Which is better: A markdown or a freebie?

Don't Waste Your Money

Freebies or markdowns: which do you prefer? A report claims that most customers prefer the wrong one.

While most us love a sale, a new study finds that simply lowering prices doesn't get people to buy more.

But it finds that adding a free bonus does.

Shoppers ignoring lower prices

JC Penney made headlines in the past couple of years with a new everyday low price strategy. But shoppers, for the most part shrugged, and sales dropped 15 percent. Why?

A study by the Journal of Marketing claims shoppers prefer bonuses, like BOGO (buy one get one) to markdowns, or a small freebie like a scarf, bracelet, or even a free tube of lipstick.

It did a test where a store marked down a product 35 percent for a week, then offered "50 percent more free" for a second week.

The store sold much more with the 50 percent free promotion, even though it was not the better deal. The markdown actually was a better value.

Doesn't that stink?

And from the "doesn't that stink?" file, what this means to you. It means that stores have found a way to avoid huge markdowns, but still make you think you are getting one.

Doesn't that stink?

So next time you see an an ad promising a free scarf if you buy something, you'll know the reason.

That little freebie sells more products than a big markdown. It's all basic psychology.

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