Aviva Directory » Shopping & eCommerce » Discounts & Coupons

Product discounts, coupons, and rebates are the focus of this portion of our web guide.

A discount is a deduction in the purchasing price of a product. Often used as a short-term marketing strategy to attract customers, discounts are applied immediately at the time of purchase. Examples include percentage-off deals, buy-one-get-one-free offers, and seasonal sales.

Coupons are vouchers or codes that discount the price of a specific product or service. Found online, in newspapers, or directly from retailers, coupons are generally presented before making a purchase. They are a common way to save money on groceries, clothing, and other items.

Rebates are similar to coupons, except that the discount or incentive is received after the purchase. Consumers buy a product at the regular price and then submit proof of purchase to receive a portion of the total amount back. Rebates are often part of a long-term sales strategy. Examples include mail-in rebates, online cashback offers, and loyalty program rewards.

Going into more detail, discounts have been integral to commerce for centuries. In ancient marketplaces, traders often haggled over prices. Discounts were informally negotiated based on factors like bulk purchases or loyalty.

As economies grew, fixed prices became more common during the Middle Ages. Early discount practices included volume-based reductions for large orders, and regular customers were more apt to be given a better deal.

The Industrial Revolution led to mass production and the need for standardized pricing. Manufacturers introduced catalog prices, which formed the basis for trade discounts.

Functional discounts are given by manufacturers or wholesalers to resellers based on order volume, status, or trade customs, thus encouraging bulk purchases and rewarding distribution channel members. Discounts are calculated as a percentage reduction from the catalog list price. For example, a manufacturer might offer a 5% trade discount to a retailer, who then sells the product at a higher retail price.

Cash or early payment discounts encourage prompt payment and are typically expressed as a percentage reduction in the price.

Quantity or volume discounts reward bulk purchases. In this scheme, the more units bought, the higher the discount. Volume discounts are often tiered; for example, 10% off for 100 units and 15% off for 200 units.

Seasonal or promotional discounts temporarily reduce prices during specific periods, such as holidays or clearance sales.

As noted above, cash discounts encourage early payment, improving cash flow for both parties. Longer credit terms may lead to higher prices due to financing costs.

Trade relationships strengthen relationships between manufacturers, wholesalers, and retailers. Long-term customers often receive additional trade discounts. Loyal customers may receive loyalty discounts, while creditworthy customers get favorable terms.

Discounts play a role in pricing strategies, fostering trade relationships, and influencing purchase decisions, whether it's a trade discount for resellers or a seasonal promotion for consumers.

Product coupons also have a history. In 1887, John Pemberton, the creator of Coca-Cola, introduced the first coupon. This marketing tactic offered consumers a complimentary taste of the beverage. By bypassing traditional advertising channels, the coupon played a significant role in Coca-Cola's expansion across the United States.

Traditional paper coupons that consumers redeem at physical stores are still used. However, many now require the shopper to print them out. Online promo codes are used to provide discounts for online shoppers. Another type is mobile coupons, which are sent via SMS or mobile applications and are convenient for smartphone users. Scanning QR codes with smartphones also unlocks discounts or special offers. Some brands offer exclusive deals on social media platforms like Facebook or Instagram.

Manufacturer or brand loyalty programs offer reward points and personalized discounts to keep customers engaged with the brand.

Historically, coupons have influenced buying decisions. Today, they also foster brand loyalty, encourage trial purchases, and enhance customer enhancement.

Rebates have existed since at least the 1800s. Initially, they were met with mistrust or skepticism. Large industrialists, such as railroad tycoons, used rebates to undercut their competition and maintain market power. However, over time, they gradually evolved into a more customer-friendly approach.

Today, the types of rebates include volume, value, growth, and product mix incentive rebates. Sellers might also offer free products as a rebate, providing free products of a different type.

However, rebates have also been used to collect customer data, which may be sold to third parties.

 

 

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