Are rebates effective incentives for product purchasing? What
percentage of buyers actually end up making a purchase because of a
rebate? How man rebates are actually submitted?
This solution looks only at the business-to-consumer segment. The PMA
report suggests that around $465 MM are spent on rebates to consumers.
Pharmaceutical companies spend that much on rebates on a single
product in dealing with managed care organizations.
Hello Pleasedontsink,
The impact of cash rebates on likelihood to purchase
75.4% More Likely To Buy
15.4% No Effect
9.1% Less Likely To Buy
Likelihood to Purchase by Promotion Type
Type of Promotion More likely to buy
Coupon for free products 98%
Money-off coupons 92%
Free gift with purchase 82.8%
Free sample 79.4%
Cash rebates 75.4%
Contests 42.5%
Sweepstakes 39.0%
PROMOTION MARKETING ASSOCIATION
Perceptions of Consumers about Promotions and the Economy
http://www.pmalink.org/research/CDPconsumer_F.asp
===========================================
A wealth of useful information is provided in the PMA Mail-in Rebate
Benchmarking Study from May 1, 2005
Download here:
http://www.pmalink.org/members/mailinrebatereport.pdf
Excerpt:
?Redemption rates averaged 21.1% when calculated as a percentage of total sales.
Trends:
?The most widely observed trend among respondents is an increase in
rebate size. Increases in sales response, number of competitors
offering rebates, and redemption rates were also observed.?
The majority of managers hold the opinion that:
?Increasing the size of a rebate increases sales and redemption rates.
Increasing effort requirements decreases sales and redemption rates.
Giving consumers more time to redeem increases redemption rates.?
Read the complete report here:
http://www.pmalink.org/members/mailinrebatereport.pdf
===========================================
Over $500 million in rebates go unfilled every year.
?Rebate redemption rates never hit 100 percent. They rates generally
range from 5 percent to 80 percent, depending on the value of the
rebate. While vendors have accelerated nearly every other aspect of
the purchasing process in recent years -- from overnight shipping to
24/7 instant chat support -- rebates are still stuck in the stone age
to discourage redemption.
This is hardly a secret in the business world. In fact, it's discussed
openly in the trade press. "Rebates are a good business plan only when
consumers fail to claim them," ARS analyst Gary Peterson recently told
The Wall Street Journal.?
Consumeraffairs.com
http://www.consumeraffairs.com/consumerism/rebate_madness01.html
===========================================
www.techbargains.com estimates that rebate redemption rates range
from 10 to 30 when payoff is $10 to $30. ?The rate falls far below 10
percent for smaller dollar amounts, according to the online resource,
which includes information on dozens of rebates offered by companies
including Apple, Sony, HP and Panasonic.?
Fort Wayne.com
http://www.fortwayne.com/mld/journalgazette/business/12505195.htm
===========================================
"One of the nails in the coffin for the "empowered" consumer came from
a study of rebate redemption rates.8 Rebates are particularly popular
promotional tools used by technology retailers?cell phone marketing is
a case in point?but they are also popular for packaged goods, where
they are the number two tool after coupons. Redemption rates vary, but
are generally low?less than 50% for big-ticket technology goods, and
as low as 2% for packaged goods. Conventional wisdom would suggest
that the redemption rate would increase as the dollar amount of the
rebate goes higher since the gains are greater. The rate should also
increase with the length of the redemption period, since the consumer
has more time to submit the paperwork. The study did not support this
conventional wisdom. The purchase rate increased, that is, more people
bought when the amount and length of the period increased. But the
redemption rate was largely not affected by the amount offered, and by
extending the time limit, redemption rates actually decreased. This
leads one to believe that when people are given plenty of time to do
something, it never gets done. Advice for companies: Offer big rebates
and give people a lot of time to redeem. You sell more, and it costs
less."
Why Do Marketers Do What They Do?
Date: Nov 5, 2004.
http://www.phptr.com/articles/article.asp?p=336261&seqNum=2&rl=1
===========================================
Additional information:
Download the dissertation ?Why Do We Buy but Fail to Redeem?
The Influence of Pre-Purchase, Post-Purchase, and Repeat-Purchase Factors
On Consumers? Subjective and Objective Probability of Redeeming Mail-in Rebates?
(51 pages)
http://catalyst.gsm.uci.edu/tools/dl_public.cat?year=2003&file_id=126&type=cal&name=Rebates-Silkjobtalkpaper.pdf
===========================================
Search terms used:
Rebates effectiveness consumer survey OR poll respondents OR responded
Rebate redemption rate
rebates trends 2004..2005
I hope the information provided is helpful!
Best regards,
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Effectiveness of Rebates