Coupons have been a major component of manufacturer and retail trade promotion of products on the shelves of America’s grocery stores for most of the past three decades. From 1970 to 1985 the number of coupons distributed increased from 16 billion to 200 billion, at a compound annual growth rate (“CAGR”) of over 17 percent. However, from 1985 to 1992 the CAGR for coupons dropped to under 7 percent, and in 1993 and through half of 1994 the CAGR for coupons was negative, at -3 percent. Manufacturers have made a major investment in coupons as a promotional vehicle for their products. How have consumers reacted to this investment?Consumers have reacted by clipping virtually the same number of coupons every year, regardless of how many coupons the manufacturers throw at them. During the period 1985 to 1993 the consumer redemption rates for coupons dropped virtually every year, from 3.25 percent in 1985 to 2.28 percent in 1993. Over the same period the real number of coupons being redeemed has remained static around 7 billion each year. With the flood of coupons on the market why aren’t consumers clipping like they used to? Have the traditional channels for delivering coupons been flooded to the point where consumers just can’t take any more?Throughout this stagnation period the average face value of coupons has been increasing nearly twice the rate of inflation from 30.4 cents in 1983 to 59.5 cents in 1993. In the past three or four years manufacturers begun to shorten the duration of coupons, to increase their ability to evaluate the performance of coupon programs. Even with a shorter coupon life, there are many more dollars on the table to attract consumers, but they aren’t coming. What are consumers looking for that manufacturers and the trade are not offering?The traditional method for delivering coupons is direct to the consumer via Free Standing Inserts (“FSI”), Direct Mail,...
