auditors in a uniform reporting format. That said, there may be important differences between different service providers’ SSAE 16 reports. It is particularly important to look at how timely, comprehensive and credible the report is, as well as whether the report is Type I or Type II (Type II is preferred).

Store Tag: Represents the smallest identifiable unit that submits coupons within a retail chain, wholesaler, etc. Because many retailers submit coupons at the store level, store tags often represent individual store locations. However, there are some retailers who do not submit coupons at the store level. As a result, some store tags may represent a division, region or other unit within the organization. A retailer clearinghouse may generate more store tags by dividing the coupons received from an individual submitter, or it may generate fewer store tags by consolidating multiple submissions from an individual submitter.

Subcontracted Coupon Processing: See “Electronic Invoicing.”

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T

Tax ID Number (TIN): Number required for retailer payment as the $.08 handling is considered income and must be reported to the IRS.

Tolerance: Threshold stated in a manufacturer’s payment policy that must be reached before a payment is denied. Also includes thresholds for when no payment will be issued. For example, shortage, overage, claim value over max, etc.

Transaction: Unit of processing of submitted coupons.

Two-Count Processing: A method of processing coupons in which coupons are physically processed once by the retailer’s clearinghouse and a second time by the manufacturer’s redemption agent. Two-count processing often involves an extended payment cycle because payments may not be issued on behalf of the manufacturer until after the coupons have been physically transported and audited by the manufacturer’s agent.

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U

Universal Product Code (UPC): A 12-digit bar code system for identifying products and coupons for efficient scanning at the retail point of sale. A variation of the UPC code, known as the UPC-A, is used specifically for coupons. The UPC-A coupon code is currently being phased out by the GS1 and is to be replaced with the GS1 DataBarTM by 2010.

UPC-A/GS1-128 Barcode: Also known as the coupon extended code, it is a supplemental bar code that provides additional information not contained in the UPC-A coupon code. Use of the UPC-A/GS1-128 is currently being phased out by the GS1 in favor of the GS1 DataBarTM. The transition is to be completed by 2010.

UPC Company Prefix: The UPC Company Prefix is provided to support the creation of UPC bar codes. A UPC Company Prefix is derived by removing the leading “0” digit from the GS1 Company Prefix. Only companies/organizations assigned GS1 Company Prefixes beginning with a “0” may create UPCs. See also “GS1 Company Prefix” and “Manufacturer Identification Number.”

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