Use Them or Lose Them: Rebates Key to Driving Tech Sales

PORT WASHINGTON, NY -- Dec. 27, 2004 -- The use of rebates is at an all-time high, especially when it comes to computer and consumer electronics purchases, finds The NPD Group’s recent report, Rebates: A Consumer Perspective.

During the six months prior to the November survey, almost a third of consumers surveyed (32 percent) purchased a technology product that offered a rebate. A closer look at those consumers’ responses shows more than 25 percent of computer hardware product purchases during the six-month period included a rebate and 8.5 percent of respondents used a rebate to buy a consumer electronics product.

“Rebates are here to stay,” said Stephen Baker, director of industry analysis for The NPD Group. “Unquestionably, the successful results of rebates on the computer side of the market have begun to factor into the market development strategies in the emerging CE categories. While tube TVs have a fairly low incidence of rebates (less than 10 percent), advanced technology televisions and products like DVD recorders and digital cameras show much higher propensity to be sold with a rebate. Properly applied, rebates turn out to be a pretty good deal for all involved - manufacturers, retailers and consumers.”

The clear benefit of rebates in consumers’ minds is the price reduction offered. More than half of those surveyed said rebates “made the product more affordable than expected.” Rebates also spurred consumers to buy products sooner than they expected (21 percent), to buy more expensive products than they would have without a rebate offer (17 percent) and to purchase brands they would not have without a rebate offer (9 percent).

While rebates are very popular, the NPD study indicates the redemption process is still a source of frustration for many consumers. The most commonly cited reason for dissatisfaction with rebate programs was “prefer instant cash” (35 percent). Another 25 percent said rebates are “too much work for the money” and 17 percent said they forgot to mail in or go online to redeem their rebates before the expiration deadlines. Additionally, 15 percent said it was difficult to know what to do to redeem rebates and 13 percent said they didn’t have enough time to complete and submit the forms necessary to redeem their rebates.

When asked what types of changes would improve the rebate redemption process, almost half said they would shorten the waiting time it takes to receive rebate funds. Another 43 percent said they would like manufacturers to cut down on the information and materials required to complete rebate forms. A third of consumers (33 percent) said they wish companies required purchase codes instead receipts to redeem a rebate certificate, as often consumers need receipts for other uses later on.

“Rebates are used to spur consumers to purchase specific items during limited- time promotions. For many manufacturers, they are highly effective tools for encouraging purchases,” Baker added. “As consumer technology markets change over the next few years and price and technological change become even more important in the marketplace, we expect to see a greater use of rebates.”

Methodology

Rebates: A Consumer Perspective was an online survey conducted among members of NPD’s online consumer panel. NPD invited a nationally balanced sample of 15,000 adults (18+) to complete the survey in November 2004. The study is based on 6,800 completed surveys. This report examines consumers’ attitudes toward rebates, what types of products are most often rebated, how rebate practices differ by channel, and their impact on category profitability. It also considers the practices surrounding rebates and how they may affect technology products in the future.

About The NPD Group, Inc.

Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries such as apparel, appliances, automotive, beauty, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, information technology, music, toys and video games. NPD provides critical knowledge on what is selling, where, to whom and why to help clients make more successful, fact-based business decisions. For more information visit www.npd.com.

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The NPD Group, Inc.

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