Saturday, April 11, 2009

Buy Three Ounces, Get Five Free--And That's Our Regular Offer!





While doing some last-minute shopping in preparation for my recent trip to Guatemala, I discovered something very interesting. Almost anywhere you shop, you can buy these two items for the same price. (If you want to verify it, please click the images.)

Now the item on the left is a 3 oz. package, while the "Super Size" item on the right is 8 oz. Wow! So you can buy three ounces, and get the next five ounces for free if you purchase the item on the right.

Which begs an interesting question: If the bigger tube is by far the better value, why does Banana Boat have them priced the same? On the face of it, it would seem like no one would ever buy the 3 oz. size. And if so, Banana Boat would notice this and begin cutting the price on the 3 oz. size. But they don't.

So does Banana Boat know what they are doing? Or are they destined to fail this summer due to silly pricing?

I think Banana Boat is probably getting it right, and here are two of my suggestions why. First, the marginal cost of five more ounces of sunscreen must be very, very small for a company that is already making so much of it. And if many of their costs involve packaging (i.e., the tubes), shipping, and distribution, then perhaps they are willing to give five ounces away to anyone willing to cough up the full price of the smaller bottle.

Here's my other one, and one I like very much. When you go through security at a U.S. airport these days, you are not permitted to have any liquid health/beauty items larger than three ounces in your carry-on baggage. So I suspect that demand is up--way up--for three-ounce sizes of all kinds of health/beauty items, including sunscreen. And given the higher demand, Banana Boat can charge a surprisingly high price for the smaller, but legal-to-take-on-board, three ounce size.

Well, those are my first reflections. If you think of others, please leave a comment!

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