The Consumer Psychology Of Mail-In Rebates

Purpose - Mail-in rebates are an oft used, but poorly understood mechanism to promote the purchase of a product. In particular, prior research suggests that a significant percentage of consumers who purchase a product intending to redeem an accompanying rebate, fail to do so - a phenomenon known as "slippage." To date, however, there has been very little research designed to understand why this takes place. The authors here aim to propose that the presence of a rebate provides a consumer with the means to justify a preferred course of action. Specifically, when considering the purchase of a desired product that carries a rebate, consumers tend to generate scenarios of successful rebate redemption and fail to adequately account for things that can go wrong in the redemption process. As a result, they systematically overestimate their likelihood of rebate redemption.Design/methodology/approach - The authors conduct three laboratory experiments to test the proposed framework.Findings - Study 1 shows that consumers overestimate their redemption likelihood because they tend to generate scenarios of successful rebate redemption and fail to adequately account for things that can go wrong in the redemption process. In studies 2 and 3, it is found that this effect is moderated by the valence and strength of one's motivation to purchase the promoted product.Originality/value - The authors propose a new psychological account to explain consumer responses to rebate offers, and in particular study the role of motivation and elaboration. The results suggest that managers could use rebates in situations where customers need a reason to purchase, and that rebates for hedonic products are best delivered at the point-of-purchase.