10 for $X.XX Deals
This is a continuation of a preceding article, that can be found here. In it we explore the idea that sales based on ungrouped items may be more profitable, because they’d lead to the purchase of full...
Introduction
This is a continuation of a preceding article, that can be found here. In it we explore the idea that sales based on ungrouped items may be more profitable, because they’d lead to the purchase of full priced items. Or, in numeric terms, say the following is true: 1 Can of Chili on Sale – Loss of $.05 for the company. 1 Bag of Cheese Not on Sale – $1.00 profit. 1 Hot Sauce Not on Sale – $1.00 profit. Looking at it in this way, even at 10 cans of chili, the resulting profit from the cheese more than makes up for the difference. All it takes is just one bag to turn a $0.50 profit for the company, and customers may also be buying even more cheese and hot sauce to turn a greater profit. Customers will also be more likely to buy the cheese/hot sauce/etc., because if those products are commonly paired, it is unlikely that anyone has already stocked up on these items already. Purchasing one of these full priced products is virtually guaranteed. However, if the company only put product pairings on sale – meaning the chili, the cheese, and the hot sauce were all included in the 10/$5.00 sale, even if the company did turn a profit on each purchase, it’s possible that the profit would actually be less.
Using This Line of Thinking
If this is the case, then what the grocery store should be doing is looking for the anti-pairings – they should look for products that are rarely bought together, but are bought with other items that are not on sale. The less of a relationship between the items in the 10 for $X.XX sale, the more likely that these products will be paired with full priced items that will ultimately bring in extra revenue for the company. Also, by ensuring the products have as little a relationship as possible, the grocery store is also able to win over more types of customers. It can be assumed that if customers tended to buy all of the items included in the 10/$X.XX sale together they would have more of a relationship. So ideally, the grocery store would be looking for items that are all bought by different customers, and including those items in the sale.
Understanding This Method
The idea sounds fairly complicated, but many companies use very similar marketing tactics already. Companies like Amazon put something on sale so that they barely have much of a profit margin, with the hopes that you purchase other gear or items to complement the initial item in order to build more of a profit. However, this type of technique does not appear used as often at grocery stores, especially in terms of bulk items. Sales were common, and perhaps grocery stores tried to utilize product pairings, but when customers only need to purchase one item, they may be less likely to purchase the others. For example, if I already have cheese, and I buy one can of chili on sale, I probably will not buy another cheese at full price and simply wait for the next sale, since I have enough cheese on hand to cover the single can. Forcing people to buy many cans (and motivating them by making the sale price fairly drastic) increases the likelihood that I’ll be purchasing the full priced cheese, and so on. I don’t personally know what this grocery store is doing, but if they are using their research to purposely find unrelated items in order to increase full priced complementary items, they are certainly using the research wisely. Related Blog Part 1 Related Blog
Key Takeaways
- Introduction
- Using This Line of Thinking
- Understanding This Method
Related Articles
10 for $X.XX Deals
At the grocery store the other day I noticed that it has changed the way it handles sales. Normally the grocery store puts up a random item for sale, and charges some value, such as “Cans of Chili – 3...
Survey Insights10 for $X.XX Deals
Recently we published an article on a grocery store that has decided to change the way they do sales. Rather than simply offer sales based on individual products, the company has switched to offering ...
Survey Insights3 More Questions that Identify Customer Service Talents
In the past few days, we have been looking at the importance of hiring based on customer service ability, and how the companies that prioritize customer service in their recruitment processes are the ...
Ready to Get Started?
Create your first survey today with our easy-to-use platform.