Dr. Tim Silk - How Marketing Research Protects Consumers - The Case of Rebates
1. How Marketing Research
Protects Consumers:
The Case of Rebates
Professor Tim Silk
Sauder School of Business
University of British Columbia
UBC Celebrate Research Week 03 ⢠06 ⢠2011 1
2. The Issues
Controversies:
1. Low redemption rates
2. Not getting paid
3. Onerous effort
Policy issues:
1. Laws inconsistent
2.Make rebates easier?
3. Longer deadlines?
4. Ban rebates entirely?
UBC Celebrate Research Week 03 ⢠06 ⢠2011 2
3. What Role Can Research Play?
Psychology Economics
Consumer Behavior
How Do Our Biases Affect
Consumer Decision Making?
UBC Celebrate Research Week 03 ⢠06 ⢠2011 3
4. Biases in Decision Making
We all fall victim to natural human biases
We are mostly unaware of our biases
We think we make good decisions
But we often make lousy decisions
UBC Celebrate Research Week 03 ⢠06 ⢠2011 4
5. Consider this offer
Offer A: Offer B:
Rebate must be postmarked Rebate must be postmarked
by March 15, 2011 by March 31, 2011
1. Which offer looks more attractive?
2. Which offer will have the higher redemption rate?
UBC Celebrate Research Week 03 ⢠06 ⢠2011 5
6. Whatâs the Conventional Wisdom?
Giving people more time to redeem will:
Increase the redemption rate: 57%
Have no effect: 40%
Decrease the redemption rate: 3%
Reasoning:
⢠âIf you give people enough time, theyâll eventually
get around to it.â
UBC Celebrate Research Week 03 ⢠06 ⢠2011 6
7. We Ran A StudyâŚ
How will people really respond?
Experiment:
Offered 1233 consumers
a rebate on movie tickets.
Manipulated:
1. Size of rebate
2. Length of deadline
3. Effort required to redeem
UBC Celebrate Research Week 03 ⢠06 ⢠2011 7
11. Reasons for Redeeming
And effort is not the only reasonâŚ
Over half of non-redeemers never start the processâŚ
So it canât just be about the effortâŚ
UBC Celebrate Research Week 03 ⢠06 ⢠2011 11
16. Key Findings:
1. Discount percentage has stronger effect on
lift than the dollar value of the rebate.
2. Lift is increasingly sensitive to changes in
the discount percentage as the % increases.
3. Suggests consumers frame rebates as a
percentage discount off the list price.
Implication:
⢠$5 rebate on $10 item (50% discount) can appear more
attractive and generate more lift than a $10 rebate on $40
item (25% discount).
UBC Celebrate Research Week 03 ⢠06 ⢠2011 16
17. What Drives Redemption Rates?
a) Increasing the rebate dollar value.
⢠Effect of dollar value is greater than discount percentage.
Rebate
$20
$10
Redemption 60% $5
Rate $1
40%
20%
1-25% 26-50% 51-75% 76%+
Percentage Discount
UBC Celebrate Research Week 03 ⢠06 ⢠2011 17
18. What Did We Lean?
1. At time of purchase, people tend to be overconfident
about their likelihood of redeeming.
2. Longer deadlines make the offer look more attractive, but
make us less likely to redeem by fostering procrastination.
3. Many people never start the process.
4. Increasing effort angers people and increases the
motivation to redeem. Iâll show you, Iâll get my $!!!
⢠Implication: Do it now!
UBC Celebrate Research Week 03 ⢠06 ⢠2011 18
19. How Did This Research Influence Policy?
1. Research presented to Federal Trade Commission,
Competition Bureau of Canada, other policy officials.
2. Advised on new rebate guidelines issued by Competition
Bureau of Canada.
3. Policy analysis identifying rebate legislation as helpful or
harmful to consumers.
1. Deadlines should be disclosed.
2. Longer deadlines not necessarily helpful.
3. Effort requirements should be disclosed.
UBC Celebrate Research Week 03 ⢠06 ⢠2011 19
20. Research and the Public Interest
Some perceptions Iâd like to change:
⢠Academic research doesnât relate to the real world.
⢠Research in marketing benefits firms, not consumers.
⢠Marketing is evil.
How you can support research:
⢠Voice you support for federally funded research like
SSHRC.
⢠Attend talks and generate dialogue in the community.
⢠Support your local universities.
UBC Celebrate Research Week 03 ⢠06 ⢠2011 20