Re: [Leica] Rebates

["Bryan Caldwell" <bcaldwell@softcom.net>]

John,

>>I HATE rebates!  If you want to spur sales, why don't you just reduce the
price?<<

Because if a manufacturer simply reduces the suggested list price (and
therefore the wholesale price it charges dealers who order new stock), it
will face a virtual mutiny from dealers who have stock for which they paid
the old (higher) price. By offering a rebate, the manufacturer effectively
lowers the price to the consumer without directly affecting the wholesale
price paid by dealers. Authorized dealers keep their profit margin, but,
when offset by the rebate, the consumer pays a lower price.

Consider the following. You are a widget dealer who sells widgets at
$1,000.00 for which you pay a wholesale cost to the widget manufacturer of
$500.00. Business is fairly good and you lay in a stock of quite a few
widgets. Without any advance warning to you, the manufaturer drops the
suggested list price to $800.00, making it impossible for you to sell yours
at $1,000.00. Furthermore, because the list price has dropped, the wholesale
price has dropped correspondingly, to $400.00. Now you have to sell your
remaining stock (for which you paid $500.00 each) at $800.00 - a reduced
profit margin. You're now competing with dealers who didn't have any in
stock and can now order widgets at $400.00 each.

By offering a rebate, the consumer feels like they're getting a better
dealer and the manufacturer is not pulling the rug out from under its loyal
dealers who have stocked up on equipment.

Apologies to those who thought they'd left all this behind in Econ 101.

Bryan


- ----- Original Message -----
From: "John Coan" <jcoan@alumni.duke.edu>
To: <leica-users@mejac.palo-alto.ca.us>
Sent: Wednesday, June 07, 2000 10:21 AM
Subject: Re: [Leica] Rebates


> Craig,
>
> Can I editorialize here for just a minute?
>
> OK, thanks.
>
>  It is such a hassle to 1. Find the rebate certificate -- often in a rack
in the
> front of the store like Best Buy. 2. Send your original sales receipt.
What if
> you need it in the future? 3. Often deface the package to cut out the UPC
> symbol.  4. Put all this in a envelope, spend postage money.  5.  Wait
forever.
> And if you didn't make a copy you have nothing to dispute not getting the
> rebate.
>
> I HATE rebates!  If you want to spur sales, why don't you just reduce the
> price?  Sure, I do them because I would be a fool not to.  But I still
resent
> having to jump through all these hoops to get a lower price when the
purpose of
> the price reduction is to move merchandise.
>
> John
>
> Craig Roberts wrote:
>
> > Dan wrote:  "...a nice way to get float on their money."
> >
> > True...but it may not be to Leitz's benefit.
> >
> > I'm the marketing manager at a high tech company which offers rebates to
> > buyers of certain products.  We are constantly receiving customer
complaints
> > about delayed rebates.  Why?  Because our rebate funds are dispersed by
a
> > third party...as they are in many companies -- Leitz included,
perhaps --
> > and that's the source of problems.  We have switched rebate handlers
three
> > times with similar results.  We'd handle the rebates ourselves, but the
> > processing is simply too unwieldy for an understaffed firm.  Maybe Leitz
is
> > in a similar situation.
> >
> > Craig
> > Boston
>