Abstract
Essay 1: Mail-in rebate promotions. Time inconsistent preferences or price discrimination? Mail-in rebates are a widely employed marketing tool (Grow 2005). Previous research suggests two mechanisms by which mail-in rebate promotions can enhance marketer profits: time-inconsistent preferences (Soman 1998) and price-discrimination via self-selection (Narasimhan 1984). Despite these investigations, not much is known about the relative salience of these mechanisms in influencing the profitability of rebate promotions. Accordingly, the primary objective of this research is to redress this gap. Across a series of experimental tasks involving simulated rebate offers, we do find evidence for time-inconsistent preferences across the "choice" and "redemption" decisions. However, the ability of marketers to capitalize on these time-inconsistent preferences is limited. In addition, we find that: (i) Redemption rates are higher when subjects are given a choice to accept a rebate offer than when they are simply given a rebate offer, signifying high levels of self-selection, (ii) An individual-specific trait, namely, the construct of "rebate involvement," has a significant impact on rebate choice even after controlling for face value and redemption effort. Moreover, this trait is positively correlated with a measure of price consciousness, and (iii) Subjects exposed to a subsequent rebate offer update their choices in a manner that reflects significant levels of learning. Overall, these findings suggest that only the price-discrimination mechanism remains as a viable mechanism to yield enhanced profits in the deployment of rebates. Essay 2: The impact of post-purchase satisfaction on the likelihood of rebate redemption. In a recent analytical paper, Chen, Moorthy, and Zhang (2005) begin with the premise that the likelihood of rebate redemption is linked to post-purchase states such as satisfaction. Employing this premise, they demonstrate that rebates can potentially serve as a price-discrimination tool across post-purchase states. Following their work, the main objective in this study is to empirically test the validity of their basic premise. Specifically, we hypothesize that when consumers are highly satisfied with purchase, they will be less likely to redeem rebates. In contrast, when consumers are dissatisfied with purchase, they will be more motivated to redress the situation by redeeming a rebate. In addition to its theoretical interest, the answer to this question will also determine if it is worthwhile to target rebate redeemers with additional marketing offers. For example, if dissatisfied consumers tend to redeem rebates at higher rates, they are poor candidates for additional marketing efforts even though the cost of targeting them is relatively low. Key words. Mail-in rebates, time-inconsistent preferences, price-discrimination, satisfaction