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Gift with Purchase Strategies

By: Buyer's Advisory Group
Posted: October 5, 2010

We’ve all flocked to department stores to purchase products only because there is a free gift that interested us. Simply put, gift with purchase strategies (GWP) work. People love free things. If the consumer is interested in a product but on the fence when it comes to purchasing it, the free gift could be the thing that sends the purchase over the finish line. For a product that is in a competitive market, according to Buyer's Advisory Group, giving a gift with purchase could be the token to set it apart.

Why Do It

You should have two clear objectives when designing your GWP (gift with purchase) campaign.

1. Drive customers to to a retail location.

If a product line isn't moving, it may be that no one knows what retailers carry the line. Simply put: you need to advertise. Advertising doesn’t have to expensive. Hire a graphic designer to create a flyer promoting the product line and GWP promotion.

2. Increase the average transaction amount.

GWP promotions should encourage consumers to purchase more than they normally would. The first step to determining the qualifying purchase amount is to figure out the average dollar currently spent on the line. Next:

  • The average number of products a customer will take home. For color cosmetics, for example, this is usually three pieces: foundation, powder and one colored cosmetic piece. For skin care, it is two pieces: cleanser and moisturizer.
  • The average dollar amount per transaction. Once you know what the average products are, you can find this by adding the dollar amounts of each product normally purchased. Example: XYZ Cosmetics' foundation sells for $30, powder for $27 and blush for $22. If the average customer purchases these three items their average transaction amount is $79.

You want to make your GWP qualifying purchase 10 to 20% more than the average transaction. For the above example, if the qualifying purchase is $79, a 10% increase over the average transaction would be $86.90. Or you could round it to an even number like $85.

When To Do It