There is a certain ironny in a government that have spent a decade running down the farming industry now suddenly deciding that we need to be careful about how much we waste becasue we will run out of food. But the move to ban Buy One Get One Free offers in favour of half price offers shows a marked lack of understanding of sales and marketing.
The BOGOF has an important role to play in pricing, or more specifically maintaining prices. It is in the buyer perception. Say I want to sell a punnett of strawberries for £2. I make a good margin and am happy at this price. The consumer is happy and willing to pay this price as well. Now, I suddenly have some strawberries that I need to get rid of quickly. If I put them on display at half price then they whiz into the baskets and everyone is happy. But next time my consumer enters the shop their mental recollection of the price of the strawberries is £1 (they forget that this was half price) and this is what they expect to pay. Cue one unhappy consumer when they see the price of £2, twice what they expect to pay. Now, what if we do this as a BOGOF, then the perceived price remains £2, after all that is what they paid for their strawberries. Therefore happy consumer when they come in next time to find the price of strawberries hasn't gone up (although in reality they end up with half as many strawberries as last time. See, BOGOF keeps the price at the level the market one while managing to shift stock, half price offers slice the overall market price for the long term.
1 comment:
I've noticed another cunning tactic with cherries recently. The price has stayed the same, but the amount in the container keeps going down and down, so the price per kilo becomes prohibitive without anyone noticing. It's very sad. Maybe I'll plant a cherry tree.
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