What are some interesting ways in which firms use percentages in ads?

[#1]

A common example that I bring up in class is how firms use percentages in interesting ways to make consumers believe they are getting a better deal than they actually are getting. Here are two examples:

1) BOGO (buy one get one) specials: instead of the classic "Buy one get one of equal or lesser value free", we now see more ads with "Buy one get one half off". The latter deal still sounds good, but the maximum discount (assuming the two items are equal in value) is only 25% on the overall purchase. Recently, I saw a shoe store advertise "Buy two get one half off". For this one, I had my students calculate the discount if you bought 3 shoes with price tags of $90, $70, and $40. The overall discount is $20 off $200, or only 10%. The "Buy two get one half off" sounds much better than 10% off.

2. An airline last year sent me a deal allowing me to buy extra frequent flyer miles at 50% off the regular price. Then, last month, I received another offer from the same airline that said "Receive an 80% bonus on all miles purchases". I ask my students which deal is better, and they quickly figured out that 50% off is better than an 80% bonus.

Does anyone have other examples of these types of real pricing strategies? I sometimes mention example #2 when explaining why we use the midpoint method to calculate percentages.

[vickyci]

There are also examples of ads that use fixed dollar amount discounts instead of percentages. For example, a $100 off coupon sounds much better than a 10% off coupon when buying a major appliance. Some stores, like Bed Bath and Beyond, offer two kinds of coupons: 20% off one item, and $5 off a minimum $15 purchase. Consumers would sometimes use the $5 coupon because it is potentially more valuable, but end up saving less because the item purchased is more than $25, which would have made the 20% off coupon more valuable.

[chiang]

Great example, Vicky! Thanks for sharing.

[vickyci]

This is a good topic with many examples. It's also related to behavioral economics, specifically how firms using framing techniques to attract more customers.