The Great Rebate Runaround

Paper, Order, or Assignment Requirements

Each student is expected to read the assigned cases and produce a two-to-three page analysis, synthesis, and evaluation of each case based on instructor assigned questions. These cases will be “typed” and double spaced. Students will use the format style in the APA Publication Manual of the American Psychological Association, Sixth Edition. Sentences must have two spaces between them. ALL case papers must have three sources that are peered reviewed. Your book is a source so please use it. Wikipedia is not a credible source so do not use it. All case papers must have references.

Please read “The Great Rebate Runaround” case in your textbook and answer the following questions:

1. This case describes one reason manufacturers might want to offer rebates rather than decrease wholesale price. Explain why this can be viewed as an example of customized pricing.
2. Even if all rebates were redeemed, why might manufacturers still want to offer rebates rather than decrease wholesale prices?
3. Why do you suppose that Best Buy, rather than one of Best Buy’s big suppliers such as Sony or Panasonic, is considering eliminating rebates?

Solution

The Great Rebate Runaround

Case Study 3

1. This case describes one reason manufacturers might want to offer rebates rather than decrease wholesale price. Explain why this can be viewed as an example of customized pricing.

One of the main goals of customized pricing is to maximize profits and move inventory. In the case study, several manufactures used customized prizing by offering the original price with a mail in rebate knowing that a significant percentage of those customers would never go through the hassle of submitting the required documents to collect on the deal. By building in an extra step or barrier to receive the discount, the manufacture achieved customized pricing by targeting people that will not submit the rebate for one reason or another.

• Even if all rebates were redeemed, why might manufacturers still want to offer rebates rather than decrease wholesale prices?

Even if all rebates were claimed, it would essentially be asking the question “Why would a company want to have a sale?”. A rebate is a sale if it is claimed. Companies have sales/rebates for several reasons including but not limited to: depleting excess inventory, moving soon to be obsolete/out dated items, getting consumers to try an item, and finally to make a profit. A company or manufacture won’t make money on a product that stays on the store’s shelf. So, a 1% profit if all rebates are claimed is still than nothing.

• Why do you suppose that Best Buy, rather than one of Best Buy’s big suppliers such as Sony or Panasonic, is considering eliminating rebates?

A surefire way to lose customers is to frustrate or upset them. Mail in rebates are great at making a quick dollar by capitalizing on a lazy customer, but it puts the manufacture and store in an unfavorable light by making people jump through hoops to get a deal. Company’s like Best buy, Circuit City, and Staples don’t get to take direct advantage of the profits of the mail in rebate, so to keep customer’s happy and profitable, it is in the best interest of those companies to drop what makes them unhappy and unprofitable. The suppliers will have less incentive to drop the mail in rebate, because they have the most to gain from this process and do not have to deal with the customers directly.