Sales promotions are short-term incentives designed to drive sales. They are part of the promotional mix within the marketing 4P’s. Because they often carry pricing incentives, such as discounts, they also have a crossover with the pricing mix in the 4P’s as well.
Sales promotions are usually executed through retailers, but service firms and other direct marketers will also use sales promotions in an attempt to increase sales.
Two common promotional vehicles used in a sales promotion program are coupons and rebates.
What is a coupon?
A coupon is a voucher or code (or some other form of identification), which allows the customer to receive a discount on their purchase at the time of their purchase. In other words, it is usually an immediate discount. The key difference between a rebate and a coupon is that a coupon provides an immediate discount.
Most people will know coupons from newspaper advertising where the consumer will cut out a special offer. But these days promotional codes are available via the Internet, and direct marketers may provide a coupon via a direct mail program.
What is a rebate?
A rebate is similar to a coupon, with the main exception being that the discount or incentive is received after the purchase. For example, a consumer may buy a box of cereal that has a $2 rebate listed on the packaging. In order to achieve that incentive, the consumer needs to cut out the coupon part of the packaging and either mail it back to an address, or visit a retailer, or access the discount via online means.
Sometimes a rebate is also referred to as a cash-back offer.
The main difference between a coupon and a rebate
A coupon will allow consumer to get an immediate incentive, whereas a rebate requires a customer to act after purchase to receive the incentive or discount.