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English visitor

The English version of this website is currently under construction. For information about our activities you can contact us at:

Email: info@servicebureau.nl
Telephone: +31 40 290 51 00

Thanks for your understanding.

Bart Jansen
Director

Cash back and the p of price in the marketing mix

Cash back or refund campaigns can be used very effectively, for example to introduce a new product. What kind of things should you bear in mind?

You have the important task of setting up a national loyalty programme. Or you want to set up a regional campaign to attract new customers and sell more products. Or you want to introduce customers to a new product. A cash back or refund campaign may be the perfect way to achieve your goal.

Series: Cash back or refund campaigns: the strategic contribution

In 4 articles we describe the various aspects of the cash back or refund campaign. A cash back or refund campaign means you offer the purchaser of your product a refund of part of the purchase amount. This is not only a way to encourage people to make a purchase, but also a way to sell, for example, extra products, because these are also being offered on the website where the cash back can be requested.

Attracting new customers, promoting a (new) product, achieving cross selling and collecting extra customer data are all possible via the cash back or refund campaign.

Cash Back or refund: the P of price in the marketing mix

If you want to see whether a cash back or refund campaign may be a good instrument, there is one condition which you have to take into account:

The P of Price: hold onto your image

As (trade) marketeer, brand manager, sales manager or marketing communications specialist, you should regularly reflect on the marketing mix. Product, price, place, promotion and personnel. All these different instruments affect the functioning of the organisation you work for. We are not going to give a detailed marketing lesson in marketing right now. However, the following are a few aspects you have to take into account when determining price. You should not underestimate the importance of correct pricing, including in connection with a cash back or refund campaign.

What do you think of when determining the price (and when determining the amount of the refund)?

  • Costs: the costs are the basis for determining the price. What does it cost to make the product? Which other basic costs are related to this and have to be included in the calculation?
  • Consumer budget profile (purchaser or customer): who is it for and what can this person pay – on average?
  • Image: which image does the product, brand or company have? (This partly determines what the consumer wants to pay.)

In the case of a cash back campaign, part of the purchase amount will be refunded to a purchaser's bank account. Large numbers of Dutch people like to be (regularly) involved in campaigns like this. A cash back or refund campaign can, therefore, be a way of increasing turnover.

Consequently, how you determine the price (and therefore the level of the cash back amount) is also an important factor to bear in mind when you use the refund or cash back as loyalty or sales tool. Costs and image continue to be extremely important. Only then can you decide on the maximum amount of the refund. It should not cost you any additional money. The original price also has to be credible. Running the cash back campaign for a limited period of time gives the purchaser a more exclusive feeling and yourself an opportunity to tackle the considerations referred to.

Price psychology in the context of cash back

This brings us to the psychology behind a cash back or refund campaign. Price perception is a psychological issue. We are all familiar with the Action formula. We also know the Fat-Boy formula. Then there is the Ikea formula versus the Rivièra Maison formula. At the Action everything is cheap and consumers buy more than is necessary. In the case of Fat Boy, you are attracted to buying a small lamp because it is quite cool. The same applies to the Fat Boy Lazy Bag. That is something consumers like saving for. Consequently, they are also impressed if they visit a home and see a number of very well-known brand articles. Consumers also recognise Ikea – as being affordable – and Rivièra Maison – as representing saving or high earnings. Add to this that consumers constantly influence each other and you will get the feeling for how important proper pricing is and therefore also the amount of the refund. The price has a knock-on effect on the brand perception. Using cash back and refund campaigns can reinforce the positive feeling associated with the brand or company. And that is what you want to achieve.

The cash back indicates that you, as a company, are keen to share ideas with consumers, that you want to give them special opportunities and an advantage. Consumers like to purchase the product from your company and also like to look around to see if they need anything in the same price category. Therefore, the price perception not only has to do with the product or article, but also with your image as selling organisation.

When setting up a refund or cash back campaign it is, therefore, important to determine the amount of the refund, together with experts. When doing so you, of course, have to take into account the objectives that you want to achieve with the campaign.

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