“Everybody loves a bargain – it’s business, but it’s also psychological.” (Clifford, 2013)
Discounts are one of the activities stimulate purchase behavior of customers, in which “ Buy one get one free” (BOGO) offers are one of the most effective marketing tool in the marketing strategy for one company (Figure 1). This strategy is impressive because we all love free products, we do not like paying for things, if something has to be provided for free right in front of us, why not take it?
When mentioned money issues, our brains automatically programmed to assess the savings and value. (Kearns, 2016). When we see a BOGO sign in a store, our brains will decide to buy this product because it believes this is a good value. This is how you buy the product that you actually do not need or intend to buy in other places.
Cahners Advertising Research Report shows that 98.7% of customers affected by the price when they buy a certain product( Angulo,2015, p.13). Even with expensive items, the ads have bonus products as “buy 1 get 1 free”, “buy 2 get 1 free”, e.t.c will attract more customers.
Customers Want Free Not Cheap
According to the survey of The AMG Shopper Panel about the favourite promotion of customers, more than 66% participants chose BOGO as their answers ( Figure 2). Because customers said they liked the free stuffs as well as they thought they seem to get more. Even if you careful to take a look at it mathematically, it is merely a half-price discount but our psychological perception fonds of BOGO.
Incentives do not make a product feel undervalue quality
The survey of The AMG Shopper Panel pointed out an interesting fact which goes against the traditional belief that ‘’the promotion will reduce the value of the product’’(Figure 3). In fact, only lower 1% shoppers responded that the promotions give negative feelings about the product or the brand.
Smart strategy for new products
Launched a discount campaign to introduce a new product is the ideal way to promote the latest offering from the brand because it will help bring efficiency to a specific product.
Supermarkets, household brands often applies promotions like buy 1 get 1 free, buy shampoo get shower gift, buy laundry detergent get fabric softener, e.t.c. However, the fast-food industry is using the most BOGO advertising campaigns when they want to announce a new product (Figure 4).
This pricing strategy will help to build your brand because when mention to the “bait” product, customers will think of your store. Gradually, you will gain a solid foothold in the customer’s mind.
In 2012, Domino Pizza Japan launched their English website. To attract customers to use this website for order products, the company offer customers a great bargain’’ BOGO’’. For example, if you order one Brooklyn Pizza, you get another pizza for free. This campaign has achieved success since attracted the attention of Japanese customers to use their new website.
Let’s take another example about the success of BOGO in Viet Nam’s pizza market
When entering to Viet Nam market nearly 20 years ago (Perperonis pizza brand is the first presence in VietNam in 1996), the pizzeria noticed this dish not suit the tastes of consumers, from the price to the flavor. At that time, the “Western” food as pizza, sandwiches, hamburgers, pasta spagetty were mostly unfamiliar to many Vietnamese. Therefore, the pizza companies wanted to create a consumer trends such as “Black Friday” with an extremely shock discount that customers can hardly ignore, hence they used BOGO promotions (Figure 5).
Then guests will arrive and enjoy the foods. When they eat a lot of times, they will remember the taste, gradually they will form a habit. That is how it works on the principle of ” small rain lays great dust ‘of the pizzeria. And when ”buy 1 pizza get 1 free pizza ”becoming a trend, other companies will also apply this creative promotion. However, each brands will choose different promotion days in order to attract a number of loyal customers. With the “promotion calendar”, customers can choose different days to enjoy most types of pizza at a great discount. The success of this form of advertising over the years helped pizza from a “luxury” food became more popular, more familiar to many Vietnamese (Figure 6). Now, many Vietnamese prefer to go to pizza restaurant, order pizza delivery to home and pizza can substitute for lunch for office workers.
How about your opinion, do you like BOGO ??
AMG Strategic Advisors’ Shopper Panel report 2012 , retrieved 27 April 2016 < http://www.ala-national.org/assets/research_center/Hot_Topic_BOGO_freeFINAL.pdf>
Catherine Clifford. 2016. The Psychology of Discounts and Deals (Motiongraphic). [ONLINE] Available at: https://www.entrepreneur.com/article/229957. [Accessed 01 May 2016].
Julio César Ceniceros Angulo,2015- THEORETICAL REVIEW OF PRICING STRATEGY EVEN AND ODD AND PSYCHOLOGICAL.
Suzanne Kearns -The Psychology of Money – Saving and Spending Habits. 2016. [ONLINE] Available at: http://www.moneycrashers.com/psychology-of-money-saving-spending-habits/. [Accessed 27 April 2016].