Returns Policies: An Under Appreciated Marketing Variable

Returns policies are widely used in the marketing of products and services. That they do much more than provide insurance is, however, not well known. In this paper, we develop a number of other rationales for distributor and consumer returns policies. We develop these motivations through application of insights from various theories in marketing and economics. These rationales are incorporated into a general framework to provide managers with qualitative insights on the adoption and implementation of returns policies. The framework identifies the benefits that returns policies provide to manufacturers, distributors, and customers. We also discuss the consequences of returns policies, and compare them to alternative marketing strategies.