How does the concept of “Buy one get one free” works in marketing? How does this strategy prove profitable for companies?
In: Economics
Most products cost considerably less to make than to buy. For example a £5, or your chosen currency, item likely costs £2 to make or less. So on every day the company makes a £3 profit. BOGOF promotions persuade people to buy 2 of a product for £5, they’re still making a £1 as the production cost would be 2x £2 =£4. This is effective as people that wouldn’t previously buy the product, see an incredibly good deal and the company will increase sales.
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