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    Economic Worries Help Reverse Decline in Coupon Use: Study

    Analysis from coupon processor CMS shows that overall coupon distribution climbed 6 percent.

    Consumers bucked a 16-year trend by redeeming 2.6 billion manufacturers' coupons in 2007, the same number as the previous year, according to a new report by CMS, a coupon processing agent for grocery brands, based in Winston-Salem, N.C.

    Prior to 2007, consumer response to coupons consistently declined year-over-year from a high of 7.9 billion coupons in 1992, the group said yesterday.

    According to CMS, comparing coupon response to key economic indicators over time suggests a strong link between the economy and coupon redemption. Most notably, as unemployment and prices rise, coupon redemption increases.

    "Coupon response tends to run counter to economic indicators," said Matthew Tilley, CMS's director of marketing, in a statement. "When the numbers indicate a secure economic future, consumers tend to pay less attention to coupons. But, when the numbers indicate an economic downturn, consumers turn to economizing behaviors such as using coupons."

    Marketers issued 302 billion coupons in 2007, a 6 percent increase over the previous year, the report found. However, that increase belies the fact that manufacturers reduced the number of promotional offers by more than 8 percent while increasing the circulation of those offers by nearly 5 percent.

    "Last year, brands saw coupons as more of a mass advertising media," said Tilley. "Instead of issuing a lot of finely-tuned, targeted marketing efforts, brands tended to use coupons to support competitive messaging or new product launches."

    This broader messaging brought a significant increase in coupon values, CMS said. Average values increased 10 cents per coupon to $1.28, marking the highest level seen to date. At a nearly 9 percent increase, 2007 also saw coupon values outpace price increases for the first time since 2004.

    While overall coupon distribution was up 6 percent, distribution of coupons for non-food products was up nearly 13 percent, according to the report. Food coupon distribution was down slightly, with 2 percent fewer coupons than in 2006.

    Non-food coupons also led the way in face value, upping values by nearly 7 percent, compared to the 5 percent increase in food coupon values.

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

    CMS is an affiliate of Inmar, Inc. a provider of promotional settlement and information management services.

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