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Part Five Developing the Integrated Marketing Communications Program
Belch: Advertising and
Promotion, Sixth Edition
Exhibit 16-21 Intuit uses
a rebate offer to promote
its Quicken software
products
V. Developing the
Integrated Marketing
Communications Program
16. Sales Promotion © The McGraw−Hill
Companies, 2003
service. Because most states make it illegal to require a purchase as a
qualification for a sweepstakes entry, consumers can enter as many
times as they wish. Professional players sometimes enter one sweepstakes
several times, depending on the nature of the prizes and the
number of entries the promotion attracts. Newsletters are even available
that inform them of all the contests and sweepstakes being held,
the entry dates, estimated probabilities of winning for various numbers
of entries, how to enter, and solutions to any puzzles or other
information that might be needed. The presence of these professional
entrants not only defeats the purpose of the promotion but may also
discourage entries from consumers who think their chances of winning
are limited.
Refunds and Rebates
Refunds (also known as rebates) are offers by the manufacturer to
return a portion of the product purchase price, usually after the consumer
supplies some proof of purchase. Consumers are generally very
responsive to rebate offers, particularly as the size of the savings
increases. Rebates are used by makers of all types of products, ranging
from packaged goods to major appliances, cars, and computer software.
Exhibit 16-21 shows an ad promoting a $30 rebate on Intuit’s
popular tax and financial software products, TurboTax and Quicken.
Packaged-goods marketers often use refund offers to induce trial of a new product
or encourage users of another brand to switch. Consumers may perceive the savings
offered through a cash refund as an immediate value that lowers the cost of the item,
even though those savings are realized only if the consumer redeems the refund or
rebate offer. Redemption rates for refund offers typically range from 1 to 3 percent for
print and point-of-purchase offers and 5 percent for in/on-package offers.
Refund offers can also encourage repeat purchase. Many offers require consumers
to send in multiple proofs of purchase. The size of the refund offer may even
increase as the number of purchases gets larger. Some packaged-goods companies
are switching away from cash refund offers to coupons or cash/coupon combinations.
Using coupons in the refund offer enhances the likelihood of repeat purchase
of the brand.
Rebates have become a widely used form of promotion for consumer durables.
Products such as cameras, sporting goods, appliances, televisions, audio and video
equipment, computers, and cars frequently use rebate offers to appeal to priceconscious
consumers. The use of rebates for expensive items like cars was begun by
Chrysler Corp. in 1981 to boost sales and generate cash for the struggling company.
Rebates are now common not only in the auto industry and other durable products but
for packaged-goods products as well.
Evaluating Refunds and Rebates Rebates can help create new users and
encourage brand switching or repeat purchase behavior, or they can be a way to offer a
temporary price reduction. The rebate may be perceived as an immediate savings even
though many consumers do not follow through on the offer. This perception can influence
purchase even if the consumer fails to realize the savings, so the marketer can
reduce price for much less than if it used a direct price-off deal.
Some problems are associated with refunds and rebates. Many consumers are not
motivated by a refund offer because of the delay and the effort required to obtain the
savings. They do not want to be bothered saving cash register receipts and proofs of
purchase, filling out forms, and mailing in the offer. 45 A study of consumer perceptions
found a negative relationship between the use of rebates and the perceived difficulties
associated with the redemption process. 46 The study also found that consumers perceive
manufacturers as offering rebates to sell products that are not faring well.
Nonusers of rebates were particularly likely to perceive the redemption process as too
complicated and to suspect manufacturers’ motives. This implies that companies using
rebates must simplify the redemption process and use other promotional elements
such as advertising to retain consumer confidence in the brand.