"The very fact that brands put an extra $37 billion in coupon savings on the table proves that they're seeing the value in this type of promotion," said CMS's Director of Marketing, Matthew Tilley. "They're obviously counting on and getting advertising value, retail support and direct sales improvements. Otherwise, we'd see them cutting back."
What is interesting is that the consumer response to coupon promotions fell 6% in 2005 compared to 2004. Consumers redeemed 3 billion coupons compared to 3.2 billion in 2004. CMS, Inc. feels a significant contributor to the fall in consumers using coupons is due to the deflation of coupon values. In other words, the coupon redemption amount is less compared to 2004, and consumers responded by not using as many coupons.
Since 2001, the average value of coupons offered to consumers increased nearly 8% annually, outpacing inflation which rose at a rate of less than 3% during the same period. But that trend reversed last year when inflation was up nearly 3.5% and average coupon values only increased a penny to $1.16, less than a 1% increase.
"In 2004, we saw a 14% jump in the value of coupons offered to consumers," said Tilley. "Going from that to this year's comparatively miniscule increase means consumers saw coupons as generally less attractive offers."
Other coupon tactics remained relatively stable. Expiration periods stayed at 2.9 months on average, with nearly 94% of all coupons expiring in less than five months. Purchase requirements dropped slightly, with 25% (down from 28%) of all coupons requiring purchases of at least two products.
Longer-term trends, such as changing consumer demographics, seem to have the most impact on consumer response, yet are the most difficult to affect. "Just look at the Hispanic population as an example. They make up over 12% of the U.S. population, yet represent less than 8% of coupon users," said Tilley. "And that gap is only going to increase if that ethnic group grows according to predictions."