A popular marketing strategy used by retailers and e-commerce businesses is the BOGO, or Buy One, Get One Free. In a BOGO offer, the customer would buy one item at a full price and get the second item for free or at a highly discounted price.
The key objectives in BOGO promotions are:
- Increase in sales volume: Businesses have the ability to entice clients into making purchases which otherwise would go unconsidered by the clients themselves either through offering for free or at a discount.
- Attract new customers: One of the reasons to justify using BOGO deals can, therefore, easily be reaching out to new consumers. Since this type of deal may project much value in the eyes of a new customer, it can be just what is needed for them to give.
- Inventory clearing: Inventory clearing could be made easy with the BOGO approach by liquidating slow inventory or seasonal products, thus creating space for new merchandise.
- Induce them to spend more: The customers are induced into purchasing more than what they actually intended, thinking that in such a nice 'buy one, get one' offer, they will be getting something free-so why not buy.
- Build brand loyalty: Attractive promotions will help build positive associations towards the brand and encourage customers to return to the shop over and over again.
BOGOs come in many forms, such as:
- Buy one get one free: The most common type is one where the second item gets fully free.
- B1G1 50% off: The second item at 50% off price.
- Buy Two Get One Free: Free third item with the purchase of two select items.
- Buy X, Get Y Free: In this case, the variation just tells the customer that if he buys this product, then another one comes free with it.
This includes everything businesses should consider when doing a successful BOGO campaign:
- Product selection: Choose products relevant to the target, desired by the target, and with a high enough margin that supports the promotion.
- Time frame of the promotion: Let there be a duration that will determine how long the BOGO offer will run, so that some sense of urgency is created, yet not much potential revenue is lost.
- Marketing and Communication: Communicate the BOGO offer terms and conditions humanly clear on all marketing channels for customers to be attracted and purchase without any confusion.
- Inventory management: To ensure there's a good amount of stock ready to meet the increase in demand expected during the period of promotion.
- Profitability analysis: Assess the potential impact of the BOGO promotion on overall profitability at the level of COGS, marketing expenses, and anticipated turnover of sales.
This kind of marketing promotion, while really having an immense power to drive sales and draw customers, firms still need to be cautious so that they will not over-rely on them, since too many promotions could eat into the profit margins and spoil customers. However, as with any approach to sales promotion, monitoring the results is key, and adjusting tactics where necessary remains critical to bring about the best opportunities for business.