Rewrite Case Study
Discipline: Business Studies
Type of Paper: Discussion Essay
Academic Level: High school
Paper Format: APA
Please rewrite case study in your own words and add 4 different sources in APA (2017-2022) format with Doi format and 1 biblical source... only keep Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021. as a source: The Great Rebate Runaround Case Study (Simchi-Levi et al., 2021).
The Great Rebate Runaround Case Study
Over 400 million rebates are offered every year with a face value around $6 million. Companies use rebates to maintain or increase their competitive advantage for both new and current products. According to Staples, it and its vendors pay $3.5 million in rebates on a weekly basis. This information explains why manufacturers offer rebates instead of decreasing wholesale prices and explains if offering rebates can be viewed as customized pricing (Simichi-Levi, 2021). Rebates versus Wholesale Prices: Is it Customized Pricing Approximately 40% of rebates are never redeemed by consumers because many consumers are too busy, forgetful or lazy to apply for the rebates or to remember to use them
(Elberg et al., 2019). This can harm the manufacturer because most manufacturers could benefit from using rebates instead of decreasing the wholesale price. Furthermore, some consumers are frivolous or unable to pay full price, so they would be more willing to redeem rebates (SimichiLevi, 2021). Rebates attract consumers with the promotion of a discounted price. The bottomline price of a product depends on whether the consumer redeems the rebates and their ability to pay full price. As a result, rebates can be considered customized pricing (David et al., 2017). Manufacturers Offering Rebates Rather than Decrease Wholesale Prices Rebates are used by manufacturers as a discount tool to attract consumers and as price discrimination. While only a portion of rebates are redeemed, manufacturers might use them instead of decreasing wholesaler price because rebates attract consumers while a decrease in wholesaler price often does not (Elberg et al., 2019). In addition, rebates can have an impact on profits and costs. The use of rebates and promotions helps attract consumers which can help increase the manufacturers sales and market share. As a result, manufacturers see an increase in
cash flows when consumers pay the full price for products. Redeemed rebates are recorded as an expense on the company’s income statement. Overall, rebates can be more profitable and can attract more consumers than decreasing the wholesale price (Akgun & Chioveanu, 2018). Best Buy Considers Eliminating Rebates While manufacturers often use rebates as a discount tool to attract consumers, it is a tedious and costly process (Agrawal et al., 2016). Best Buy, in comparison to Sony and Panasonic, is considering eliminating rebates because of the process costs and consumer complaints. Over the years, consumer complaints have increased because of rejections, delayed applications, and the fulfillment service companies hired to process the rebates. The process
costs are both tedious and costly. When compared to the cost and time of wholesale price, the wholesaler price often matches or beats the rebate price of other retailers and competitors without the process costs and complaints. As a result, Best Buy is considering eliminating rebates to save costs and decrease complaints as well as to protect their reputation and brand image from
the consumer complaints (Simichi-Levi, 2021).
Rebates help companies increase its competitive advantage by attracting consumers with the discounted price. While it does attract consumers and increase cash flows for companies, it does have additional costs and time to process the rebates as well as can cause some consumer frustration due to
rejections and delayed applications. As a result, some companies, such as Best
Buy, consider eliminating rebates and focusing on decreasing wholesaler price, as the wholesaler price, at times, matches or beats the rebate price.