Tag Archive - discounts

BOGJO

It used to be “bog off!” or, more correctly BOGOF, Buy One Get One Free

Now we may be moving to the post-BOGOF era, or BOGJO – Buy One, Get Just One (but maybe with a discount).

According to the news in Harpers today that in turn were quoting a report in The Grocer (who have a closed site), BOGOF deals in UK supermarkets are being scrapped because consumers are suddenly realising that a greater volume of stuff you didn’t want is not necessarily a “deal”.

It seems initially counter-intuitive to those of us in the UK who have had volume deals rammed down our throats, quite literally in the case of wine, but being convinced to pay a greater sum of money in exchange for more “stuff” is not good for our wallets or the environment.

Coincidentally, WRAP also announced today that UK consumers waste 3.6 million tons of food each year, most going untouched before ending up in landfill sites. As they say, we pay 3 times for this waste: paying extra money for the food in the shops, paying to deal with the waste and its transport, and also paying an environmental cost as waste ruins the environment.

I can see this in my own life. I have jokingly referred to the fruit bowl beside me here as my “pre-compost bin” as so much (organic) fruit I receive on a weekly basis goes off while I munch biscuits, sometimes bought in BOGOF deals, instead (for the record, I have a series of compost bins in the garden full of very happy worms).

And what about wine? BOGOF deals in wine are very common, but how many consumers really wanted that extra bottle of the £8 wine, when they could buy 1 bottle for £6, getting potentially better wine and still saving £2.

There have been many complaints that wines sold in this way were not worth the price tags they announced, and in fact their value was closer to the ‘deal’ price, so in fact there was no benefit to the consumer. In this case, consumers were losing out by having to pay for more bottles they hadn’t intended to buy.

There is some truth to this, especially if consumers feel they have been misled, but I think the pricing issue is not the key point. Who is to say whether the wine should be sold at £7.99 or £3.99? Wine pricing is not, and should not be, exclusively about COST, but I think I’ll leave the “How to Price a Wine” debate for another time.

The most important point is that ONLY those wines that could generate sufficient marketing funds to pay for BOGOF deals AND to get placed in those end-of-aisle bins (known as Gondola Ends) were getting the promotional slots in the supermarkets. Therefore only those wines backed by the deep-pockets of multinationals, or those that charged a higher price for wines when not on promotion, were reaching the consumer.

If this is now changing, more wineries that have smaller budgets might get a chance to be seen & heard. They may still have to find money to fund 30% or more discounts (we will not be weaned off deals that quickly!), but that is a very different story to a BOGOF.

As I have said before, wine ‘marketing’ in the UK has been too concerned with pricing and discounts, and not enough about the wine itself for long enough. If we can see a silver lining in the dark clouds of climate change and the global credit crunch, it should possibly be that the time really has come to drink less wine, but better wine, and for wine companies to speak up about the environment, sustainability of agriculture, and agricultural economies too, and also to help lighten the gloom.

Cost of wine on the High Street

Once again Peter has challenged me, so here is my response on excess drinking and the cost of business. Thanks Peter!

I mentioned that I thought the Threshers “3 for 2″ campaign was a good thing, to which Peter asks:

“So you don’t agree with recent claims that such offers encourage binge drinking?”

In general terms no, I don’t agree that a “3 for 2″ encourages binge drinking. I am still of the opinion that all consumers (who can legally buy alcohol) should be treated as reasonable and responsible adults. I really don’t like this government’s campaign to control personal decision-making in all sorts of areas and not just alcohol.

Do you think that Majestic insisting on people buying a case of 12 is 4 times as bad as Thresher? Of course not. Binge drinking is an issue I’m sure, but restricting the sale of these products is not the answer.

So, assuming people can buy more than one bottle without drinking them all at once, why should we encourage this?

“The real problem with Threshers is that the single bottle price is so inflated. With Tesco, their instore prices are equivalent to the discounted Threshers price, and so an additional 30% is a deep discount.”

The issue is cost and convenience. Threshers operates out of small shops on high streets. They specialise in certain types of wines, those the consumer is familiar with and wants to buy fairly regularly. This means that they are not competing with independent wine specialists whose niche are small production, probably higher cost wines, but directly with the supermarkets who sell the same wines. Of course the supermarkets can afford to get prices very low because they have bulk buying power and other economies of scale.

So where does it leave Threshers? We cannot really expect them to be able to sell the exact same wine as Tesco for the same price can we? Why should they? We really ought to be prepared to pay a premium of some sort to be able to buy that single bottle of wine on our way home without having to negotiate all the aisles and checkouts of the supermarket.

They could have left it at that, and maybe survived, but the pressure would have been ongoing (arguably what is happening to Oddbins). So instead, they have a contract of sorts with their customers that goes something like this:

“If you are prepared to buy in slightly greater volume (thus increasing our cash flow and turnover of bottles), we will reduce our total price to you to be in line with those places you might otherwise shop”

That is obviously too complicated a message, but anyone can understand “3 for 2″ and it is therefore a good marketing concept. Do I begrudge them trying to survive? Not at all. You can still buy that single “emergency” bottle on the way to the party, or after a tough day or whatever. If you think that premium is too much, you can still go to the supermarket instead.

No-one criticises Majestic in the same way for a vaguely similar model, quite the opposite. In fact their prices are also more or less in line with other retailers but only because they demand that you buy in volume. They won’t even allow that single bottle purchase. Surely this is something we could praise Threshers for?

When Tesco, Sainsburys et al offer a further 25% or 30% discount, Threshers and other smaller retailers simply cannot compete and still make money. However, they have to find ways to stay in touch as they still need to trade. Where I have the problem, as I have raised elsewhere, is when they try to do so by ‘bamboozling’ customers by talking about percentage discounts instead. I would like to see them try and find a differentiator that was not price and discount driven instead (as discussed many moons ago here and here) – it seems a sensible suggestion for longer term differentiation.

I should state for the record that indirectly I am involved as a supplier to Threshers (as well as Tesco, Sainsburys, Majestic and many others), but that my views on this are quite definitely my own and presented in the spirit of improving wine knowledge and discussion rather than promoting or knocking any specific retailer or wine.

Threshers’ incredible disappearing discount

Now this is the kind of thing that brings marketing a bad name.

At Christmas Threshers started a viral campaign that offered a discount voucher worth 40%. It seemed a great deal, until it was pointed out that they ALWAYS offer a “3 for 2″ deal which equates to 33% discount anyway. Of course, many of those receiving the vouchers were not regular customers and therefore were probably unaware of this.

The reaction was mixed. Some saw this as a “rip off”, others as a genuine additional discount even if not nearly as substantial as at first glance. Either way, it seemed to work.

My own view at the time was that this was still a good deal as it represented the equivalent of a further 10% discount on the “normal” price*.

As of today, Threshers are offering 35% off 6 or more bottles until 22 July. “Get the Barbie out of the shed” they say. Hurrah!? That lot at Tesco are only offering 30%.

But, hold on a minute. This is apparently also instead of the usual “3 for 2″ offer. Therefore, the additional money you save for buying 3 more bottles is … 2.5%. We all like deals, but this one is rather small.

This time I can’t help the feeling that the only justification for such an “offer” is to dupe customers into thinking they are getting a better discount without actually offering one. They are not actually ripping anyone off of course, they are offering something of genuinely greater value to the customer, but in this case it is very small.

For example, if you pick up 6 bottles of a wine worth £5, the additional saving is worth 50p. Hardly the kind of thing worth creating a poster campaign about or updating the tills for is it?

Whilst I applaud their “3 for 2″ campaign to encourage high street shoppers to buy in slightly greater volume, I suspect that the outcome of this campaign could be to damage the reputation of Threshers as offering a good deal, and once again equate “marketing” with “rip off”.

Or have I missed something here?

Of course the reason they are doing it is that consumers are so addicted to “deals” that they are now probably losing out heavily to Tesco and others who are currently offering large discounts of their own. Selling wine on the high street in competition to supermarkets is a tough business. I wonder how long Thresher will be able to try and play the same discounting game, or whether it is time for some more of that creative thinking that created the “3 for 2″ in the first place.

* the “normal” price is 66% of the single bottle price, so the ‘extra’ discount is calculated as a % after the initial discount, therefore:
(.4-.3333)/.6666 = 0.1 or 10%

Alternate truths and statistics

Hmmm…

Time is a factor. I will continue to monitor this, but this does not look like much of a major change from the background levels, certainly not over time.

Of course mentioning this skews the stats, so no reference to the viral marketing campaign nor to the originating site, but you can follow the link here and read the previous views here if this rings any bells.

I have done research and analysis, but not for some time, but these graphs would seem to support my view that although there has been an undoubted spike recently, it has not lasted nor did it have the lasting effect of the first campaign. I have also searched on both potential versions of the retailer’s name as it has an impact on the results (as you can see).


Over 2 months

Over 6 months

As I committed myself to be a nay-sayer from the start, I am monitoring this with interest, but would be very interested to know more about the impact on sales (as opposed to mere “mentions”). I wonder if we’ll ever get these?

Marketing Innoculation

So Threshers and Stormhoek are at it again (no I will not link to it, but I suspect you can find it easily enough) – you can read my previous views here and here.

Having just spent 6 weeks trying to rid my body of an infection, I don’t have the energy to fight a marketing “viral” campaign too, but I think that the consumer “body” will be better able to resist it this time around – although I may be wrong.

My own view is that resistance is low at Christmas, but that at the moment the word of mouth element will be sufficiently dilute for it not to take control. It would be amazing if it did, but there are probably enough deal junkies and gapingvoid ‘disciples’ to spread the word. However, how many times can Hugh do this before he ruins his own credibility and that of the brands he works on?

Let’s wait and see. I suspect the answer will be inconclusive, with a rise in sales to justify the action but not nearly the same impact, vindicating the opponents.

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