Posted in Marketing and Strategy Terms, Total Reads: 1566
Definition: Cash Rebate
Cash rebate is an offer given to consumers for a cash discount, when they purchase a consumer good. Hence a cash rebate can be thought of as a discount coupon. Usually the rebate is offered by either the manufacturer of the product or the retailer. Cash rebate is a sales promotion strategy adopted by marketers to provide incentives in order to entice consumers into buying the product.
There are different types of cash rebates and they are as follows:
a. Instant cash rebate: In this case the rebate can be availed at the time of purchase itself. The discount amount to be paid is the difference of the original price and the rebate amount.
b. Credit card cash-back rebate: It is common for some credit cards to offer cash back on purchases charged to the card. The rebate amounts vary according to the terms of the card. The rebate amount may get credited automatically to the customer’s account or he can choose what he wants to do with the rebate balance. Depending on the terms of the card, the card holder can either redeem the rebate for gift cards and select merchandises or simply ask for the rebate amount cheque.
c. Mail-in cash rebate: The customer is required to pay the full price at the time of purchase. He then receives a claim form which needs to be filled and mailed to the manufacturer, along with a copy of the receipt. Once the manufacturer has processed the claim, the customer receives the rebate amount as a cheque. Mail-in rebates usually have a deadline which needs to be adhered in order to get the rebate.
d. Online cash rebate: This is similar to mail-in cash rebate where the customer pays the full price for the goods and later submits the claim, the difference being that the retailers process this rebate claim through their website. This process is void of additional forms and receipts, hence saving both time and money.
Rebates have become popular among marketers and retailers as it provides them with a database of the consumers through the information collected via the forms. Also, consumers are price sensitive. Any decrease in price followed by its increase has a negative effect on the consumer. Thus through rebates, the retailers offer benefits to the consumer by giving temporary discounts and also maintaining the current price point at the same time.