Tuesday, October 21, 2008

my paper on Consumer Behavior

Consumer Behavior

“Buying six for $30 is like buying three and getting three free,” I tell my customers as they browse the Beauty section of Victoria’s Secret, VS. “Really?” they ask as they load up the “shopper”—a mesh bag they can carry around the store with them as they shop. My two years of experience has shown me that customers are more likely to buy more when they have something to fill up versus carrying around individual pieces. And everybody loves getting something for FREE.
It doesn’t matter that a single shower gel is only $9. I rarely see adults buy just one. Teenagers, yes, because most of them are shopping with their babysitting money or an allowance. Mom and Dad shop with credit cards and it’s a rare occasion that they buy only one product. At a minimum, they usually buy two and usually because we, the trusted VS employees, are telling them their fragrance will last longer if they “layer it”—apply the lotion then spray the coordinating scent. If they have two, we let them know “for just $5 more, they can get one more product.” I’ve had customers come to the counter with their, now, three products and I’ll tell them: “for just $6 you can THREE additional products” and off they go to get their three more products. Obviously, the total benefit on paying just $30 for six products is high: individual fragrance products cost an average of $8 and they’re getting six for just $30, instead of 6 for $48, they are seeing a consumer surplus of $18, which is almost like getting a tad more than 2 items totally for free.
Another enticing trick where VS uses free stuff is the PINK dog with any PINK purchase (PINK is a VS sub-brand). One customer, Momof1andDog from the MSN message boards, can be quoted as saying: Yep definitely do it, love their stuff! Another poster, Martivir, on the message boards said: If they had something free that I wanted yes I would have bought something I didn't need to get it. Just yesterday, a man brought his daughter and wife in and asked his daughter: Do you want a doggie? Of course she said yes. Mom was compelled into making a purchase—PINK panties five for $25 versus $7.50 a pair, what a deal—just so her daughter could have the “doggie” that Dad promised her. Her marginal benefit could be measured more by her daughter’s happiness than in dollars. As for the PINK panties, they had a consumer surplus of $12.50. When it comes to Consumer Behavior, Victoria’s Secret (and all the other well known chains) have it down. ALL of VS’ undies have discounted prices if you buy a specific (multiple) quantity and they’re constantly running promotions—30% off all Prestige giftsets, get $100 passbook of savings if you sign up for the Angel credit card, and the biggie during the holiday season: get bag A when you spend $50, get bag B when you spend $100, get bag C when you spend $150, get all three when you spend $250. Pure genius and we fall for it every time.

3 comments:

bugsi033 said...

Shows how gullible we are as shoppers!!! A few suggestions from a savey salesclerk & we purchase more than initially intended. And I must say, I'm very guilty of this. Good paper. I hope you get an A.

bugsi033

Jenny said...

Isn't 5/25 and 6/30 the same price deal? you actually pay $5 for each piece regardless if you buy 5 or 6 items. Can't comment on scents as I can't tolerate most of the scents at all so I stay out of that section of the store. I do like their "free panty" card that I've been getting every couple of months. Even without buying anything else I have several free panties. Now that's a good deal :)

nidena said...

Jenny,
Yes it is the same deal but the merchandisers goal is to move quantities of products. Most folks, when they're in a hurry don't do the math and will end up buying six because it sounds like a better deal. I, personally, love when they do the 7/$35, get 8th item free because I then get eight products for $35 minus my discount. That means eight products for just over $24...or $3 each. :)