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Rebates and Wholesale Prices

Please read "The Great Rebate Runaround".

Answer the following questions and put them in essay form.

1. This case describes one reason manufacturers might want to offer rebates rather than decrease wholesale price. Explain why this can be viewed as an example of customized pricing.

2. Even if all rebates were redeemed, why might manufacturers still want to offer rebates rather than decrease wholesale prices?

3. Why do you suppose that Best Buy, rather than one of Best Buy's big suppliers such as Sony or Panasonic, is considering eliminating rebates?

Solution Preview

1. Manufacturers may want to offer rebates rather than decrease wholesale price because most people will not redeem the rebate and thus, the manufacturer can offer the rebate to those who really need and will redeem it and get the whole value from those who can afford the product and will not bother getting the rebate. ...

Solution Summary

Manufacturers are discussed in relation to offering rebates. Their motives are discussed and also what would happen if rebates were not given out. In addition, retailers are discussed as to why they would want to eliminate these rebates.

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