Rebate management systems: Refunds or rebates are a common way of promotion employed by companies to market their goods and services. In contrast to coupons and other discounting techniques, rebates pay a customer back for a percentage of the purchase price after the sale rather than at the time of the transaction. Rebates encourage consumers to buy a certain product by giving them cash back on the sales price. Rebating is a relatively new form of promotion that developed from the marketing strategy of giving out coupons.
Rebate management systems were initially made available by manufacturers of items for grocery shops, and after that by producers of non-food items. Manufacturers of small and large products, home goods, and wine and beer, as well as automakers, the wine and liquor industry, and other sectors of the computer industry, include the manufacturers using rebates.
These businesses offer a wide range of cash rebates to their consumers; some rebates are less than $1, while others on “big ticket” products like cars have reached several thousand dollars. The amount of the rebate is determined by the basic retail price, the type of product being marketed, and the volume of goods back ordered in the manufacturing pipeline.
Workings Of Rebate Management System
According to Susan J. Samtur in Cashing in at the Checkout, the manufacturer must first offer a rebate to anyone who purchases their goods; normally, the offer has a six- to the eight-month expiration date. This is the first stage in the rebate process. The customer then completes a form supplied by the manufacturer and mails it—along with any additional materials the manufacturer may request, such as a cash-register receipt or the Universal Product Code (UPC) snipped from the packaging—to the address stated on the form.
The rebate form and any associated “proof of purchase” items are typically sent to one of the numerous sizable clearinghouses that the manufacturer has contracted to handle these transactions, such as the Young America Corporation in Minnesota or the Nielsen Clearing House in Texas, rather than the manufacturer.
After the buyer mails the necessary paperwork to the clearinghouse, which typically takes four to eight weeks, the clearinghouse processes the form and gives the buyer a check in the manufacturer’s name. Companies use a variety of methods to attract clients to fill out their rebate forms. Many manufacturers give a pad of tear-off rebate forms to the retailers who carry their goods; however, some simply print the form on the product’s packaging or a tag attached to its packaging.
Companies may also use home mailers, advertisements in newspapers and magazines, advertisements in the numerous refunders’ newsletters created by consumers to take advantage of these deals, as well as advertisements to announce the rebate offer and distribute the forms. Additionally, businesses typically advertise their rebate deals on radio and television. Several websites on the Internet also connect users to rebate offers. Rebate management software
The Advantages And Disadvantages Of Rebates
Most consumers find rebates to be quite appealing since they offer partial, tax-free cash compensation for their purchases (The Internal Revenue Service does not believe rebates to be income; rather, it considers rebates as a decrease in the cost paid for the product.
Rebating also has many benefits for manufacturers:
It encourages potential customers to try their products, increases company sales, and visibility, solves the issue of excess inventory, and piques the interest of retailers, who frequently assist in promoting the offer and increase the shelf space allotted to the manufacturer’s products accordingly. Therefore, rebate programs can help a corporation gain more clout with retailers, build long-term consumer brand loyalty, and encourage repeat business.
In reality, a study by United Marketing Services (UMS) concluded that rebates are a successful strategy for raising consumer awareness of a product. Customer data on rebate forms can also be used to target upcoming promotions. However, as the use of refunds has grown, several widespread issues have surfaced. For instance, several businesses have had issues honoring their rebate offers, primarily as a result of being unable to meet demand.
Some businesses provide rebates knowing that few customers will bother to take advantage of them. According to Roberta Furger in PC World, “most corporations are anticipating that even though rebates will persuade consumers to buy their items, most people will never actually get around to dealing with all the rigmarole required to redeem them.” These businesses badly manage their rebate processing since they don’t account for the interest in a particular offer, which causes lengthy delays in the transfer of cash to customers.
Some customers now tend to see rebate offers as a sleazy marketing strategy due to the frequent errors and delays in completing rebate submissions. Fewer customers will, therefore, base their purchasing choices on the possibility of reimbursement.
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Experts point out that sending all required paperwork, keeping copies of all forms and receipts, checking the status of past-due rebates with the company, and reporting any issues to the Federal Trade Commission. The Better Business bureaus or the state attorney general’s office can all help consumers keep increasing their chances of receiving rebates that are due. Finally, experts caution shoppers against ever making a purchase solely for the rebate.