Rebates are an extension of the coupon promotion. Also known as refunds, rebates reimburse a customer for part of the purchase price of an item after the sale. They differ from coupons in that coupons offer a discount in price at the time of sale. Rebates developed after the broad success of coupons in the latter half of the twentieth century. (Thomas and Bonk, 1999) Marketers rather to give out rebates then to just simply lower the price, even though it is a much better alternative then rebates. Often, rebates are used as a promotion for marketers to attract customer's attention with the incentive they will receive, and it will also further trigger customer's desire to know more about this product. Rebates are a good a way to provide customer with what they want, lower prices. Even though it is a good way of promoting products, but it can also have its flaws. Rebates increases and affects customer's purchasing behaviour, and marketers' uses excellent marketing campaign to attract every customer they can to purchase their products. Rebates can also turn into a scam, it happens when the customers did all the requirements to receive the rebate they want, but they will only get responses on how they have missed a receipt, code, etc. A positive rebate is when customers collect their own rebates, but a negative rebate is when the customer did everything they can, yet they still cannot receive their money.
Rebates are not as well as simply lowering the price, not only will it save customers time of waiting for the process and money, but it will also save their frustration of dealing with rebates. Bestselling author, Brian Vaszily states the following:
Marketers intentionally make rebates difficult to redeem, and they're getting increasingly sophisticated at it. In fact, a key measurement of a rebate campaign's success is how many consumers did NOT redeem the rebate. (Vaszily)
Not every store in the world is a scam. Customers enjoy seeing all the savings they can make, and that is why stores offer customers a wide range of rebates. Rebates are good for customers when they are purchasing a higher priced item, such as electronics, appliances, etc. The more expensive products are the ones with killer rebates to attract customers to purchase it. Furthermore, there are rebates being offer to customers when they have achieved certain requirements, such as recycling your old fridge or appliance for an energy- efficient one. Marketers are manipulating customer's purchase behaviour and influencing them to buy them under the impulse of seeing the “savings”. However, customers do not think about the factor of them not mailing in the rebates at all. Customers can estimate that they will save a portion of their money, but if the rebate was never filed for or received, then they are just paying the full amount on the suppose-cheaper product they have just purchased. Best buy is a good example of positive rebates; they fulfill their promises and offer customers a wide range of benefits. According to their website, the credit card they offer benefits customers greatly. Not only will customers get back 4% in rewards for every 1$ they purchase at Best Buy (Best Buy, 2010), but they will also be able to use those reward point to purchase high priced products. Therefore, marketers do not lower their price because they want to maximize their profit by keeping the price as high as they can. By offering rebates they have the chance of customer not returning the rebates and that is how they can keep the money. Companies' number one objective is to make profit, and their way of achieving such results can be sneaky and unfair.
When a rebate is given out, there will be instructions of how to receive the rebate, along with “fine print” conditions. Such as the rebates for credit cards, now and days people are signing up for a credit card that offers you a form of rebate (scene point, gas rebates, etc). Customers only act on impulse, so when they see the chance of rebating anything, they will go after it. Customers do not think about the usage of credit cards, the interest is more than the rebate they are receiving. If customers are promised a 5% rebate on their purchases, then that is the only factor they think about, what about the 20% of interest on unpaid balance? In “Credit Card Nation: The Consequences of America's sense”, Robert Manning argues that “Accruing debt and then paying interest to save a few dollars at the pump doesn't make any sense” (Manning, 2001). Customers can be blinded by greed of saving more money, but if someone can simply point out the fact that they will pay more if they do not pay off their credit card balance, then the customers will rethink their actions. Another reason why they will not lower the price, because they use customer's impulsive purchase behaviour to attract customers with the rebates they are offering. Companies will not lower the price unless they have to, instead of them lowering the price; they rather offer rebates and take that 50/50 chance of them sending back the rebate application. Marketers understand consumers' purchase behaviour very well and that is how they achieve their profits very well.
Within the promotional mix, marketers often pick incentives that will attract customers' attentions, but rebates are not as good as using a coupon. Coupon can be presented during the time of the purchase, but with rebates customers will have to go home and photocopy and then send in the requirements for their rebates. In the article, seven core drivers of success of today's world, Harvey Scahachter , a researcher states:
The researchers believe rebates will be most effective for tempting products, where consumers are looking for reasons to justify the purchase to themselves, rather than utilitarian products - wine and spirits rather than diapers and batteries. (Schachter, 2010)
He identified manufactures' motive of promoting rebates, and it is to attract customers who are buying products based on impulse of seeing the big save from the rebates. It is the customers' responsibilities to mail the rebates and to ensure that they have completed the requirements for their refund. Moreover, it is the customer's decision to get the rebate in the first place. Rebates can be good when it is real, and not a scam. Schachter also identified another problem through his article:
They found that when a consumer is motivated to purchase a rebated product the individual assumes he or she will successfully redeem the coupon and doesn't sufficiently adjust for the various things that could go wrong in the redemption process. (Schachter, 2010)
Customers purchasing behaviour can be affected from the price they are seeing, the great amount of savings they will be receiving. Though they did not consider the process of redeeming such rebates, and it may consist of photocopying your receipts, cutting off UPC code or simply fill out a form. There are many ways to mail in a rebate and the most common one is MIR, mail in rebates. Those who actually care for their money will follow and achieve all the requirements; however, there are those who do not have the patience for such a thing. When customers do not collect their rebates, the money goes right back to the company, therefore, unclaimed rebates is what companies are aiming for. Rebates are only useful for luring customers into buying a product, and the customers do not even know the product they are purchasing. Often when people buy houses they would go buy the accessory that goes with it, such as furniture, appliances, dishes, etc. Stores ensure that their promotion is noticeable, so when they enter a shop all they see are big flashy colour and all sorts of writings that draw them in.
In conclusion, rebates can be positive incentives; customers are the ones that makes it either a positive rebate or a negative one. A positive incentive is when customers who actually receives their cash value back, however, it can also be a positive incentive for the manufacturers when customers do not collect them. Rebates can be considered as a positive or a negative impact to the economy. When customers do not collect them, it will stimulate the economy, and companies will not run out of money. However, when that happens it is not good for the customers, since they were expecting their money back. In the end rebates are good essential tools for everyone, it is there for customers to save money and for companies to regain money. Rebates can also be a scam to get customers to purchase the suppose-on sale product and when customers do mail in their rebate form; companies will simply reply that you have forgotten. In the end, it is the customers' decision of which rebate they want to follow, it is their own decision of whether or not they wish to use the rebate.
Source: Essay UK - http://buystrangestuff.com/free-essays/finance/about-rebates.php
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