Business 740 Discussion Reply 1- The Great Rebate Runaround

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Texas Tech University *

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MISC

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Marketing

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Feb 20, 2024

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The Great Rebate Runaround Reply Thank you for your analysis of the case study regarding the utilization of rebate strategies by organizations. Your analysis provides an intriguing examination of the utilization of rebates versus discounted wholesale pricing practices and gives a reasonable explanation for the consideration of rebate elimination by Best Buy. As you discussed regarding the utilization of rebates over discounted wholesale pricing, the discounts offered through rebates do not equate to the discounting of wholesale prices. As stated in the text by Simchi-Levi et al. (2021), 40% of rebates on average are never redeemed due to various factors including laziness, forgetfulness, and busyness on the part of the consumer. Additionally, even with the 100% redemption of rebates prompted in the case, the manufacturer’s decision to utilize rebates will likely remain the same. Regardless of rebate redemption, the reasoning behind this preference is primarily a response to the attractiveness rebates can possess. Muzzafar et al. (2018) determined that the profit return will be identical when the retail order quantity is equal for both the wholesale pricing and rebate methods. However, the rebates offered to consumers present opportunities to increase brand value and attract consumers that do not occur when utilizing wholesale pricing (Elberg et al., 2019). As a result, rebates remain the preferred method for manufacturers regardless of redemption percentage to their ability to attract consumers and increase profits. This ability is due in part to the fact that anything less than 100% redemption of rebates results in extra profit for organizations (Simchi-Levi et al., 2021).

Reference Elberg, A., Gardete, P.M., Macera, R., & Noton, C. (2019). Dynamic effects of price promotions: Field evidence, consumer search, and supply-side implications. Quantitative Marketing and Economics , 17 , 1-58. https://doi-org.ezproxy.liberty.edu/10.1007/s11129- 018-9205-5 Muzaffar, A., Malik, M.N., & Rashid, A. (2018). Rebate mechanism for the manufacturer in two-level supply chains. Asia Pacific Management Review , 23 (4), 301-309. https://doi.org/10.1016/j.apmrv.2018.01.001 Simchi-Levi, D., Kaminsky, P., & Semichi-Levi, E. (2021). Designing and managing the supply chain: Concepts, strategies and case studies (4 th Edition). Richard D. Irwin, Inc.

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Business 740 Discussion Reply 1- The Great Rebate Runaround

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