Brand factory from Big Bazaar has come out with an offer – “Free shopping”. All of us must be licking our jowls, free is the trigger that all of us love. There is no free lunch in this world. There are lots of catches.
“The offer is this - buy goods worth Rs 5000/- and pay only Rs 2000/- and get even that back. Rs 500 worth merchandise, 1000/- shopping vouchers and Rs 500/- cash back from Big Bazaar e-wallet”
Let us remember
Brand Factory is a commercial enterprise, they need the sale and that too they need a profit. So even at Rs 2000/- they will make profit
There is an entry fee, Rs 100 and Rs 250/- so window shoppers are discouraged and that is extra money for Brand Factory
The entry fee will be deducted from the free stuff.
So let us take what we pay, we pay exactly Rs 2,000/- and Big Bazaar expects to make atleast Rs 200/- per purchase (10% margin)
As we can assume that most goods would be over priced by atleast 100% so our goods that we purchase for Rs 5000/- are actually worth only Rs 2,500/-. Brand Factory would also push its in-house brands mark-ups could even be up to 300%. So when we pay Rs 2000/- that goods could be worth only Rs 1500/- to Rs 1600/- to big Bazaar.
What is being returned. Rs 2000/- is already less by Rs 100/- (remember the entry fee).
The Rs 500/- worth merchandise is worth only may be Rs 200/-. Shopping vouchers are for high priced items like a hair salon where it would be redeemed only for a purchase much above the Rs 1000/- voucher given that is could be redeemed if the bill is atleast Rs 10,000 (may be Brand Factory even gets a cut from the hair salon).
The Rs 500/- cash back from the e-wallet is tied up with lots of other payments that we make and I am sure that brand factory will be able to get a loyal clientele and also get commission from the party to which we are making digital payments.
In all it looks like a good marketing strategy from Brand factory let us see if it succeeds or remains a marketing gimmick.