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Below is a short essay prompt: The term "BOGO" ("Buy One Get One", also referred to as "Buy One Get One Free") has entered the urban dictionary, and is a sales tactic whereby sellers offer buyers a...

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Below is a short essay prompt:
The term "BOGO" ("Buy One Get One", also referred to as "Buy One Get One Free") has entered the urban dictionary, and is a sales tactic whereby sellers offer buyers a second unit of the item free if they pay full price for the first unit. A variation of BOGO occurs when stores offer a "Buy One Get One Half Off" sales promotion. Why do you think consumers respond to the "Buy One Get One Half Off" sales promotion and what principle of economics does this behavior reflect?
Answered Same Day Dec 21, 2021

Solution

Robert answered on Dec 21 2021
119 Votes
Answer:
“Buy One Get One Half Off” is one of the several sales promotion programs available to a store.
Under this scheme, the first unit is sold at full price but for the second unit, people get 50%
discount. People are likely to respond to this sales promotion scheme because of the valuation they
put on each extra unit of purchase. For the first unit, people’s valuation is high and therefore they
are ready to pay high price. But for the second unit, consumer’s valuation will decline and therefore
their willingness to pay will decline. This implies that consumers would be ready...
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