Essay: Negative Effects of Rebates on Sales
Poorly designed rebate programs can have negative effect on market penetration of a new product. The consequence is reluctance of consumer to purchase a new product preferring the inferior product irrespective of whether the product is improved or not. In the long run, the product is not accepted whether it is of high quality or not. An example of a product that was greatly affected negatively is the compact fluorescent lamps (CFLs).
The compact fluorescent lamps (CFLs) were distributed and sold at lower prices, however, the product was of low quality and many consumer declined to buy them, after their quality was improved, the compact fluorescent lamps (CFLs) did not evolve in the market and clients preferred buying other substitute products. To avoid this failure that affects the producers and the consumers, rebates programs should be employed on high quality products that will guarantee that the products succeeds in the market.
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