Manufacturers may use rebates to achieve a few objectives. One would be to use rebates as part of a promotional strategy to gain market share. They may use them to purge aging inventory or to control demand and level the supply chain. In the end, the primary objective and advantage of rebates is in the revenue growth which they generate from increase sales. There are also opportunities for the manufacturer to increase revenue through “Slippage”, “This refers to the proportion of consumers who are enticed to purchase as a result of the rebate offer but fail to request refunds to which they are entitled. This lack of follow-through by consumers results in increased consumer purchases without cost to the manufacturer, Thus the producer 's average
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Due to slippage associated with the application process, this is not likely to happen. Another disadvantage to rebates could be the design of the rebate program and the potential for negative impact on the brand. “Nonusers of rebates perceive that the redemption process is too complicated. Moreover, these consumers have negative perceptions of the manufacturers ' motives for offering rebates. If these perceptions are not changed, rebate offers might degrade the image and the desirability of the product. Thus, when contemplating a rebate offer, the firm should give serious consideration to the trade-off between a potential degradation of the brand 's image and the potential sales gain.” (Tat, Cunningham III, & Babakus, 1988, page …show more content…
“Rebates can offer the consumer substantial savings. In 1980, consumers collected over $702 million in rebates Gorges, 1981). Some professional shoppers reported collections of rebate checks worth over $1,500 per year (Leasure, 1981; Samtur,1979).” (Tat, Cunningham III, & Babakus, 1988) Some of the negatives for the consumer would be the effort needed for execution of the refund process, risk associated with an unfamiliar brand, and the need to purchase more of an item than is
Due to slippage associated with the application process, this is not likely to happen. Another disadvantage to rebates could be the design of the rebate program and the potential for negative impact on the brand. “Nonusers of rebates perceive that the redemption process is too complicated. Moreover, these consumers have negative perceptions of the manufacturers ' motives for offering rebates. If these perceptions are not changed, rebate offers might degrade the image and the desirability of the product. Thus, when contemplating a rebate offer, the firm should give serious consideration to the trade-off between a potential degradation of the brand 's image and the potential sales gain.” (Tat, Cunningham III, & Babakus, 1988, page …show more content…
“Rebates can offer the consumer substantial savings. In 1980, consumers collected over $702 million in rebates Gorges, 1981). Some professional shoppers reported collections of rebate checks worth over $1,500 per year (Leasure, 1981; Samtur,1979).” (Tat, Cunningham III, & Babakus, 1988) Some of the negatives for the consumer would be the effort needed for execution of the refund process, risk associated with an unfamiliar brand, and the need to purchase more of an item than is