How Marketing Research

Protects Consumers:
The Case of Rebates
Professor Tim Silk
Sauder School of Business
University of British Columbia

1
The Issues
Controversies:
1. Low redemption rates
2. Not getting paid

Policy issues:
1. Laws inconsistent
2.Make rebates easier?

3. Longer deadlines?
4. Ban rebates entirely?

2
What Role Can Research Play?
Psychology Economics

Consumer Behavior
How Do Our Biases Affect
Consumer Decision Making?

3
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

4
Consider this offer

Offer A: Offer B:
Rebate must be postmarked Rebate must be postmarked
by March 15, 2021 by March 31, 2021

1. Which offer looks more attractive?

2. Which offer will have the higher redemption rate?
5
What’s 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:
• “If you give people enough time, they’ll eventually
get around to it.”

6
We Ran A Study…
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
7
Rebate Purchase Opportunity Return

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What Drives Purchase?
Larger rebates and longer deadlines increase purchase.
30%
Proportion that Purchased
25%
24%
20%

16% 17% 16%

15%

10% 10%
8%
5%

0%
1-Day 7-Day 21-Day
Deadline

$9 rebate $6 rebate

9
Reasons for Redeeming

And effort is not the only reason…

Over half of non-redeemers never start the process…
So it can’t just be about the effort…

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Bias #2: Procrastination Histogram

Longer deadlines encourage procrastination

Days between purchase and Days between starting and

starting application: submitting application:

14
14
12 12.4
12
10
10
8
Days

Days
6 6 5.2
4.3
4 0.7 4
2 1.2 1.3 2.8
2
2.3
0 0
1-Day 7-Day 21-Day 1-Day 7-Day 21-Day
Application Deadline
Application Deadline

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 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. I’ll show you, I’ll get my $!!!

• Implication: Do it now!

12
 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.

13
 Research and the Public Interest

Some perceptions I’d like to change:

• Academic research doesn’t 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.
• Attend talks and generate dialogue in the community.
• Support your local universities.

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 Thank you

Questions / Comments?
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