Merchants and traders can win big with 'group buy' tactics
These days have you noticed that many shoppers and restaurant patrons often bring with them a sheet of paper printed from home to get a discount?
With an e-mail printout, a big cup of premium frozen yoghurt could cost less than Bt50; a full-course spa treatment could now be lower than Bt500; or even a boutique hotel is now affordable at the price of Bt1,500.
These are just a few samples of what's really available. Participating merchants who offer these tempting discounts range from a small ice-cream shop with an unbelievable 90 per cent discount to a high-end hideaway resort with a 50 per cent discount.
This trend of "group buy" is the newest marketing tool which is proving to be quite prolific. The idea is that the middleman will gather consumers in the community so they can enjoy great savings from local businesses together. Naturally, the higher the volume, the greater the discounts.
But, are they the real deal?
Here, the rule of engagement is "the fear of loss".
This new marketing philosophy has probably evolved from olden-day methods. Whenever a business wants to boost its sales, these two are the most familiar ways:
- Shopping spree — a tried-and-true method: Limited offers in a limited window of time creates an irresistible impulse for shopaholics who, in fact, do not really need the products.
- Online auction: "ebay" has been in business for more than a decade. Competitiveness, together with the joy of winning the shopping race, is what drives people to participate.
Then, what does this "group buy" do to business owners? Why have they opted to try it?
Well, there's nothing to lose, actually.
To participate in an online voucher extravaganza or a group buy scheme, all the business owners need to do is just sit there giving away irresistible discounts and paying marginal fees to the middleman, and the fees will only be deducted after the sale ends.
This is considered much better than organising a "traditional" shopping spree. There will be no upfront investment on a setup booth, staff, advertisement and other logistics with no guarantee of sales. A trade exhibition sounds good but is much more competitive as there will be hundreds of other vendors competing at the same time.
The sophistication of Internet technology and the convenience of credit card payment propel the temptation to buy. It's simply a click away to get super hot deals. Why not?
Suppose you are a hotel operator, you'd rather fill those empty rooms. This is better yet if you are one of the new emerging business operators who need to build brand awareness and create massive exposure to the right target group.
However, to create a really attractive deal, businesses would have to sacrifice so much to give big discounts. So how is this feasible?
Most impulse buyers who shop only to satisfy the need to get a great discount or limited offers might not use the vouchers. Statistics show that in most cases, the highest redemption rate is only slightly higher than 50per cent. Besides, the service providers can earn significant incremental revenue from customers' usage.
So, hurry up! The spa voucher you printed out last week will probably expire soon!
Janejit Ladpli is vice president in the Travel & Leisure Marketing Division of Krungthai Card (KTC).
