solution

An eye for a bargain

A study of 294 consumers was undertaken to determine the correlates of ‘rebate proneness’: in other words, the characteristics of consumers who respond favourably to direct mail promotions that offer a discount on the normal purchase price. The predictor variables were four factors related to household shopping attitudes and behaviour and selected demographic characteristics (gender, age and income). The dependent variable was the extent to which participants were predisposed to take up the offer of a rebate, of which three levels were identified. Participants who reported no purchases triggered by a rebate during the past 12 months were classified as non-users, those who reported one or two such purchases were light users and those with more than two purchases were frequent users of discounts. Multiple discriminant analysis was used to analyse the data. Two primary findings emerged. First, consumers’ perception of the effort/value relationship was the most effective variable in discriminating among frequent users, light users and non-users of rebate offers. Clearly, ‘rebate-prone’ consumers associate less effort with fulfilling the requirements of the rebated purchase, and are willing to accept a relatively smaller refund than other customers. Second, consumers who were aware of the regular prices of products, so that they recognise bargains, are more likely than others to respond to rebate offers. These findings were used by Dell (www.dell.com) to offer cash rebates on its notebook computers. The company felt that this would encourage rebate sensitive customers to choose Dell notebooks.