How Old Effective And Deceptive Is “Buy One Get One Free”?

If you have watched the American drama television series Mad Men episode one boardroom scene, Don Draper and Roger Sterling meeting with Mr. and Ms. Menken; you should remember that Mr. Menken satirically commented on the board proposal using humor and exaggeration to criticize Sterling Cooper executives proposal saying “let us assume that this is the most amazing idea in retail since “Buy One Get One Free” and account executive Pete Campbell laughed. Mad Men‘s fictional time frame runs from March 1960 to November 1970. So the boardroom scene is around 1960-61. If Mr. Menken is satirically throwing in Buy One Get One Free as a description of an old promotion method, How Old is Buy One Get One Free?

“Buy one, get one free” or “two for the price of one” is a common form of sales promotion known in the marketing industry by the acronym BOGOF or simply BOGO. BOGO is believed to have existed since the 18th century when English potter Josiah Wedgwood invented the phrase “Buy One Get One Free.” Economist Alex Tabarrok has argued that the success of BOGO lies in the fact that since you’re selling two times the sales volume price should be reduced, however what actually happens is that the price of “one” is somewhat nominal and merchants typically raise the price when used as part of a BOGO deal. which lead to conclude that the price is not actually half the original price. BOGO offers customers extra value and may motivate them to buy more, choose to buy from one retailer over another, and decide on one product and not another. This raises the question: How effective is BOGO?

In few words: BOGO doubles the store’s office! Grocery stores employ BOGO all of the time as a way to lower inventory or simply boost average order value. If you can sell a product at half price and still make profit, selling two items of this products would double your profit. Moreover, BOGO help retailers clear out inventory and still make profit, help get better responses from customers, and share profits with customers. With that in mind effective BOGO strategies consider the best time of the year when the retailer wants to reduce inventory, the audience that BOGO will target to get higher conversion rate, and the channels that will be employed to share the promotion. This raises the question: How deceptive is BOGO?

BOGO is most effective in selling commodities, because customers already know the price of the commodity and they are assured that they are getting two items at the original price of one. However, for some products when the price of goods sold is not universally known, customers may not trust BOGO offers and may not respond to their promotion. Moreover, people perceive a 50% off a better deal than BOGO. People know that every promotion companies do is for the good of business and to make more profit.