BOGO
| December 4th, 2008 by Robert | Word Count: 752 | Reading Time 3:01 | 2,699 views |
Up until about a few years ago, I had no idea what BOGO meant. I thought someone had invented a new type of pogo stick that I wasn’t currently cool enough to know about. But, after seeing store sign after store sign promoting “Buy One, Get One Free” deals, it became readily apparent that BOGO was a new acronym for the frenzied shopper looking for significant bang for the buck. Shop here and we’ll actually give you something for buying just one product! In fact, we’ll give you something of equal or lesser value and not some predetermined trinket of “appreciation.”
Sounds great doesn’t it? It sure does to me and whether I was buying shoes, shirts, pants, or whatever it was that the deal was currently focused upon, I felt like I was actually being treated to a special deal. I also thought that the market was pretty limited… limited in a way that the BOGO offers were specifically tied to certain lower tier products and fashions that may be closeouts and out of season gear. While that was predictably true, this year we have seen an entirely new market open up to this type of shopper incentive… car sales.
Car dealers, in an effort to keep their store fronts open, have succumbed to the pressure of going all out on their sales to move inventory. There are certain car dealerships that are selling a vehicle and throwing in another with your only cost being taxes, licensing, and insurance. These aren’t shoes that normally sell for $20 or pants that retail for $40 or some sweater sale in the middle of June, these are fully featured and full sized vehicles. From cars and trucks, to SUVs, dealerships are doing all they can to clear their lot of stagnant inventory.
No, the car dealers are not increasing their asking price on the initial vehicle sale, they are only requiring that you pay sticker price on the first vehicle and the second is free. For the most part, the second vehicle is predetermined for you, but some aren’t following that model. How can that be? How can a vehicle on the car lot sticker priced at say $27,000 be given away? Even though the customer pays sticker for their first purchase, they are not covering the investment of the given away vehicle.
Desperate times call for desperate measures. The car dealers have only a few options. Sell what they can and try and ride the economic storm out, sell what they can with special deals such as the BOGO offer, or simply go out of business. The first option works for dealerships that are large enough to sustain a certain amount of loss, but the middle and lower tier guys don’t have the ability to cut costs by laying people off or shaving off fixed costs. The second option works for businesses that are looking to push their “drop dead date” into the future in hopes that the economy picks up between now and then. They are hoping car sales return to normal and they can offset their current giveaway costs by future revenue. The last option has already taken about 700 car dealerships this year… an additional 200 are expected to close their doors by the end of the year.
If I had the money, I would be heading to a dealership running a BOGO and buy a pair of new vehicles. These deals feel like a “once in a life time event.” You can’t go wrong in this situation. Throw on top of the situation that the automakers are sacrificing almost everything to rid themselves of their sunk costs and inventory, they are actually BEGGING you to take their vehicles and in turn, cost them money, just not as much if they didn’t sell anything. Their choice is lose a little bit of money every day that will amount to a lot over the long haul, or lose everything now and hit bankruptcy. One choice offers a slim chance for recovery and the other none.
Sounds like some of the situations our American households are facing. What set of bills do we have to pay to survive and what can we default on and still have a roof over our head, heat to keep us from freezing, and food to nourish us. Maybe the car makers should offer a BOGOx2, Buy One, Get Two Free. If you’re going out of business, some money in the bank is better than none…
on December 4th, 2008 at 10:30 pm:
Isn’t that the way it goes.. these “once in a lifetime” deals come along and the majority of households are no better off than the car dealerships and have no resources to take advantage of it. It always seems like businesses only give great deals if there is no other choice. How about everyone play fair? Maybe if all these businesses weren’t so greedy from the beginning, things wouldn’t be so bad now. You see it everywhere.. gas prices, food, vehicles, etc.
Of course I don’t think it’s all their fault. If we didn’t feel like we had to have anything our hearts desired at right that very second, we wouldn’t be just as bad off as the businesses.
on December 6th, 2008 at 11:55 am:
The retailers are in it to make the most money they can, any way they can. However, that philosophy can only work if people are willing to submit to their profiteering methods.
It is sad that when the tables are turned, it’s because the consumer’s bank accounts have been exhausted. And in the end, the retailers fail also because they continually forecast their methods to work again and again.
We are all at fault for allowing greed to rule our purchase decisions and not necessity.