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Why would a manufacturer offer a rebate?

1. Why would a manufacturer offer a rebate instead of just lowering the suggested retail price?
2. Can price effect perceived quality? Why or why not?

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1. Why would a manufacturer offer a rebate instead of just lowering the suggested retail price?

A manufacturer offers rebate instead of just lowering the suggested retail price for various reasons. The first reason, as mentioned previously as well, is to ensure that customers realize the true "value proposition" of the product. If the manufacturer would offer a lower retail price, the product may not be able to achieve its intended positioning in the marketplace and customers would not "perceive" the product correctly. Instead, if a rebate is offered on a higher retail price, the customers would perceive that the product of a higher "value" is being offered at a lower price currently and hence. better "value for money".

Secondly, there are many customers that always look out for bargain and purchase those products only that are offered at some discount or has some added benefits in terms of discounts or ...

Solution Summary

This solution addressees the two marketing questions in approximately 600 words. Many manufacture rebates are offered to ensure that customers realize the true "value proposition" of the product. This relates to the second question: yes, price does impact perceived quality.

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