Sales Promotion

Rebates

Rebates, like coupons, offer value to purchasers typically by lowering the customer’s final cost for acquiring the product.  While rebates share some similarities with coupons, they differ in several keys aspects.  First, rebates are generally handed or offered (e.g., accessible on the Internet) to customers after a purchase is made and cannot be used to obtain immediate savings in the way coupons are used.  (So called “instant rebates”, where customers receive price reductions at the time of purchase, have elements of both coupons and rebates, but for our purposes we will classify these as coupons due to the timing of the reward to the customer.)

Second, rebates often request the purchaser to submit personal data in order to obtain the rebate.  For instance, customer identification, including name, address and contact information, is generally required to obtain a rebate.  Also, the marketer may ask those seeking a rebate to provide additional data such as indicating the reason for making the purchase. 

Third, unlike coupons that always offer value when used in a purchase (assuming it is accepted by the retailer), receiving a rebate only guarantees value if the customer takes actions.  Marketers know that not all customers will respond to a rebate.  Some will misplace or forget to submit the rebate while others may submit after a required deadline.  Marketers factor in the non-redemption rate as they attempt to calculate the cost of the rebate promotion. 

Finally, rebates tend to be used as a value enhancement in higher priced products compared to coupons.  For instance, rebates are a popular promotion for automobiles and computer software where large amounts of money may be returned to the customer.