When you stroll through a retail store you’re often confronted with an ‘unbeatable’ special offer. Store managers sacrifice a small percentage of their gross profit margin in favour of boosting turnover – and it’s usually at your expense. One of the most
What about big-ticket items
All this talk about retail activity got us to thinking about discount strategies for big-ticket items. We all know the Verimark ‘and that’s not all’ marketing gimmick. But we don’t expect such gimmicks from people who sell cars or houses. But as conditions in the passenger vehicle and housing markets get increasingly worse, sales inducements have become the rage. One recent development is the ‘cash back’ offer which accompanies many house and motor vehicle sales. “Buy a house from us and we’ll give you R15 000 cash back!” screams the advert. Of course you’re forgetting this price is built in to the deal and effectively financed at the prevailing interest rates through your home loan. It might seem like a great idea at the time; but wouldn’t it have been better to receive the R15 000 as discount against the house price?
We’ve also seen cars and generators packaged together; cars and scooters; and even cars and thousands of rand worth of petrol. But when you look at the terms and conditions with these deals you can’t help feeling you’re financing short-term luxury goods purchases on the hire purchase agreement. And that’s good for only two people – the care dealer and the finance house! Of course South African motor dealers aren’t the only ones giving crazy discounts.
We laughed out loud when we first read about a Californian Porsche dealer who gave away 18 Porsches on his “buy one; get one free” opening day promotion. One’s initial reaction is “How could anyone be this dumb?” As it turns out, the article (which appeared to be genuine when it first surfaced) was little more than a spoof posted by a reader on New Zealand website (http://www.stuffed.co.nz/). But we’ve found another example of an extreme sales incentive in support of our “Americans are crazy!” drive.
A free Porsche must be the limit – except if you’re Californian
Early in 2000 we completed a three month stint in the United States. We learned a great deal about the average American in that time. They do everything on a grander scale. Their cars are bigger; servings at fast food restaurants are insane; and they can hold a World Series without inviting a team from another country. And one of the most interesting things about talking to someone in the US is that they’ll always tell you where they’re from… A typical conversation goes something like this:
Of course he could have been from Texas, Florida or California too. And as the conversation progressed you’d soon realise that your new friend had no idea where in the world South Africa was – and you go the idea he didn’t really care either. The reason is that America is a world all of its own. And California is one of the strongest economies in that world.
But we’ve strayed from our topic. There’s a reason we introduced you to the bizarre American sense of self. We wanted to tell you about a real estate developer in South California’s San Diego who recently offered prospective home buyers a ‘buy one; get one free’ deal of a lifetime. The developer’s problem was an over-supply of newly built homes due to the huge collapse in the US property market. His solution: For each purchase of a $1.6m luxury home Michael Crews Development would throw in house worth $400 000 at no charge! Amazingly this offer had to be extended through June 2008 because buyers were reluctant to put their money down... Marketing director Dawn Berry couldn’t figure out what the stumbling block was: “If you don’t know what to do with your free home, you could always give it away!”
Editor’s thoughts:
A special price only benefits you if you actually need the item you’ve purchased. How many times have you been to the shops and returned with a DVD or CD when you only intended buying groceries? The CD may only have cost you R49.99 on special; but it’s R50 you weren’t going to spend in the first place. Are you easily lured by ‘buy one; get one free’ and other special offers? Send your comments to gareth@fanews.co.za, or add them below.
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