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, phone and email 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 the value of a rebate only occurs if the customer takes action after the purchase. Marketers know that not all customers will respond to a rebate they have received. 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, compared to coupons, rebates tend to be used as a value enhancement in higher priced products. For instance, rebates are a popular promotion for automobiles and appliances, where large amounts of money may be returned to the customer.