THE IMPACT OF BUY 1 TAKE 1 AS A MARKETING STRATEGY TO THE CONSUMERS OF BACOOR CITY, CAVITE
SIMON, CINDY GRACE C.
TACASON, HENDRIKS IVAN A.
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CHAPTER 1
INTRODUCTION
ABSTRACT
Buy-one-get-one-free promotions are a common feature of retail food markets, but why are they so widespread? This study provides explanation on how this marketing strategy has impact to the random consumers of Bacoor City, Cavite. The study involved 100 respondents who are the random consumers in 4 barangays near in Bacoor.
BACKGROUND OF THE STUDY
In this huge society, there are thousands if not, uncountable amount of supermarkets and small convenience stores in existence, trading products every day, yet, how are they supposed to earn a somewhat nice amount of cash with such giant rivalries around them? Obviously, human beings are able to constantly generate new working marketing strategies, several go outdated within months but few still apply as impressive even to date, introducing the Buy One Get One Free pricing strategy.
You must be joking if you have never seen the “Buy One Get One Free” technique, it is effective all the time, why? Due to the fact that you receive something free, its value is oftentimes looked as a huge deal. The strategy is impressive simply because we all like free products, we don’t like paying for things, if something free has been offered right in front of us, why not take it for granted? This is the reality of us and no one can pretend it does not exist. Even if you carefully take a glance at it in a mathematical way, it’s pretty much only just a half-taken-off discount, but the psychological perception is way above that.
Yet, you really should take note that the “BOGOF” delusion does not work as strong in all cases, because if you intentionally send off another copy of your good, you’re really saying: No one is buying my products, I’ll give you a discount and buy it for me please. (pretty much a bribe) You wouldn’t want to do that.
The obvious answer is that it will definitely lower your brand’s credibility, you will turn socially disliked since you are trying to upsurge your sales, and most crucially of all, your product may actually not be that “good-quality”. To defend for a clean company reputation, it’s about keeping your value up at a medium range, this is called image pricing, and your company will remain unhurt while your opposition rush selling their products. Of course, using prestige pricing (also called image pricing) only runs successfully for high-end and luxury based products, not cereals. Meaning, the BOGOF trick works effective only at average goods that are not extremely pricey.
Due to the fact that a lot of people use this “Buy One Get One Free” tactic, people are beginning to realize they are actually getting tricked. Since sometimes the “1” is usually priced higher than its original price to create the deal, so, a real effective way to prevent the customers from backing away is to take the strategy to a higher level like “Purchase 5 Now and Get 2 Free”.
Really, just simply be creative, play with math and by all means, always experiment and so you will know whether your target consumers like a certain pricing sneaky trick or if they ignore it.
One of the biggest marketing ideas in recent years has been the concept of Buy One Get One. This can come in a variety of offers from buy one get one free to buy one get one 50% off. But no matter the variety, they all do one thing very well – they drive sales. The most important part of writing effective ad copy is to have a compelling offer. And buy one get one, or BOGO for short, is compelling. Like many offers, it is the perception that is most important, not the reality. In fact, the reality is if you do a BOGO 50% off, it is the same as 25% off your entire purchase for the customer, but it feels like so much more. I remember when the state of Texas implemented a sales tax holiday the first weekend in August for
back to school supplies. It included anything a child needed for school. So in addition to pencils and paper it also included backpacks and clothes and shoes.
Any of the qualified items that a person bought this weekend (even if they may not use it for school) was tax-free. That first weekend, we did more business than any other weekend that year – yes, including Black Friday or Christmas weekend. We were definitely caught off guard. People came in the stores in droves and our staffing was for a 15% sales gain YOY, so we were not prepared. Thankfully, we got people in the store and had a terrific, fun weekend. (Always fun when you are selling more than ever!) But the amazing part was the deal or offer. Each customer saved 8.25% (our sales tax rate) and that was it. We had no other deals or sales that weekend. They just saved 8.25% and the customer loved it! And we loved it even more as storeowners.
The perception for the customer was that they were getting a big deal. And that is what matters. BOGO is one of the best “perception” offers you can use. But the beauty of this offer is in its benefit to the retailer. If you were to run 50% off everything in the store, you would have a lot of tickets with one item on them. That means your margins for the day would be hit hard. But if you did a BOGO, then your margins still take a hit, but not as dramatic.
Let me illustrate. If you have keystone margins (50%) on items, then every time they get a keystone item with 50% off, you are break even. But not everything in your store is at keystone. You have items with even higher margins. So, directing a customer to buy one then get one means that your margins can be less impacted. For example, if they buy a 60% margin item and the free one is 35% margin, you just came out ahead.
BOGO is designed to clear out and move inventory. Use it in that way. It is also a way to create cash flow. Use BOGO when you want to generate more cash. People have to buy more (higher $ per ticket) to get the offer, so you get more cash. While this is only true if your BOGO is a % off the 2nd item; it does work. And since BOGO is a common offer for customers now, the psychology of the deal is often times the same – meaning BOGO free and BOGO 50% still make me as a customer feel like I got a great deal.
Just like the sales tax holiday made the customer feel like they were getting the best deal. Let’s face it, I could run a 16.5% off everything in the store event (double the sales tax) and not even come close to the amount of sales we did during those sales tax holidays. One note on the “dark side” of BOGO. They are people who, if they cannot find a 2nd item, will not buy the first. But these are a small % of your customers. So do not let them freak you out. Just know that it will happen and make sure that you have plenty of great 2nd items to choose from in your store.
SIGNIFICANCE OF THE STUDY
This study will help consumer’s awareness about this kind of pricing strategy. The researchers will find out and help consumers to recognize if they are really saving money or people are beginning to realize they are actually getting tricked. We all know that Filipinos think that this is the best way to save money. Buy 1 Take 1 is a great discount technique to use to appeal to consumers. The research will be also helpful specially to the future entrepreneurs it helps boost sales and profits, it is a great tool that can help you get rid of your less desirable inventory quicker and maintain profitability at the same time. Once you’ve figured out what you’re selling, it is important to know whom you’re selling to. Buy 1 Take 1 can help you achieve one of the biggest retail goals, creating loyal customers. The future researchers will also benefit on this research.
SCOPE AND LIMITATION
This study was conducted to determine the impact of Buy 1 Take 1 to the random consumers of four barangays in Bacoor, City Cavite. This study is conducted on sampling of household survey. The research will focus on the awareness and impact to the consumers. This would be helpful to understand the relative strength and risk exposure to the entrepreneurs and marketers also. The study does not cover consumer’s perception towards this kind of marketing strategy.
STATEMENT OF THE PROBLEM
GENERAL PROBLEM
The purpose of the study is to determine the impact and effectiveness of Buy 1 Take 1
