Finding the best deals IV: when bargains are actually booby traps

As a result, it’s become quite a tradition among card users to go with the best deals when shopping, swiping only the cards that offer the best benefits. 

But why are there so many credit card promotions? 

The credit card industry in Thailand is probably more competitive than anywhere else in the world. Card operators do whatever it takes to defeat their competitors, to the point that there hardly are any genuine benefits left after the marketing and promotional expenses are invested. 

These days promotional schemes disguised as credit card privileges come in two forms:

 

New labelling: ‘Buy 1 Get 1 Free’

For example, a round-trip ticket to Europe on a Middle Eastern airline costs less than Bt20,000 – quite inexpensive. However, with no fancy campaign, the tickets might just sit there because no one notices them.

A clever promotion could trigger a totally different reaction, with the tickets paired and labelled “Buy 1 Get 1 Free” at a price of Bt39,800.

Another so-called privilege takes advantage of customers’ addiction to bargaining. 

In the hypermarket and other retail industries, both merchants and credit card operators have to come up with an advertised “marketing” price. This includes a hidden cost that enables them to give “on top” discounts to customers dissatisfied with the advertised discount and eager to bargain the price down further. These customers feel that they haven’t clinched the best deal until it is better than the one received by other credit cards’ customers. 

To make them feel special, merchants and card operators give them an “on top” discount, when in fact it is given in exchange for their own card reward points at the same amount as their total purchase. 

 

Credit-back campaigns 

In a low margin industry like petrol/diesel, there really is no room for petrol stations to offer promotions. But if such an everyday expense is a top income earner for card operators, it’s no wonder they fight harder to get their share. These operators must dip into their own pocket for any promotions they offer. 

All credit card providers earn a fee of no more than 2 per cent from petrol stations. When there is a need to defeat others, some card providers choose to go as far as sacrificing a significant amount of their marketing budget for credit-back rebates to draw customers’ attention. 

When they play this game of sacrificing their own cash, there is no winner. Well, maybe the credit card users, but not for long. No company will stump up a huge marketing budget to cover rebates forever. The more customers use their cards, the bigger the loss. And as soon as such a promotion ends, card users will switch back to their preferred card anyway. 

When all’s said and done, there’s no such thing as a free lunch. 

 

Janejit Ladpli is vice president of Travel & Leisure Marketing at Krungthai Card (KTC).