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The shady economics of ‘buy one, get one free’ deals

thehustle.co

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Re: The shady economics of ‘buy one, get one free’ deals

#151

Post by hopler »

jacobyoder wrote: post #91
jjeaff wrote: post #83

Earlier quoted context omitted.

I'm not sure I get what you mean. If I go to the store with a list of the usual items I purchased and some of those items are on sale, I end up spending less money for the exact same items.

> usual items I purchased and some of those items are on sale Often the "deals" are "buy 3, get one free", where the per unit price might be a bit less than a single unit, but if you only went in for 1, but ended up buy 4, you've paid more than you might have otherwise. Sometimes it's a good deal, and you get more value, sometimes the items expire before you end up using them, etc.

You haven't lived until you are comparing "buy 2 get 3 free" to the other brand with a simple price but a different package size.

Re: The shady economics of ‘buy one, get one free’ deals

#152

Post by chippy »

jjeaff wrote: post #83
everdrive wrote: post #79

Earlier quoted context omitted.

I usually don't like language that suggests that consumers are brainwashed by marketing. But, getting people to comprehend that spending money =/= saving money is surprisingly difficult. Even when they understand money has been spent, it's not spent rationally: money "saved" at the grocery store doesn't actually mean less total money spent, rather the same amount as usual is spent, and more food than usual was able t…

I'm not sure I get what you mean. If I go to the store with a list of the usual items I purchased and some of those items are on sale, I end up spending less money for the exact same items.

The other replies have good examples. At it's simplest if you have $100 and go to the shops and leave with $20 you have not saved any money, you have lost $80. Reducing the amount you lose is not saving that money as money is still being lost. Yes you might lose less money than usual but the article and the point most people are making is that these offers short circuit rationality to make us think we are getting a deal but actually in most cases we are not. You have to be very shrewd to do the home economics correctly. I don't bother and most people don't bother and we are being swindled most of the time.

Re: The shady economics of ‘buy one, get one free’ deals

#153

Post by hopler »

vxNsr wrote: post #94
pattle wrote: post #29

Earlier quoted context omitted.

> This isn't even getting into the actual value of perceived value (cf. the sticker price of wine vs. its perceived quality). Really interesting stuff. I fall foul of this trick quite a lot when food shopping. For example if I'm buying a box of cereals and I see one is priced at £1.80 and another is priced at £2.50 but is on sale from £3.50 I'll buy the more expensive one because I'm under the illusion that I'm getti…

When it comes to commodities, the best thing to do is shop by unit, ignore the "sale price" and the msrp, look only at the cost/ounce or cost/unit most US stores list both on their price tags, though you have to watch out for when they use different measurements for directly competing products (ie kellogs sold by the ounce while store brand by the pound). In semi-blind taste tests I've always preferred the name brand…

The name brands taste better because they have put more effort into researching weird chemicals that taste good

Re: The shady economics of ‘buy one, get one free’ deals

#154

Post by hopler »

mrhappyunhappy wrote: post #135
maaaats wrote: post #68

Earlier quoted context omitted.

Even without discount on the more expensive one, it can be used as a marketing trick to make you buy more expensive. For instance offer three versions of a product: $1 branded as cheap/bad, $2 branded as good, $5 branded as luxury. The last one exists mainly to anchor the value of the $2 as also cheap and to make you buy it. If one only had the choice between $1 and $2, most people would choose $1 option.

Branding and perceived high quality due to high price works ridiculously well too. My wife will always want to buy the higher price item because “it’s probably better”. I’ve looked at pricing and anchoring extensively and know better but at this point I gave up trying to convince her. Now marketers take our money and I won’t blink an eye, just cry inside.

This is what drives me to MGTOW -- Men Getting Their Own Wallet.

Re: The shady economics of ‘buy one, get one free’ deals

#155

Post by Matticus_Rex »

mrhappyunhappy wrote: post #143
jamiethompson wrote: post #99

I think the counter argument to this is non-perishable food and other groceries. There is a certain brand of shelf stable non-dairy milk that my family use a lot of. The usual price is £1.50 a carton. Every few months there is a 3 for £3.00 offer. Now this is obviously a ploy to get you to buy more than you needed and also to appeal to new customers. But I use these offers to stock up on weeks worth of the stuff. If…

I’m curious to know what’s happening with our supermarket ice cream discounts. Every Friday all ice cream is 50% off and as you’d expect a lot of people buy their ice cream on a Friday. The rest of the week it’s full price. Does that mean they are taking a profit hit on Friday just to move inventory or is the ice cream marked up higher than their ideal selling price which would be the standard profit margin they expe…

They're using it as a loss leader: taking a cut in profit or even a loss to pull people into the store, where they're likely to buy more than enough to make up for it.

Re: The shady economics of ‘buy one, get one free’ deals

#156

Post by matwood »

jacobyoder wrote: post #96
underwater wrote: post #65

Earlier quoted context omitted.

You're not exactly beating the system. That's just plain old brand loyalty, which companies love. You've stopped shopping based on quality or value, and they can turn a profit without investing anything into marketing.

paganel is saving time by no thinking about the issue, so 'winning' in some sense. However... you don't know what the brand is. The brand may be the store brand, which... while it's brand loyalty, is almost always the cheapest, and usually don't have any marketing expense beyond the product in the store in the first place. I've learned to love most store brands, and... it may be my mind rationalizing it, but I think…

My localish store brand is also quite good. I buy the store brand for all of the staples.

One place that I can't quite find a non-brand name replacement I like is laundry detergent. I've tried the cheaper brands, store brands, etc..., and always end up back on Tide.

Re: The shady economics of ‘buy one, get one free’ deals

#157

Post by chippy »

whoopdedo wrote: post #128

A related and greater rip-off is the discount cards that give you coupons after a purchase. Consumers become addicted to these "deals" that make it seem as if they're paying a very small amount for something. When in fact they paid up-front with the original overpriced purchase. It amounts to an interest-free loan to the retailer that is paid back to you with those coupons.

These cards are the original data tracking example as by using the cards you give the retailer all your data including demographics of your age and location etc. From what I recall retailers cannot use your credit card purchase history for this, you have to use opt in and use the "loyality" cards.

Re: The shady economics of ‘buy one, get one free’ deals

#158

Post by hopler »

tyingq wrote: post #136
afpx wrote: post #122

I’m very interested in knowing what proportion of retail revenue comes from these types of dark patterns. Is it even possible to come up with a number? If so, I’d be willing to help fund the research. The other day a friend and I were discussing the “take X% off your entire order” coupons. These seem to be very common, lately. She mentioned that she recent used one on a cart of $100 in items. She expected a $20 disco…

"Free shipping" is a funny one. For smaller businesses, it's basically subsidizing far away customers with nearby customer money. I offer it not because I want to deceive people, but because we sell more that way. People like predictable upfront prices without having to tell anyone their location. It is, of course, not "free". We just calculate the average shipping cost and pad the price.

How much does shipping cost actually vary? I always assumed that first//last mile handling of a package dominates over the fuel/depreciation cost share of driving the item farther.

Re: The shady economics of ‘buy one, get one free’ deals

#159

Post by matwood »

jamiethompson wrote: post #110
paganel wrote: post #39

Earlier quoted context omitted.

What I ended up doing in order to avoid this is that I’ve been buying from the same brands for some time now, i.e. the same soap, the same shampoo, the same butter (truth be told, for butter I fluctuate between two brands), the same chocolate, the same detergent etc. This way I don’t fall for tricks like the one you mentioned because I almost don’t care about any other brands and products than the ones I’m really int…

I'm very much the opposite. I have in mind what I want to pay for a certain item, butter for example, and I'll buy whatever brand is being promoted that week for my target price. As long as it's not absolute garbage of course. Maybe it's different in the UK than in other places, but the large supermarket chains are constantly running so many promotions that you can, if very brand disloyal, always shop smart based on…

> I have in mind what I want to pay for a certain item, butter for example, and I'll buy whatever brand is being promoted that week for my target price.

I do this and it drives my wife nuts. For example, she likes Diet Coke. I see it as diet soda and will buy whatever diet soda is on sale. I only eat fish or steak when it's on sale, otherwise it is chicken all week.

Re: The shady economics of ‘buy one, get one free’ deals

#160

Post by chippy »

beefield wrote: post #90

Funny the title calls economics. But the textbook economics with its utility maximizing rational agents is utterly incapable even accepting the existence of this kind of phenomena, much less analyzing...

would it be under game theory?
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