Answer Man: Rebates ususally offer value

News-DemocratJune 26, 2013 

Q. How do stores like Menards benefit from all the rebates it offers? I mean, there has to be lots of bookkeeping and mailing expense. I personally won't buy something if it has a rebate. If I'm going to save a dollar, I want it right then, not six to nine weeks later.

-- T.N., of O'Fallon

A. Filling out rebate forms can be a real pain in the patootie, but you can miss out on some great bargains if you always want instant gratification.

Let me give you a f'rinstance: For several years I took advantage of a great computer software piggyback offer: If you bought even the most basic TurboTax, you could get the latest version of Norton antivirus free.

Sure, you had to clip the UPC code off the box, save the mile-long cash register receipt, mail in not one, but two rebates and wait. But it was good for $50 or $60 each year and I needed the TurboTax and the virus protection anyway.

This year I didn't see Norton offering the rebate so I bought McAfee, which -- you guessed it -- was offering a rebate without buying anything else. I'm still waiting, but that $50 gift card will be nice when it finally arrives.

So, yes, I'm kind of a rebate junkie. But, like you, I have wondered why they don't save everyone a lot of time, trouble and money and just mark down the price on the shelf.

Turns out there's method to their madness, according to Coresco, a North Carolina marketing firm that, among other services, has helped companies offer these "fulfillment programs" for nearly 35 years. With a clientele that has included Bacardi, Duracell and Michelin, its reasoning for such promotions apparently makes plenty of sense (and dollars) to prospective firms.

So why not just slash the cost? Because, Coresco argues, such yo-yo pricing ultimately may drive customers away. If you cut a price for a promotion only to raise it two weeks later, savvy shoppers may be less inclined to buy after the sale, thinking that it may have been overpriced in the first place. As a result, your products may gather dust on the shelf.

I'm certainly like that. For example, I know Schnucks periodically offers Yoplait yogurt for 50 cents a cup. I'll stock up so I can make it to the next sale without having to pay 70 or 80 cents in between.

Rebates get around this negative response because the shelf price remains the same, Coresco contends. Rebate lovers like me will, despite the trouble, take advantage of a limited-time, mail-in offer while rebate haters like you won't feel you're being soaked by the regular price.

But there are other reasons why rebates can be profitable, some of which you may not have thought of:

* Rebates gather information on customers so a company can understand who they are, where they live and what they're buying. By analyzing this data, companies can design better marketing campaigns for current customers and dream up new product lines for prospective buyers.

* By compiling a customer list, they can market directly to people have purchased their products in the past -- and perhaps sell those lists to nonrival groups or companies.

* Because you do have to wait a month or two, money to pay the rebates can be stashed in the bank at interest before it is mailed back to you. It may not sound like much but multiply it by hundreds or thousands of rebates and you're talking real money.

* Rebates may spur customer traffic and sales. Even if I were going to Menards for a specific rebate, I might pick up several other items that I need while I'm there, adding to their bottom line. Stores count on impulse buying, which is why they're laid out as they are.

* And, yes, it's no secret that companies are counting on people like me to excitedly buy a product for the rebate, only to miss the deadline, throw away the packaging, lose the sales slip, etc.

"A fair percentage of customers who purchase an item with a rebate do not follow through on redeeming their rebate," Coresco notes. "Consequently, the company offering the rebate is able to retain the unclaimed money."

At those times, I almost want to swear off rebates.

Almost.

Today's trivia

Ironically, who reportedly was the only cast member of "Hair" who refused to disrobe in 1968?

Answer to Wednesday's trivia: Hall of Fame DJ Kemal "Casey" Kasem always sounded so cool and smooth bringing America the hits for 30 years. But on Sept. 14, 1985, he went on a minute-long, profanity-laced tirade while recording that week's "American Top 40" show. A listener had requested Henry Gross' "Shannon" -- a song about the death of Beach Boy Carl Wilson's dog -- be played to honor his own pet. But Kasem, a perfectionist in the studio, didn't want to go from an up-tempo Pointers Sisters tune into a dirge for a dead pooch, so he went into a now-infamous verbal explosion. It wasn't aired at the time, but the outtakes now have been requested more than a half-million times on YouTube. (Note: Be sure youngsters and other sensitive listeners are well out of earshot if you play it.)

Send your questions to Roger Schlueter, Belleville News-Democrat, 120 S. Illinois St., P.O. Box 427, Belleville, IL 62222-0427 or rschlueter@bnd.com or call 239-2465.

Belleville News-Democrat is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service