Rebates are effective in obtaining new users, brand-switching, and repeat purchases among current users. In March 2009, AT&T deployed a rebate program as a means to draw new users to their Internet services. AT&T’s intent behind this rebate plan was to acquire new users from rivals such as Verizon. What makes rebates effective?
A study was undertaken to determine the factors underlying consumer perception of rebates. A set of 24 items measuring consumer perceptions of rebates was constructed. Respondents were asked to express their degree of agreement with these items on 5-point Likert scales. The data were collected by a one-stage area telephone survey conducted in the Memphis metropolitan area. A total of 303 usable questionnaires were obtained.
The 24 items measuring perceptions of rebates were analyzed using common factor analysis. The initial factor solution did not reveal a simple structure of underlying rebate perceptions. Therefore, items that had low loadings were deleted from the scale, and the factor analysis was performed on the remaining items. This second solution yielded three interpretable factors. The factor loadings are presented in the accompanying table, where large loadings have been underscored. The three factors contained four, four, and three items, respectively.Factor I was defined as a representation of consumers’ faith in the rebate system (Faith).Factor 2 seemed to capture the consumers’ perceptions of the efforts and difficulties associated with rebate description (Efforts).Factor 3represented consumers’ perceptions of the manufacturers’ motives for offering rebates (Motives).The loadings of items on their respective factor ranged from0527 to0.744.
Therefore, companies such asAT&Tthatemploy rebates should ensure that theeffort and difficulties of consumers in taking advantage of the rebates are minimized. They should also try to build consumers’ faith in the rebate system and portray honest motives for offering rebates.
Note that in this example, when the initial factor solution was not interpretable, items that had low loadings were deleted and the factor analysis was performed on the remaining items. If the number of variables is large (greater taan 15), principal components analysis and common factor analysis result in similar solutions. However, principal components analysis is less prone to misinterpretation and is recommended for the nonexpert user. The next example illustrates an application of principal components analysis in international marketing research, and the example after that presents an application in the area of ethics.
Driving Nuts for Beetles
Generally, with time, consumer needs and tastes change. Consumer preferences for automobiles need to be continually tracked to identify changing demands and specifications. However, there is one car that is quite an exception – the Volkswagen Beetle. More than 22 million have been built since it was introduced in 1938. Surveys have been conducted in different countries to determine the reasons why people purchase Beetles. Principal components analyses of the ‘,ariables measuring the reasons for owning Beetles have consistently revealed one dominant factor-fanatical loyalty. The company has long wished for the car’s natural death but without any effect. This noisy and cramped “bug” has inspired devotion in drivers. Now old bugs are being sought everywhere. “The Japanese are going absolutely nuts for Beetles,” says Jack Finn, a recycler of old Beetles in West Palm Beach, Florida. Because of faithful loyalty to the “bug,” VW reintroduced it in 1998as the New Beetle.The New Beetle has proven itself as much more than a sequel to its legendary namesake. It has won several distinguished automotive awards. The 2009 Beetle was offered in coupe and convertible versions and the base medel had a starting MSRP of $17,990.
Factors Predicting Unethical Marketing Research Practices
Unethical employee behavior was identified as a root cause for the global banking and financial mess of 2008-2009. If companies want ethical employees, then they themselves must conform to high ethical standards. This also applies to the marketing research industry. In order to identify organizational variables that are determinants of the incidence of unethical marketing research practices. a sample of 420 marketing professionals was surveyed. These marketing professionals were asked to provide responses on several scales, and to provide evaluations of incidence of 15 research practices that have been found to pose research ethics problems
One of these scales included II items pertaining to the extent that ethical problems plagued the organization, and what top management’s actions were toward ethical situations. A principaI components analysis with varimax rotation indicated that the data could be represented by two factors. These two factors were then used in a multiple regression along with four other predictor variables. They were found to be the two best predictors of unethical marketing research practices.