What is meant by “Breakage” in Retailing?

The manipulative nature of promotions is very well established in the RETAIL INDUSTRY and one such principles is termed as “BREAKAGE”.

BREAKAGE measures the percentage of customers who FAIL to take ADVANTAGE of a PROMOTION and end up paying FULL PRICE for the product instead.

This typically happens when buyers do not bother performing the necessary steps to claim REBATES , a process purposely kept complicated to increase the likelihood of mistakes or inaction.

Adopted from Simon Sinek’s book Start With Why


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