Wednesday, September 1, 2010

Mail in Rebate!

Am back in the US,after two hectic months in saudi arabia,which were suppose to be vacation,but i had so much paper work i only managed to finish two days before i flew back to NC!

so,ive been waiting for a long time to buy my self a computer,and ive been wondering which one to buy and how much i should put in it,anyways,i ended up buying an iMac 27" running a i7 Quadcore processor,pretty amazing machine i must say.

but my post today is not about that,its about somthing that i noticed in the US that i dont think i ever witnessed anywhere else in the world,at least not in any country ive been into in my life,and ive been in around 10+ countries so far.

its the return/rebate/exchange policies that corporates in the US use,let me explain how.

One very Big chain of whole Sale super markets,that have almost what every household need from groceries,electronics,furniture,and some other things like hardwares and sport goods, has a no Question asked Return policy on any of its items,with two exceptions:
-Electronics,they have a 90 days return policy,
-Underwears,which cannot be returned for hygiene reasons,which makes total sense.
anything else in the store,if u bought it,and didnt like it,return it and get a full cash refund.
what i dont understand is,every return item,if used,is not resale-able,which makes me wonder,where is profit in that!!
i recently bought a 42" LCD TV,and after i got it home,i realized that the place that we wanted to put it in,didnt have enough space to put it there and we were forced to buy a smaller one,so we ended up buying a 37" instead.
upon returning the TV,as i said,they returned it without a single Question except the Reason for return,though i admit the guy gave me that look when i told him the TV is too big it didnt fit in my living room,but he did return it.
however,when he returned it,he put a sticker on the box that said,not for Resale.

another incident,I personally know a guy,who bought a shoe in 2006 from another store,and every time the shoe gets worn out,he returns it and they give him a brand new one in exchange for it, in the name of "100% customer Satisfaction Guarantee!!",this very same person,who is now a loyal customer to this store,bought his little son a shoe from there,and everytime the kid grows up,he exchanges the shoe with a bigger size.

Does that make any sense to you? if it does,please explain it to me,cos i dont get it!! how is that making any profit for them,i dont Geddit!

and the final thing that doesnt make sense to me is the mail in Rebate,which is somthing that doesnt exist in saudi arabia,and it simply goes like this,
in a Store like the Apple Store,if u were a Student, upon showing your ID,u are eligible for multiple educational discounts and offers,one of them is a Free iPod Touch on every Mac purchase.
so if you bought an iMac/Macbook,you qualify to get an iPod for free After mail in rebate,to get the mail in rebate,you actually buy the iPod and pay for it at the store,then u submit a rebate request,which gets ur money back in a form of a check in around 30 days,which u can either Cash it from the bank,or simply deposit it in your account.

in wikipedia,it mentions what benefit Mail in Rebate has over instant rebate,which is the discount you get while u shop,not after u submit ur rebate request,here is what i found,which i must admit,is very subtle idea.

-The information given in the rebate form, such as name, address, method of payment, can be used for data mining studies of consumer behavior.[10]
The information can be used as evidence of a pre-existing business relationship for marketing purposes, such as do not call lists.
-Customers tend to notice price increases and react negatively. Rebates offer retailers the benefit of giving customers a temporary discount on an item, to stimulate sales, while allowing it to maintain its current price point. This method avoids the negative backlash that could be perceived with a price being lowered and then raised later.[11]

-Rebates also allow companies to "price protect" certain product lines by being selective in which models or brands to be discounted. This allows retailers and manufacturers to move some product at lower cost while maintaining prices of successful models. A straight price reduction on some models would have a domino effect on all products in a line.[12]

-During the turnaround time, the company can earn interest on the money.
If the turnaround time crosses into the next fiscal year or quarter, a rebate offer can inflate sales in the current period, and not have to be accounted for until the next period and then it could be attributed as a cost reducing sales or expense for the next period giving companies an accounting advantage with their Wall Street projections.

-Extended warranties and other price-dependent factors always use the initial purchase price, not the price after the rebate. This is normally because if the company has to refund the customer the "replacement value", it would be the before rebate "in-store" price.

-Once the UPC has been removed from the box, retailers can refuse to accept a return of the item.
Not all buyers will meet the criteria to receive the rebate. Companies often require the original UPC barcode, receipt, and additional information, which a buyer may forget to include when redeeming the rebate. Companies almost always add other caveats to the rebate as well, such as the redemption having to be postmarked by a certain date. It works in the company's favor if buyers do not act quickly to redeem. However, a University of Florida study notes that shorter redemption periods actually increase the redemption rate in the consumer's favor because it gives them less time for procrastination to set in.[13]

-New companies that want to make a break into a market can offer substantial rebate savings on their new product as a means of capturing a customer's attention. Zeus Kerravala, vice president at the Yankee Group, has said "For companies that haven't been in a particular market, the rebate that essentially refunds the customer's money is a great way to get people to pay attention to them, This is especially true in consumer electronics, where brand name does matter. It's a good way to get customers to take a chance on a new brand."

.....Amazing,isnt it?
its really amazing how big marketing ideas that are made behind simple plans like these,one might think what difference does it make if they send me a check,over giving me the discount immediately,well,now u know! five minutes ago,i didnt know them!

ill end this with one incident that happened with my wife yesterday,we were at Dairy Queen,which is a Canadian American Fast food chain based in IL that is growing around in North Carolina,my wife ordered a cheese burger combo meal,and i ordered something similar,
we got our food,and after we started eating,my wife felt like she want to have fried shrimps basket,so she went and ordered it and came back.

the waiter came with the order,and after he placed it on the table,he asked my wife,
Waiter : "ma'am,was this what u really wanted,but u didnt know when u ordered?"
wifey: "Yes,but i only felt that i am craving it after i started eating the cheese burger"
Waiter: "thats ok,allow me refund you on the cheese burger meal"
Wife: "What? why! i ordered it and i already took a bite from it"
waiter: "yes i understand,but we dont like you to pay for somthing u didnt really want in the first place,so go ahead,u can have it all that you want,and ill put it up in a box for you so u can take it home and eat it later,but i will also refund you for its price in full"
Wife: "ok,if you insist"
Waiter: " i do insist =)"

and he DID come back with a full refund.
i admit,we really like Dairy Queen because we think they are the best fast food resturant around us in terms of hygiene,and quality of food provided,but what happend yesterday made my opinion become alot more positive than it already is.

my question is,if we took albaik,in saudi arabia,which is THE best fastfood resturant in Hejaz Area,would they ever do this? i dont think so!

such incidents that i mentioned above,make me wonder how do businesses like those mentioned make money when it seem like they are paying back a huge amount of their sales? i dont know how,but its definitly one of the most intresting marketting techniques ive yet to see.


Chiara said...

Interesting! I grew up with no questions asked returns. Most use this responsibly, though some take advantage, eg. use a video recorder for vacation and return it; wear an expensive dress to a special occasion and return it; etc. like your example of the pairs of shoes (though usually there is a halt to returns after the 2nd or 3rd time on the same item).

My SIL came to visit one year in winter (Feb) and as soon as she arrived the hub took her to buy winter boots from a major department store. She learned a few days later from Moroccan immigrant friends that she could return them even though they had been worn, if they appeared faulty (normally shoes that have been worn outside--you can wear them inside to make sure they fit--cannot be returned). Some how these brand new boots, made for Canadian winter, cracked at the toe/sole. My SIL went with the friends, returned them, got the money, and made other purchases with it.

We found out in the car driving somewhere, and the hub was upset that she had exchanged them without getting a new pair of boots, because he was worried about snow. She said she had been here days and no snow, and she had used the money to buy her mother sandals as a gift. So, not much he could say to that, except, it could still snow.

Of course, major snow storm a few days later, she and I trying to return home from downtown where we had been caught by the storm (me in boots because I am not a fool in February), ie she and I walking in snow about 3 inches (7-8 cm) deep; tried a cab--it couldn't get up the mountain, and the psychiatric case (literally) driving was a wreck; took public transit; at the transfer spot the next bus was never coming, others said they had been waiting for one for an hour; she didn't know to wiggle her toes and stamp her feet (now in little shoes), which I told her.

It was best to walk the usual 15 minute walk, which turned into more of a forced march against the wind, with me holding her up as she slid around in her shoes, especially given her lack of experience walking in snow (there is a technique).

Her feet felt "frozen" (actually just numb with cold, but unpleasant and not healthy). I had to tell her not to put them on the heating vent (burns likely cause can't feel the heat), to rub them and relax, and I gave her tea to warm up, then reassured her after she got the characteristic feeling of needles in her feet, as they "thawed". Did I say anything about the returned boots--nah, not that stupid an inlaw! :)

The short answer to one of your questions is that the cost of the returns policy is factored in to the price. We all pay for the privilege, and some of us pay for those who abuse the policy.

Often people don't fill in a rebate in time or there is another problem so the company doesn't pay out as much as it seems. Same with gift certificates (many go unredeemed or not fully redeemed) which also usually bring the person into the store, and result in the person spending more than the gift certificate, and making up the difference, or else spending less and forfeiting the rest of it.

Fast food chains (DQ is American BTW) count on high volume and turn over, and repeat local customers, so better to have the policy you describe.

Major retailers aren't fools either! :)

Susanne said...

Enjoyed your post. I love the Blizzards at Dairy Queen though I've not had one in a few years now. Maybe I'll have to go now that you reminded me of DQ! ;)

Anonymous said...

in short..
for me:
Business = ART + MORALS
i'm sad to admit we lack BOTH!

i loved all the info provided in this post! thanks for that.

btw, welcome back! :)

Dentographer said...

thanks Chiara,i just wonder how winter really is in your part of the world.
Susanna,i guess the blizzards are worth the drive arent they :p
ablaj,hala o 3'ala =)

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