Asian BOGO Flu Epidemic

Ian McKee, from the Power of Influence blog, commented on our Marketing Intervention Guidelines posting expressing his concerns about the discountitis epidemic in Singapore.

The Brand Autopsy Discount Detox Center is aware of the Asian BOGO Flu epidemic having read about it in the fictitious Journal of Meaningful Marketing. Our hearts go out to those customers, businesses, and marketers in Asia affected by this virulent strain of the far too common BOGO Flu.

The “Buy One, Get One Free” discount disease has been around for decades. The antidote we administer to defuse this discount disease is an accounting mindset change. Companies most susceptible to the BOGO Flu financially account for redeemed coupons at the cost-of-goods-sold (COGS) and not at full retail value. The financial impact to a company is considerably less when they account for discounts at the COGS level.

For example, suppose you are a marketer at an Espresso Café offering the following coupon: Buy One Latte (12 fl oz.), Get One Free (equal or lesser value). The COGS of preparing a 12 oz latte is around 30 cents while the retail cost is close to $3.00. If 1,000 BOGO coupons are redeemed, the financial hit for a company accounting for the coupon at the COGS level is $300 versus a much larger financial hit of $3,000 if accounted for at full retail value.

A $2,700 discount discrepancy for 1,000 redeemed coupons is serious money.

Once discount addicted marketers are made aware of this discrepancy, they realize the fiscal affect of their discount disease. Following completion of their discount detox treatment program, these marketers return to their companies and begin advocating accounting for any and all discounts at full retail value and not at the cost-of-goods-sold.

The Brand Autopsy Discount Detox Center will gladly share our marketing antidote to the Asian BOGO Flu epidemic with the Asian Business Health Organization (ABHO). Anyone have a contact at the ABHO?

Comments

[Thomas]

Asia is overflowing with the "poison" of having millions of state-subsidized and private factories "competing" in every market there is worldwide, by all making the same errata commodities at 60% more production volume than there is demand for, and continuing to project 100% growth every year. Yep, there are going to be some deep discounts happening out there. Good for consumers perhaps, but only temporarily. The only way to "detox" this discount thing is to unplug about half of these factories, like right now. Marketers can do nothing to reverse this type of race to the bottom, brought about by gross oversupply. "Firesale!" is about the only marketing there is when the value of goods goes through the floor. Unless of course, you have built a REAL brand that has value enough to soar above the noise.