A conditional rebate is a sales-based

promotion Promotion may refer to: Marketing * Promotion (marketing), one of the four marketing mix elements, comprising any type of marketing communication used to inform or persuade target audiences of the relative merits of a product, service, brand or i ...

typically used by

retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...

ers to increase their sales, generate traffic and create publicity. The rebate is commonly an element of a

marketing strategy Marketing strategy allows organizations to focus limited resources on best opportunities to increase sales and achieve a competitive advantage in the market. Strategic marketing emerged in the 1970s/80s as a distinct field of study, further buil ...

and an

advertising campaign An advertising campaign is a series of advertisement messages that share a single idea and theme which make up an integrated marketing communication (IMC). An IMC is a platform in which a group of people can group their ideas, beliefs, and conc ...

. With this specific type of rebate, a company typically offers a certain amount of their product, or some sort of sales incentive, if a particular circumstance (i.e. condition) arises.

Operation

A conditional rebate revolves around an "if, then…" proposition (in this case: if ''x'' happens, then ''y'' will be awarded to the participating customers). The conditional rebate is typically used with sports- or weather-related conditions. In order to protect themselves from the risk of making such an offer, companies turn to specialty

insurers Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

to purchase either conditional rebate coverage or promotional weather coverage, where they will pay a premium based on the odds of the "condition" taking place. Conditional rebate insurance can be a very effective

for retailers because for a fixed fee the company eliminates the risk associated with repaying their customers in the event of a claim since the risk has been transferred to the insurance company after the policy is purchased. As an example, a retailer might want to insure the following: if a particular

National Football League The National Football League (NFL) is a professional American football league that consists of 32 teams, divided equally between the American Football Conference (AFC) and the National Football Conference (NFC). The NFL is one of the ...

team returns the opening

kickoff Kickoff or kick-off may refer to * Kick-off (association football) * Kickoff (gridiron football) * ''Kick Off'' (series), a series of computer association football games * ''Kick Off'' (album), a 1985 album by Onyanko Club * ''Kick Off'' (mag ...

of a game or season for a

touchdown A touchdown (abbreviated as TD) is a scoring play in gridiron football. Whether running, passing, returning a kickoff or punt, or recovering a turnover, a team scores a touchdown by advancing the ball into the opponent's end zone. In Ameri ...

, then the customer who made a purchase during the specified promotional period will get a 100% rebate on their purchase. Another example is that of a conditional weather rebate where if there is snow on

New Year's Day New Year's Day is a festival observed in most of the world on 1 January, the first day of the year in the modern Gregorian calendar. 1 January is also New Year's Day on the Julian calendar, but this is not the same day as the Gregorian one. Wh ...

the customer will receive a full refund of all purchases made during the month of November.

Rating

Insurance companies rate conditional rebates based upon a variety of factors. If the conditional rebate is weather-themed it will be based on the location of the event (city/state) and history of the weather condition that is being underwritten (temperature, rain, snow, etc.) as well as the limit of the policy that is being insured. Sports-themed conditional rebates are rated based on not only the size of the policy, but the history of the particular sports team. This is not only limited to how many wins that particular team has had, but the number of home runs or other circumstances that are being insured under a conditional rebate.

Operation

Rating

References

Further reading