Don't Waste Your Money: Freebies vs. Markdowns - Toledo News Now, Breaking News, Weather, Sports, Toledo

Don't Waste Your Money: Freebies vs. Markdowns

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(Toledo News Now) - More and more stores are turning to bonuses and freebies instead of sales.

Freebies or markdowns: Which do you prefer?

While most of us love a sale, a new study finds that simply lowering prices doesn't get people to buy more, but adding a free bonus does.

Shoppers Ignoring Lower Prices

JC Penney made headlines earlier this year with its new everyday low price strategy. But shoppers, for the most part, shrugged, and sales dropped 15 percent. Why?

A new study by the Journal of Marketing claims shoppers prefer bonuses to markdowns. For example, BOGO deals (buy one get one). The Journal 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?

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 ad promising a free iPod if you buy something, you'll know the reason. That little freebie sells more products than a big markdown. It's all basic psychology.

Now you know, so you don't waste your money.

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