The Great Rebate Run-Around

The Great Rebate Run-Around

Using rebates to enter or maintain a specific market for new and current products is the focus of this case study, The Great Rebate Run-around. According to reports, 400 million refunds are given out each year, totalling $6 million. Some manufacturers give rebates rather than lowering wholesale costs, which explains why some firms like Best Buy are considering discontinuing rebates. This approach may be regarded as personalized pricing. The article describes why manufacturers offer refunds rather than lower wholesale prices. This might be viewed as an example of personalized pricing in various ways. Product differentiation is referred to as personalized pricing, which means that a different price is charged for each consumer when it comes to pricing. As a result of pricing changes, Simchi-Levi et al., (2008) suggests an increase in income. The refunds that businesses use in their cross-border commercial dealings are the subject of this lawsuit. 40% of rebates go unclaimed because customers don’t utilize them or their requests are denied, making it look like the firm is taking advantage of the free money, which is open knowledge. Because manufacturers make it difficult for customers to receive rebates promptly, they benefit significantly from personalized pricing.

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Only a small percentage of buyers ever redeem their refunds; therefore, the “one price fits all” notion is becoming obsolete. Rather than lowering wholesale costs, most manufacturers would gain from rebates. Sadly, many people are either too busy, lazy, or forgetful to take advantage of the available rebates. No one should expect a discount on their purchases if they don’t apply for it. On the other hand, the rebates are used by consumers who squandered their money or can’t afford to pay the total amount. Rebates are designed to entice customers to buy a product at a reduced price, then at a total price. Because the final cost of the goods varies on whether or not the buyer redeems the rebates and their capacity to pay the total price, this may be considered personalized pricing. 

Even though rebates have been cashed, producers may still prefer to offer discounts rather than lower wholesale prices for numerous reasons. As a result of manufacturer requirements, refunds totalling 40% are never claimed by end-users. Because of the incredible variety of market circumstances across different industries, numerous loyalty rebates are required and widely used by firms of all sizes. The rebates will continue to bring in additional revenues for producers since retailers find the paperwork and papers they need to fill out a time-consuming endeavour. 


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