Coupon redemption decline stopped in 2007

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By: Wise Marketer Staff |

Posted on April 4, 2008

Coupon redemption decline stopped in 2007

Consumers in the US have bucked a 16-year downward trend by redeeming 2.6 billion manufacturers' coupons in 2007 - the same number that was redeemed in 2006 - according to grocery coupon processing agent CMS.

Before 2007, consumer response to coupons had consistently declined year-over-year from a high of 7.9 billion coupons in 1992. But economic pressures and consumer-friendly tactics have lately combined to build more consumer and manufacturer engagement with money-off offers.

Soft economy's effect Comparing coupon response with key economic indicators over the years suggests a strong link between the economy and coupon redemptions. Most notably, as unemployment and prices rise, coupon redemption also increases.

According to Matthew Tilley, director of marketing for CMS, "When there's a secure economic future, consumers tend to pay less attention to coupons. But, when there's an economic downturn, consumers turn to economising techniques such as using coupons."

Increase in coupon issuance Marketers issued some 302 billion coupons in 2007, a 6% increase over the previous year. However, that increase belies the fact that manufacturers reduced the number of promotional offers by over 8% while increasing the circulation of those offers by nearly 5%.

"In 2007, brands saw coupons as more of a mass advertising media," explained Tilley. "Instead of running a lot of finely-tuned, well-targeted marketing campaigns, brands tended to use coupons to support competitive messaging or new product launches."

New products and competitive messages require richer offerings to get the attention of potentially less receptive audiences. Therefore, the broader messaging brought a significant increase in coupon values. Average values increased by US$0.10 per coupon to US$1.28, marking the highest level seen to date. At a nearly 9% increase, 2007 also saw coupon values outpace price increases for the first time since 2004.

Driven by non-food promotions While overall coupon distribution was up by 6%, distribution of coupons for non-food products was up by nearly 13%. Food coupon distribution was down slightly, with 2% fewer coupons being issued in 2007 than in 2006.

Non-food coupons also led the way in terms of face value, increasing values by nearly 7% compared to the 5% increase in food coupon values.

Significant competitive activity in non-food categories did contribute to these trends, but the increased activity drove down non-food coupon response rates to 0.54% (from 0.60% in 2006), while food coupon rates remained relatively stable at 1.27% (up from 1.24% in 2006).

For over 20 years, CMS has provided promotions logistics services to leading consumer products companies. Over 700 clients rely on CMS's services for all types of promotions, encompassing every point of the promotion's lifecycle. CMS's ability to provide a seamless experience, from strategic consulting to post-campaign analysis, empowers promotional productivity.

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