Rebates… not such a dirty word
Boardrooms across the country are rife with marketing challenges: dealing with competition not just from the store down the street but the world online, satiating the public’s constant thirst for what’s new and finding new ways to reach customers in their cluttered lives. Most significantly, today marketers are up against consumers who are hyperconscious of value.
Value is in, that’s for sure. The August 2009 Nielsen Consumer Insight Report said that 80% of Americans are stressed over the economy, with nearly 88% of them changing the way they shop through brand disloyalty, migration to private label, discount shopping or switching stores.
Because of this, a primary question has emerged: how do mid-tier and premium brands ensure that their market share is not eroded by low-price rivals? How can you maintain integrity while mollifying the value seeking consumers?
Some may recommend launching a fighter brand: an entry-level product to compete with your own premium line, but build market share. This move can take a defensive strategy and turn it into a long-term success, eliminating low-end competitors and diversifying product lines. However, companies struggling with product direction and lack of insight into the economic upswing may be cautious (and rightfully so) about launching a new line in an uncertain climate. Other experts suggest leveraging viral and guerilla marketing. This is a great long-term strategy, but do these tactics provide the ‘dollar out – two dollars in’ measurements that your Board is demanding? Do you go avant-garde with your advertising campaign and hope that it is the next YouTube sensation?
As these conversations are happening in strategy sessions across the Fortune 1000, some marketers and product managers are taking a look at a ‘throwback’ tactic to achieve the desired sales lift, retain and even increase market share, reduce price temporarily and maintain brand integrity.
The answer may surprise you. …r*%@tes, ahem, rebates are not such a dirty word in today’s marketing toolkit. This old-school marketing tactic and somewhat misconstrued practice not only has a new face, but also a new following. Research shows that currently 83 percent* of consumers are seeking product with rebates. Also, new rebate technology means today payments come quickly, rebates can be tracked online and via email, in some cases the redemption process is entirely paperless and consumers can have a choice in how to receive their rewards with options such as prepaid cards, gift cards, checks, direct deposit or merchandise.
Let’s walk through the rebate basics, before you jump ship, here.
Discount price and net price advertising
Rebate programs enable you to reduce the price of your product temporarily without permanent erosion, brand dilution or the consumer backlash as a result of increased prices. With rebates, you still maintain the basic value and perceived value of your product. You don’t have to start driving down the price, which could begin a competitive price matching war that could force you to lower prices again down the road. (Soon enough, the recession will be over but you just reduced your margin to 5% and killed your product category.)
Appeal to all consumers
Hypothetically, your product is worth $100 to a certain, albeit shrinking, percentage of consumers. But other folks that are seeking low-price versus brand loyalty will only pay a discounted rate for your product. Rebating is the only solution that enables you to appeal to all consumers at their self-dictated price point or “reservation” price, while maintaining some semblance of pre-recession margins.
The new face of rebating
If your organization has not looked at rebating or maybe stopped rebating years ago because it was an arduous consumer experience, (requiring what seemed like the cutting of endless UPC symbols, original receipts and your first born), you might want to take another look. Staples’s Easy Rebate program has been heralded by the likes of USA Today as changing the rebate landscape. If you have purchased a mobile phone from Verizon over the past few years you know that it has also had a hand in ushering rebates back into vogue. With online submission, receipt of funds in a week or two and even the choice of reward type, rebates have entered the next generation. In fact, for some marketers rebates have become a critical piece of their customer acquisition, communication and loyalty strategy. Today’s revamped rebate programs provide a terrific avenue for customer interaction, valuable demographic information and the ability to more accurately provide desired product presentation and promotions.
Customers are asking for them
Rebates enable customers to gain deeper discounts for a little extra work. They get that. And in today’s economy, they want that. In fact, in a recent survey 83% percent of consumers said they are actively seeking products with rebates.* Consumers will drive an extra mile, clip coupons and want rebates. (Especially because they expect “new” rebates that are easy to redeem.) Value-seeking is in.
Access to new marketing outlets
Social media is king – bloggers, Twitter, Facebook and more. The viral nature of discount shopping is contagious. Rebating provides you with extra access to this world. Social media is a staple of value seeking, coupon and promo code gathering mainstream. New offers spread like wildfire through thousands of sites, and to millions of consumers immediately.
At the end of the day, you may still want to launch your fighter brand, but rebating should be a tactic brought back to the table for consideration. As a short-term or recurring strategy it provides sales lift, added marketing benefits and can offer a greater brand experience to your consumers. Just think about it: this old-school tactic could be the new-school idea that saves your product line.
* 2009 Parago Survey
