Posted in Marketing and Strategy Terms, Total Reads: 463
Definition: Retail Buy Downs
Buy down refers to the method of giving certain incentives to the retailer in return for the promise that the retailer will pass on some of these benefits to the end customer. Buydowns can be passed on to the manufacturer of the product as well. This helps compensate the manufacturer for the initial costs of design and fabrication.
The low cost can thus be used to convert the market. This method has been especially successful in the energy conservation industry. Even though the program can be a little complex in the first stage, the long-term returns compensate for these troubles. These incentives must be complemented by robust marketing strategies for wide publicity in order to get good returns. Over the long term, the prices of the product are expected to remain low even after the validity of the financial incentives has expired.
However, the disadvantage is that it is difficult to verify that the benefits reach the intended target audience, because the retailers cannot control the verification of the end consumers very efficiently.