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What are some interesting ways in which firms use percentages in ads?

Question asked by Eric Chiang on Dec 15, 2015
Latest reply on Dec 16, 2015 by Vicky Chiu-Irion

A common example that I bring up in class is how firms use percentages in interesting ways to make consumers believe they are getting a better deal than they actually are getting. Here are two examples:

1) BOGO (buy one get one) specials: instead of the classic "Buy one get one of equal or lesser value free", we now see more ads with "Buy one get one half off". The latter deal still sounds good, but the maximum discount (assuming the two items are equal in value) is only 25% on the overall purchase. Recently, I saw a shoe store advertise "Buy two get one half off". For this one, I had my students calculate the discount if you bought 3 shoes with price tags of $90, $70, and $40. The overall discount is $20 off $200, or only 10%. The "Buy two get one half off" sounds much better than 10% off.

 

2. An airline last year sent me a deal allowing me to buy extra frequent flyer miles at 50% off the regular price. Then, last month, I received another offer from the same airline that said "Receive an 80% bonus on all miles purchases". I ask my students which deal is better, and they quickly figured out that 50% off is better than an 80% bonus.

 

Does anyone have other examples of these types of real pricing strategies? I sometimes mention example #2 when explaining why we use the midpoint method to calculate percentages.

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