The theory behind Canon rebates..?

[davebell]

I haven't yet worked out why the rebate scheme, Canon or otherwise, exists.

Why not simply offer the discount in the shop? Why put customers throught the

hassle of having to apply for a rebate by post, which can take quite some time

(i've been lucky in this regard, 4 weeks and 2 weeks each time).

 

Is it because a certain percentage of people won't bother as they are rolling

in cash, or may forget? I've noticed on my occasional trips to the US that

the "mail in rebate" system is quite widely used, thankfully its not prevalent

in the UK (but then we're ripped off anyway...).

 

If anyone could enlighten me please let me know.

[steve torelli]

David,

 

I have to believe it's mostly a marketing ploy. No doubt some buyers will not apply for the rebates for various reasons,some will be turned down for not filing the paperwork correctly. At any rate,it will cost a company considerably less than a direct reduction in price. Good luck.

[beauh44]

Hi David, What Steve said. The companies that do rebates are banking on the fact that "X" percentage of the buyers of their products won't go through with the considerable hassle of keeping/locating their receipt, copying it, filling out the form perfectly (because if you don't, it's reason to decline the rebate), etc. And they're right because many just don't mess with it. Time is money and I've sat for hours screwing around with mostly puny ($20 bucks here, $15 bucks there) rebate forms that many times I never received because I didn't have the fortitude (or time) to raise enough hell to spend an hour on the phone to learn why they didn't condescend to send it to me.

 

And the advertising can get a bit deceptive too. For example, "Product X" - which usually costs say $150 - will be advertised in a sales flyer or newspaper for $90 and in big print it'll say "YOU SAVE $60!" but in the same advert at the very bottom, in teeny-tiny print it'll say "With $60 manufacturer's rebate".

 

So you go to the store, pay the original $150 anyway, go home and start scanning/copying the receipts (usually in triplicate), printing them, filling them out, mailing them in and then... you wait - usually months and months and many times never see the rebate.

 

Sure you could call that (not toll-free) number and sit on "Ignore" for 2 hours listening to bad Muzak, only to be told by someone who barely speaks English that you didn't hold your head just right while filling out the form and are thus ineligible for the rebate.

 

Or you just say "To hell with it!" and end up paying the "normal" $150 for it - which is precisely what the manufacturer is banking on because they just sold a boat load of "Product X" because it was able to legally advertise a much lower price - a price that most people never saw or received.

 

Another example of Refined Capitalism! ;-) Best wishes . . .

[morthcam]

I was going to answer, but there's not much to add to what Beau wrote.

[alec_myers]

I think there are more sophisticated and subtle reasons, to do with taxation and accounting practices. Reducing the price to the store changes factors like gross margin and gross sales values for both the manufacturer and the retailer. This way the value of sales to the store remains high, commissions remain high and so on, but the manufacturer gets the sales boost of lower prices. I'm not sure of the exact details, but I'm not a tax specialist or an accoutant.

 

I suspect most people actually do fill in the rebate forms, it's not tricky.

[pjmeade]

The 5D cashback ended on December 31st, what's the chance of getting one for a body bought on Jan 3rd?

[steve_dunn2]

<p>The main reason is, of course, that even for a high-value rebate like this one, a surprising number of consumers never bother to fill in the paperwork, or disqualify themselves by filling it in incorrectly or by returning it after the cutoff date, or never bother following up with the rebate company if the rebate hasn't arrived in a certain period of time. But there's another reason, tied to your question "Why not simply offer the discount in the shop?"</p>

 

<p>In Canada, and probably in many other jurisdictions as well, it's illegal for the manufacturer to set the selling price of a product. They can <em>recommend</em> a selling price, but it's up to retailers to decide whether they follow that recommendation. So if a manufacturer like Canon wants to put a product on sale, they can't do it directly. They could lower the price they charge to retailers, but there's no guarantee that retailers would lower the price they charge consumers. For small-value items like frozen TV dinners, the manufacturer often puts a coupon on the packaging, in a display in the supermarket aisle, or in an ad in the newspaper; for large-value items like consumer electronics, it's usually done via mail-in rebate.</p>

[gordon_kraeger1]

I have to agree with Alec, it's much more than a discount. We pay sales taxes on the original purchase price. This goes to the state, county, and city where we live. When we get our rebate, we have already paid the percentage sales tax (in my case, 7%) on the amount that's being rebated. If it was to give the consumer the benefit of the discount, why not do it up front?

[erictomenga]

I just got my $20 Canon rebate for a lens bought last November. My wife bought me a lens for the holidays that qualifies and if I buy a 2nd lens or flash I can double my rebate. So instead of $30 rebate, doubling would get me ~$100. So instead of a Tamron, Sigma or Tokina I'm considering a Canon for my next lens purchase a bit sooner than normal.

[jbq]

I agree with Alec's comments - rebates are probably counted as sales/marketing, not cost of sales, so that they fall under operating expenses and don't affect the gross margin. I'm not an acocuntant, though.

 

In addition, having rebates allows non-US companies to adapt their US prices along with the fluctuation of the exchange rates, without having to change the list price.

 

Finally, there's the definite truth that a $100 rebate coupon doesn't cost the company $100 because of the fraction of rebates that don't get sent.

[carbon_dragon]

The way rebates work is that they make them so hard to get and force the buyers to go through so many hoops, that a lot of people give up. I've heard some bad stories about the fullfillment company Canon is using to process the rebates -- things like just rejecting the rebate the first time and needing to be threatened before actually coming through. Since I have $740 in rebates coming, I hope those stories are exaggerated.

[J.W. Wall]

Among other things, the rebate schemes are one of many methods to create consumer excitement in the marketplace, thus stimulating more purchases (the mfrs. hope). (E.g., note the excitement at pnet on the Canon rebates.) If you feel you've been "ripped off," you can report it to your state attorney general or consumer affairs office. If enough people complain, they may actually do something about it. Companies run rebates because they actually do work to stimulate sales. If they didn't, the rebate offers wouldn't continue.

[duane_kucheran]

Rebates have been used to help move slow selling items and it's a fairly equitable way to compensate the consumer.

 

It occured to me that the rebate system where the customer gets the refund directly helps the small shop out by minimizing its exprenses. The shop has already paid for the goods from the manufacturer and held the goods in inventory, which is a cost. By having the customer apply for the rebate, the shop gets its price (hopefully fair) and doesn't have to go through the hoops, wait for the refund and have to account for it all. If the shop is moving a small quantity of a manufacturer's product, the overhead of a rebate bites into the profit and the shop has to think twice about whether it's worth the trouble.

 

It's not as convenient for the customer, but heck, it's not really about us, is it?

 

Cheers,

[mark u]

I think that consumer mail in rebates are an extremely inefficient way of offering discounts to consumers. Much easier would be to grant rebates or lower prices to retailers and leave competition to do its work. As OP commented, mail in rebates are relatively rare in Europe - partly because consumer law is much tougher and so the kind of behaviour of rebate companies such as Young America that handles Canon rebates in the US would not be tolerated, in the same way that stores that operate as the Brooklyn scam merchants do simply do not exist (any such behaviour would lead to prosecution and closure pretty fast).

[barry_jackson1]

This is from some information on Nikkons rebates

"Why does Nikon use rebates all the time? There seem to be two primary reasons: currency fluctuations and inventory promotion. Because both of these things are always in flux, Nikon's rebates tend to be renewed and tweaked every quarter (and sometimes more often)."

[marknagel]

Although I think the main reason is a marketing strategy. It allows the manufacture to hold your money for a period of time making money off it. It also allows companies to shift profits from one quarter to another. Example increase sales on slower Q3 and payout rebates on more profitable Q4. Lastly, it reduced returned merchandise, by cutting the UPC, it makes most sales final.

 

Mark

[len_kocurek]

It's simply a way to move merchandise. If the discount is given to the retailer it might not be passed on to the customer. Manufacterers have little if any say about the retail price or sales practices at the retail level. A rebate draws customers. In the mid 1970's when Detroit couldn't sell their cars they came up with the cash back in a check to the customers. It worked and we have been hooked on rebates since. There is nothing nefarious about the Canon rebate program. The documentation they make you provide is simply to prevent fraud and abuse.

[nammyboy]

I think Nigel hit it on the head.

 

It is the same logic as Jamba Juice offering a free smoothie with a $25 gift certificate purchase, or Subway selling their $25 GC's for $20. You pay them up front, they have cash in hand. They make interest off of it, and most people won't use up all the cards.

 

I have NEVER failed to receive a SINGLE rebate (from Canon or any other retailer). Just follow simple directions, yes? And I've never had to call some number either. I've received a $420 check last year from Canon, and I got an e-mail saying that my $700 check is in the mail this year.

 

~Nam

[mark u]

The Massachussets State Treasurer seems to think that Canon's rebate company has been breaking the law:

 

http://www.mass.gov/treasury/PressReleases/11705.htm

[bobatkins]

To be fair it's not <em>Canon's</em> rebate handler, it the handler for rebates from a whole bunch of comanies including HP, Best Buy, Canon and more.

<p>

Rebate schemes exist because they are better at generating profit than in-store discounts. If they weren't, there would be no mail-in rebate schemes.

<p>

The best idea I've seen so far was with a rebate on a laptop I bought. The rebate was $100. You could play the usual rebate game of submitting your paperwork, following up on the website and witing 8-10 weeks. Alternatively the rebate company had a special "rush process" where you submitted the rebate and got your check within 7 days. I think they charged $10 for the "rush" scheme. I took the $90 and got my money right away. I wasn't all that happy about it, but it sure beats waiting 3 months and then fighting with them about whether I'd submitted the right paperwork.

[robert_turner]

Peter- you have until January 13, 2007 to buy a 5d and receive the cashback rebate if you live in the US.

 

Good luck,

rt

[savas_kyprianides]

Then again, your time is worth a lot more than the $10.00, what with copying, filling out,

packing, stamping, getting it to the post office, making sure you don't forget to submit, so

and and so forth.

[William Michael]

>I haven't yet worked out why the rebate scheme, Canon or otherwise, exists. Why not simply offer the discount in the shop?<

 

Because it is not Canon`s retail shop in which to offer the discount.

 

Many of the answers have supplied valuable and perhaps useful [additional] information regarding rebate schemes as employed by multinational companies in the western world as a marketing strategy.

 

But Mr Dunn has answered the question asked:

 

There are no countries, [i know], that allow the Manufacturer or Wholesaler to SET retail prices: moreover in most capital environments [although the detail of legislation varies], it is illegal so to do and subject to large fines or imprisonment of the Company Directors.

 

Thus to legally give the equivalent of a `discount`, as such, to the consumer, many wholesalers or manufacturers employ a cash back or rebate system upon proof of purchase and conforming to the rules they stipulate.

 

Consumers have the right to avail themselves of such offers or not, there is no pressure to take up the offer.

 

I do not see any need for criticism of a mechanism offered in good faith: if for you, there is too much paper work to get a few hundred back then do not do it, but do not whinge either, no manufacturer is not OBLIGATED to offer the rebate initially.

 

WW

[bobatkins]

"I do not see any need for criticism of a mechanism offered in good faith"

 

Indeed, but I think that many consumers (not to mention consumer advocates and departments of consumer affairs) do NOT consider that these rebates are offered "in good faith". The companies who offer them must know that the redemption companies they use are engaging in what amounts to fraud. I don't think it's "in good faith" if the companies do everything in their power NOT to fill the rebate, sometimes simply denying valid rebates in the hope that the customer will not pursue the issue because it's too much trouble.

 

They seem to work on the principle of "the customer is always wrong" rather than the more traditional "the customer is always right".

 

Canon certainly isn't the worst or only offender, but they still really need to take a closer look at who they hire to do this job.

[mark u]

Earlier in the thread Bob mentioned being able to get an expedited rebate if he accepted a lower sum from the rebate company. I wonder whether the phone numbers used by the rebate companies aren't often revenue sharing ones - i.e. the rebate company collects a portion of your phone bill for holding you on the line for an hour before you are allowed to challenge the improper rebate denial. An insidious practice that has spread to other areas and ought to be prevented by law since it encourages poor service, in my view.