The shady psychology behind ‘buy one, get one free’ deals.

In commerce, a single phrase can wield the power of hundreds of salespeople.

It can turn even the most rational consumer into a crazed lunatic who’ll stand in line for hours to save a few bucks, and will wrestle with complete stranger to snag the last item of clothing off a rack.

I’m talking of course about ‘buy one, get one free.’ But, are these deals as good as they seem?

Deep down, most of us understand that nothing is truly free. Commercial businesses don’t offer deals out of the goodness of their hearts. They do it because it’s great for business.

Sometimes, these promotions can be down right deceptive. (Just how much leeway can ‘conditions apply’ really give?)

So, why does the allure of ‘free’ hold so many of us captive?

Let’s imagine you’re hungry and hankering for a treat, and you’re offered a choice. A Hershey’s Kiss for 1 cent, or a Lindt Truffle for 15 cents. Which would you go with?

In his book ‘Predictably Irrational’, behavioural economist Dan Arieley ran this exact experiment and found that 73% of consumers chose the pricier Lindt chocolate.

But, when he changed the price of the Hershey’s kiss from 1 cent to free, 69% opted for the kiss.

The introduction of that one word – free – entity reversed the outcome of the study.

When confronted with a purchasing choice, we typically run a quick internal cost-benefit analysis where we way up potential satisfaction with the price.

But, Arieley concluded that when the word ‘free’ is introduced, it not only decreases the cost, but makes us believe that the benefits of the free item are higher.

As a result, we fall victim to the ‘zero price effect’, a phenomenon whereby our demand for an item dramatically increases when it’s free.

Just look at how madly we scramble for a free can of soft drink being handed out at a sporting event, when we could probably purchase the same drink at a supermarket for less than a dollar.

“The moment something involves ‘free’, we get overly excited,” explains Arieley “and we no longer think rationally.”

Retailers are well aware of this, and for longer than most of us can remember, they’ve been taking advantage of this lunacy by continuing to blazen their advertising with ‘Buy one get one free’ – also known as BOGO for short.

The question is, will the rational side of consumers minds ever truly catch up to the emotional?

Until then, it appears that BOGO is here to stay.

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www.optuneconsulting.com.au

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