Minimize Minimum Purchase Discount Fallout

Discounts with a minimum purchase requirement (MinPR) have the format “Buy at least five different categories of items today & get a 20% discount on your entire purchase.” This resembles the format of a multiple quantity discount (MQD) (“Buy at least five shirts today & get 20% off”). However, there is an important difference. The shopper interested in the MQD is probably sure to want a shirt. The issue is whether they really want to buy five. With the MinPR discount, the issue is whether the shopper can find five desired categories of items from the store’s entire merchandise selection.
     What if they can’t? asked researchers at Soochow University in Taiwan, and so the shopper puts into the basket one or more items they really do not long for in order to get the discount on items they do.
     As you might expect, the answer obtained by the researchers is that the shopper’s satisfaction drops and the shopper loses appreciation for the discount. Even though a MinPR discount is much less restrictive than a MQD and the shoppers are saving money on the items they want, many MinPR shoppers feel cheated. This leads to another question: Considering that MinPR discounts increase total purchase revenues, are there steps a retailer can take to avoid the negative fallout from this type of promotion?
     Yes, the researchers documented. An obvious one is to keep in stock the sorts of items shoppers want. A somewhat less obvious one is to stay alert for signs that a shopper is having trouble filling the quota and then help by making suggestions which are based on what you know about the customer, including what items they’ve already placed into the basket. Reduce the decision difficulty. Moreover, encouraging a shopper to explore your aisles is a fine way to acquaint them with all your store carries.
     Another approach to MinPR discounts and MQD has been validated by researchers at National Chung Hsing University, also in Taiwan. Multiple price breaks are in the format “Buy three and get 10% off. Buy five and get 20% off.” In addition to tempting larger quantity purchases, it also results in more single-item transactions than does “Buy five and get 20% off” alone. Perhaps it’s because single-item purchasers feel more comfortable knowing that others—those who purchase three items, but not five—are also missing out on the best per-unit price.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

Click below for more: 
Increase Purchase Quantities with Discounts
Analyze What Your Shoppers Say and Do
Escort Shoppers on In-Store Travel
Multiply Sales via Multiple-Quantity Discounts