Why Do Companies Use Mail In Rebates?

C

Corso482

Why not just give you the savings up front? Is it because they're hoping a certain % of people simply won't request their rebates? But even if that's the case, is the hassle of dealing with the rebates worth the savings? I don't get it. Can someone explain this little mystery to me?
 
I'm guessing a very large percentage of people never bother to request the rebate, especially the small rebates. I'm sure it adds up to big bucks for the companies. The "discount" increases sales, but that discount is rarely claimed.


Snake
 
I just finished a marketing course and only around 20% of people actually mail in for rebates. Its the oldest sales promotion trick in the book.

the amount given back in rebates is far less than the increase in sales it brings.
 
I think it's also because then they would have to deal with the retailers and suppliers selling product for a lower cost than that which they paid for the items they already have in stock. This way, they can alot money to a rebate program rather than reimbursing suppliers and retailers, which can get nightmarish.
 
I'd say customer laziness is the major reason. they also get some time value - they book the revenue now and don't have to take the charge for a few months or quarters...

with bigger items (e.g., "cash back" on autos) - maybe the dealers require refund vs. reduction in price (commissions, financing fees and interest based on sale price, etc.)? or is it just to inflate the revenue numbers?
 
I also have sent in rebates that never came back to me. They say allow 6 - 10 weeks, by that time you may have forgotten about it. Or contacted them to be told "the check is in the mail" so many times that it isn't worth screwing around with for a $50.00 rebate.
Chuck.
 
worked for a big company in accounting dept.
on average 89% never turned in rebates.
example:

when you buy cell phone with $100 rebate, 100 bucks applied to company revenues. It makes REVENUES and earnings much higher (talking about fundamentals) and it makes big difference on financial statement. This way it is possible artificially and totally legal bust the stock prices because most of the people cannot read financial statements.
 
To get you buy products. Many people nver mail them, and many companies "lose" them.

Also their "gross sales" figures look better even when they are honest about the rebate.

Big corporate stock holders like to show strong sales numbers
 
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