Essay: How Rebates Aid in Market Transformation
Previously rebates were employed to ensure an increase in the product sales volume without much contemplation on the market long-term market effects. However, presently the goals of the rebate programs are increasingly changing and focusing on the consumer tastes and preferences, which dictate their spending behavior in the long run. This made the rebates to appear costly with limited long-term effects.
Nonetheless, the rebate programs play a critical role in increasing the demand and supply for quality products in the market. It goes without saying that quality products in the market benefits consumers while the producer benefit by making clients loyal and thereby establishing a big market share, which in due course results to increased returns.
It is imperative to note that, through market transformation programs, the rebates play a fundamental role in overcoming market entry barriers for both the clients and firms. They are both affected depending on the kind of market since there are markets dominated by a single buyer, as there are other dominated by a single seller. These programs overcome market barriers in a number of ways as listed below:
- Reduction of risks and to be encountered by the players in the market
- Creating an environment that favors the consumer’s actions
- Acts as a temporal market support for producers before they begin to enjoy the economies of scale that reduce the cost of production per unit