The ongoing economic downturn in North America and other developed markets appears to be creating a growth pattern in coupon usage, according to a survey by North American target marketing firm ICOM Information & Communications.
Of the 1,500+ US consumers who responded the survey, 67% reported that they are either "much more likely" (45%) or "somewhat more likely" (22%) to use coupons during a recession. ICOM reports that the average coupon redemption rate in the US has dropped to less than 1.0% (of all US coupons issued) from a level of 1.6% ten years ago.
Effects of age and geography
The survey's respondents were drawn from the ICOM Shopper's Voice database, and 71% of those aged 18-34 were found to be more likely to use coupons during times of recession, compared to 68% of those aged 35-54 and 63% of those aged 55 or over.
Geographically, 70% of Midwesterners said they are much more likely or somewhat more likely to use coupons in a recession, compared to 69% of Westerners, 64% of Northeasterners, and 62% of Southerners.
Income not so relevant
Income did not make a significant difference to respondents, with 68% of those earning less than US$50,000 per year reporting that they were much more likely or somewhat more likely to use coupons in a recession, compared to 67% of those earning more than US$50,000 per year.
These results are not entirely surprising. Historically, coupons are one area in which manufacturers do not cut back during hard times. For example, in the weakened US economy of 2001, ICOM's survey showed a significant increase in the number of coupons consumers redeemed each week.
Coupon targeting
According to Peter Meyers, ICOM's vice president of marketing, "Households of two adults and two children who use coupons wisely could save up to 25% on their grocery bills without cutting purchases. That saves US$2,400 a year based on a typical monthly grocery spend of US$800, which outstrips the US$1,800 'economic stimulus' cheque the family will get in May from the government."
But, according to Meyers, marketers need to be smarter about the way in which coupons are distributed. For example, there is clearly no need to send out dog food coupons to households that don't have pets: "Brands should do their homework and send offers that are relevant to the needs of individual consumers and households. And consumers should be given more time to redeem coupons - three months is simply not enough."
Demand for techno-coupons
In the survey, 58% of consumers said their coupon usage would increase if they were able to download coupons from the internet and have them automatically connected to an electronically-swiped frequent shopper or loyalty card account. Out of that group, 35% said they would be "much more likely" (and 23% were "somewhat more likely") to use such a card if that option was made available. At the moment, AOL, Kroger, General Mills, and Procter & Gamble are all involved in programmes testing this kind of couponing system.
Most (77%) of consumers aged 18-34 said they would be much more likely or somewhat more likely to use coupons if they were given access to this kind of paperless coupon technology, as were 63% of those aged 35-54, and 47% of those aged 55 or over.
According to ICOM, online coupons of all kinds currently represent less than 1% of the overall coupon market in the US, and consumers have so far expressed a strong preference for receiving coupons by mail. But brands should now begin paying attention to consumer opinion to see when the time is right to offer a more technological approach.
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