How Companies Make Money on Black Friday
- Lure customers in with freakish deals (a.k.a. doorbusters/loss-leaders).
- Expose them to more profitable/better offerings that rival their target buys.
- Strengthen business with more profits.
For instance:
- "Item X for $50!"
- Customer sees Item Y, which is better/nicer/more-profitable.
- Customer chooses Item Y instead.
The ideal result is the company sells more profitable items than the unprofitable ones.
What Smarter Companies Do First
Speculating that the above will happen = gambling (results in a net profit growth of zero if done over the long-term).
BOO.
The financially-smarter companies would do this instead:
- First, test an intended campaign with a sample group -- e.g., 1000 prospects -- with (a) the freakish-unprofitable deal, and (b) a profitable deal.
- See what buys result from the test.
- If the test results in ideal profits, promote and run with the campaign on Black Friday (or some other large scale campaign).
That is:
- 'We're okay with losing $ on Item A.'
- 'The marketing of Item A however will bring in more customers, which allows us to expose more prospects to the better/stronger/more-profitable rival, Item B'
And If All Else Fails
The shady trick:
- Stock a super limited supply of Item X.
- Promote the %$#@ out of it to attract large numbers.
- When the first 0.01% buys Item X, the store will expose the other 99.99% to the profitable Item Y instead.
(More numbers. More pitches. More sales.)
The Cumulative Results.
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Posted November 27 in Sales & Marketing |
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on "How Companies Make Money on Black Friday"victsteria (Rank: #4)
It is a terrible trick but that is exactly how it is done. It is great for business but sucks for the buyers who get suckered. That is why I never deviate from my list on days like that.
jseyah (Rank: #11)
i would think that if you employed trizles 3 product recommendation with a goal of selling the middle of the line product, you could be very successful. spending a few extra bucks for a higher quality item when it's sandwiched between something cheap and something overpriced almost always seems like a good idea to most people.
diamyaz (Rank: #6)
I'm not a fan of black friday and this is exactly why.It's just a smooth way for the stores to actually con people out of their cash.If you are good at sticking to a list you may be ok if you get their early enough though.
kimberrus (Rank: #9)
Great info! I'd love to be in on a focus group for sale testing like that. Sounds like it'd be right up my alley since I'm so cheap... I might skew their results though lol