Buy One Get One Half Off: Is It Worth It? Essay

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Consumers respond to the "Buy One Get One Half Off" (or BOGO 1.5) sales promotion because it gives an impression of savings and serves as an incentive for the consumer to get two items for one and a half price. Perhaps, rational consumers evaluate their choices and act systematically to achieve their objectives. Marginal changes are incremental changes to the existing plan of action. The rational consumer can precede a better decision when thinking of the margin. They only act if marginal benefit exceeds the marginal cost. If acting on the promotions, the consumers will receive a better value by purchasing the products. On the other hand, if the consumers choose to forego the deals then the promotion does not support consumers' objectives. …show more content…

Firstly, our example illustrates how people respond to incentive. In economics, an incentive is defined as any factor that provides a motive for a particular course of action. This example is exemplified in our first customer. Perhaps, the promotion encourages her to purchase an extra bottle of X shampoo now instead of later. By doing so, the BOGO 1.5 promotion can be classified as an incentive which ensures her decision. As she rationalizes her decision to purchase an extra shampoo, she demonstrates that everyone do respond to incentives. In contrast, the promotion does not have the effect on the second consumer because it does not provide incentive therefore not applicable to him and his choice as a consumer.
Secondly, our example also demonstrates how people think at the margin because each consumer evaluates whether the marginal benefit exceeds the marginal cost associated with the BOGO 1.5 promotion. The first consumer realizes that if she purchases the extra shampoo by paying for 50 percent (marginal cost) more now, she will receive her marginal benefit from not having to purchase another shampoo in the future. On the other hand, the second consumer would not use the X shampoo even if he purchased it. He shows no interest in such product. This explains why he does not gain any marginal benefits when his marginal

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