A few years ago, the German authorities were forced by European legislation to allow loyalty programs and cut-throat price promotions (which were previously banned; they were considered “Kaufzwang”, a strange expression meaning “purchase obligation” – huh? your product’s on promotion, so that’s forcing me to buy it?!? Bizarre logic).
Well, Proctor and Gamble (P&G) leapt at the opportunity. They know that promotions are a major way to stimulate customers (and potentially blast a few competitors out of the water – the very reason the Germans had their protectionist policies installed in the first place, to protect small companies).
This offer (known in the UK as a “buy one get one free” or bogof for short), is a typical P&G promotion. Having worked on a dying brand I know how crucial they are to buying custom. But only in the short term.
Careful you don’t do them too often (as we did, despite my protestations). Customers aren’t idiots. They remember, buy in volume – and won’t buy you when you’re back at your normal price!
In fact, personally I suggest you keep well clear of such promotions – unless
- you’re launching something new – but make sure it’s clear this is only an introductory offer
- there is no alternative (like you need to spoil a competitor’s launch, you don’t have enough money to spend above-the-line)
- the pattern of promotions is irregular – as customers work out when regular promotions are coming, and wait.
And watch out for sales managers pushing for end-of-year promotions. They’re sometimes just out of desperation – they want to hit their targets and secure their annual bonus!