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Introduction
Cash rebates refer to refunds offered to customers who buy goods from retailers within a given period. The use of cash rebates manages the movement of goods within a store without adjusting the list price (Hill & Jones, 2007). The business can also retain the cash for a short period and gain interest. Moreover, cash rebates allow a business to gather valuable information about the market and its consumers. The use of cash rebates is a sound marketing strategy used to drive product sales, and can be effective for marketing products with high price tags.
Main body
Use of rebates is an ethical promotional strategy as long as consumers are aware of its existence. Consumers have to be aware that the product they purchase has a claimable cash rebate. If the rebate gets paid following the appropriate application procedures, then it is an ethical means of pushing product sales. It can only be termed as unethical if the procedure for claiming it remains undisclosed or if the customers do not get the rebate at all.
The use of cash rebates is a sound business strategy. Rebates reduce product cost to the consumer (Johnson, 2010). Therefore, it is an incentive to buy the product and can be more effective than offering a price cut. On the other hand, the business increases the product sales and company visibility. The business may also earn some interest before the rebate gets paid. This enables a business to break even and make some profit.
The fact that redemption of cash rebates has never hit 100% proves that consumers do not take the full benefits offered by cash rebates. The redemption of cash rebates ranges from 10-80%. The low redemption rates arise because some customer’s view redemption as a lengthy process. The mailing of the rebate form and the proof of purchase can be tedious to some consumers. In addition to that, the customer has to bear the cost of making copies of the purchase receipts. The long waiting period also discourages some consumers. Sometimes, it may take up to 6-8 months.
Use of cash rebates can be an effective tool for marketing products with enormous price tags. A company like Toyota can use cash rebates to push the sale of the company cars. Use of cash rebates has been effective in marketing automobiles (Hill & Jones, 2007). The fact that GM adopted the cash rebates strategy after dropping it earlier on indicates the importance of cash rebates in the automobiles industry.
Response to Other Discussion Posts
The point raised by Tarsem Chand that the use of cash rebates is not unethical is true. However, it is essential to add that consumers have not fully exploited the benefits offered by the cash rebates because of a number of reasons. For example, some consumers may forget about the rebate or fail to mail the rebate form as they view it as a “lengthy process”. As a result, customers may not decide to buy a product just because a cash rebate is available.
On the other hand, the point advanced by Anne Kurtz that the use of cash rebates is “an inexpensive marketing ploy” is misleading. The use of cash rebates it is not a game. The Federal Trade Commission has not raised an issue against the use of cash rebates. Use of the word ploy indicates that cash rebates are marketing gimmicks, thus unethical. However, this is not true because rebates have been in use for a long period.
References
Hill, C. W., & Jones, G. R. (2007). Strategic management: An intergrated approach. Stamford: Cengage learning.
Johnson, B. G. (2010). Government can learn cash flow techniques from small business entrepreneurs. Web.
Do you need this or any other assignment done for you from scratch?
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