What is a rebate in marketing terms?

A rebate in marketing terms refers specifically to a refund issued by the manufacturer as part of the purchase price after the sale is completed. This practice serves multiple purposes: it encourages purchases by creating a perceived value that consumers can reclaim after buying a product, and it differentiates between initial purchasing decisions and the actual savings realized later. By offering a rebate, companies can attract customers who might be more price-sensitive and help promote their products without reducing the list price, which can preserve brand image and competitiveness in the market.

In contrast, other options represent different pricing mechanisms. For example, an upfront discount at the point of sale applies immediate savings, which is different from a rebate since it does not require any subsequent action from the consumer. A fixed percentage off the selling price is a direct discount strategy. A discount based on customer loyalty rewards repeat customers but does not fit the structure of how a rebate operates. Thus, a rebate uniquely captures the essence of a post-purchase incentive that directly involves a refund process initiated by the manufacturer.