How does the concept of “Buy one get one free” works in marketing? How does this strategy prove profitable for companies?
In: Economics
You can raise the price to compensate somewhat, ie. meat that’s usually $5-6/lb sometimes goes on sale for $2.99/lb and other times it might be $8/lb and buy-one-get-one, so it’s still $4/lb during that same, which isn’t even the lowest sale price.
And many products have huge markups of more than 100%, so that $20 t-shirt might have cost the store $8, and even at BOGO they still make profit.
Plus, it’s often used as a loss-leader, ie. sell you shirt at cost to get you to also checkout and hopefully buy the higher margin jeans.
And then there are brand acquisition goals. Lire somebody to try your product due to the deal, and then shift their brand preferences and they keep buying even at regular price.
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