Marketing and Rebates

Topics: Marketing, Sales promotion, Rebate Pages: 8 (2932 words) Published: January 29, 2013
Are rebates successful? Your job, as the marketing director for a newly formed company, is to evaluate how successful rebates are. What are their advantages and disadvantages to the company and the customer? Prepare a report to the CEO. January 7, 2013

Table of Contents
Introduction………………………………………………………………………1 1. Rebates Defined? ……………………………………………………………...2-3 1.1 Successfulness of Rebates……………………………………………..3-4 1.2 Who Uses Rebates? ……………………………………………..4 1.3 Advantages of Rebates…………………………………..4-5 1.4 Disadvantages of Rebates………………………...6-7 1.5 Are Customers More Susceptible to Buying Products on Rebates? ………………………………….7 1.6 High Cost Risk……………………...7-8

Recommendation…………………………………………………………………8-9 Conclusion………………………………………………………………………9-10 References………………………………………………………………………..10
Introduction
Consumers now go to stores wary of the economic recession of recent times. Many now have less disposable income to spend and as a result have changed their spending habits in an attempt to cope with this economic crisis. Presently, customers are able to save a lot of money as a result of marketing strategies such as rebates. Rebates are widely recognized as refunds, and are used by businesses to promote and advertise their products and services. Rebates are designed to reimburse the customers for part of their purchase. Rebates have been successful in many organizations that have wanted to promote and advertise their services to customers by providing them with an incentive to buy particular products. There are typically two types of rebate, an instant rebate, and the most common and widely used, mail-in rebate. Rebates usually have an expiration date of six to eight months, and can prove beneficial to some companies as consumers generally forget to mail in their documents in order to receive the rebates. This in turn benefits the company as the customer has paid in full for the product. As a newly formed company, rebates can help with customer awareness of products and services as well as building customer loyalty.

1. Rebates Defined?
Marketing strategies are designed to utilize the firm’s resources in delivering superior customer experience, while promoting the needs of the organization. Rebates are widely recognized as a marketing strategy that provides incentives for customers to buy a particular product. Derived from the age old marketing technique of offering coupons, rebates are a relatively new method of promotion. According to Jim Wohlever, “rebates are a form of price reduction or refund on a product that has already been purchased” (Wohlever, 2007, p. 56) and are most commonly used as a form of sales promotion. Rebates are used by companies to encourage customers to make a purchase and often serve as a reimbursement to a customer for part of the purchase price following the sale. There are two most commonly recognized types of rebates; mail-in rebates (MIR) and instant rebates (IR). Over the past 30 years, mail-in rebates have been a popular and viable sales promotion strategy for marketers to increase sales of their products (Wohlever, 2007). The mail-in rebates require customers to fill out documentation such as a coupon, receipt or barcode and mail it in, in order to receive the benefits of a rebate. Receiving a check for a mail-in rebate can produce a wait time anywhere between four and six weeks. It is estimated that mail-in rebates can boost sales of an item by 20%-50% depending on the value of the offer, the timing of the promotion, as well as the extent of the product’s distribution (Ong, 2008). Instant rebates however are the complete opposite, as the discount is taken immediately at the time of purchase. This is usually referred to as instant savings and is in essence, the sales price (Miller, 2009). Being the more common of the two, the mail-in rebates allow retailers to boost sales by offering lower or better price incentives to consumers, at a lower cost. Mail-in rebate describes only...


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