Enticing Offerings: Unveiling the Allure of Bait Products

 

1. Concept

In business administration, malicious inventory is soon made up of real financial damage, so companies rotate goods by lowering prices in consideration of opportunity costs, thereby lowering inventory and bringing customers to stores to promote customer service.

Loss leader is a general term referring to products for this purpose and is mainly used in the field of marketing.

Online shopping malls and department stores are easy to find in real life. The former uses a method of inducing clicks by sharply lowering the prices of some unpopular products, and the latter uses a method of lowering the prices of some luxury brands compared to other department stores to make them visit luxury galleries.

This is a common method in chain stores or SSMs, where a variety of items can be brought in.

2. The latest case

According to CNN and CNBC on the 25th (local time), Trader Joe’s recently raised the price of individual bananas from 19 cents to 23 cents per unit. “We only adjust the price when the cost fluctuates,” a company official told CNN. “We have maintained banana prices at 19 cents per unit for more than 20 years, so we are now at the point of making changes to the price.”

Trader Joe’s began selling bananas individually in 2001. Dan Bain, the former CEO of Trader Joe’s, revealed his story by appearing on his podcast Inside Trader Joe’s in 2018. When he was selling bananas in pounds at Trader Joe’s, he noticed an elderly customer just looking at them and not buying them.

When Bain asked the customer, “Why don’t you buy one?” the customer replied, “I’m sorry. I might not be able to eat the fourth banana.”

Starting the next day, Bain decided to sell the bananas individually. Trader Joe’s products include individual bananas that were created for 19 cents each.

They are still considered the favorite agricultural product of Trader Joe’s customers. They served as bait to drive consumers to Trader Joe’s. They also fit Trader Joe’s concept of “selling good products at reasonable prices.”

Costco, a large discount chain, is selling a similar product. Costco has pegged the price of its hot dog set at $1.5 since 1985. It hasn’t raised the price by a penny, even as prices around the world are rising.

It raised the price of its 2022 food court menu chicken bake ($2.99 → $3.99) and 20-ounce soda ($59 → 69 cents), but it hasn’t touched the price of its hot dog set.

Costco Chief Financial Officer Richard Gallanty stressed in his 2022 earnings call that he would “keep the hot dog and soda set at $1.5 forever.” Rather than thinking about making a profit from the hot dog set, the logic was applied that instead of offering hot dogs cheaply, we could attract customers and cover the profits in other sectors.

3. Consumption strategy

• Price Comparison: There is no guarantee that a decoy product is unconditionally the lowest price. Compare if different vendors or brands offer the same product for a lower price.
• Know If You Need It: Although bait products may seem attractive, ponder whether they are actually needed. Buying bait products that you don’t need can not only waste money, but also pile up unnecessary items in your home.
• Consider additional costs: Consider the additional costs you may incur from purchasing bait products. For example, you may need to purchase more products together to purchase bait products.
• Planning Your Purchase: Plan your purchase in advance so you won’t be easily tempted by bait products. It’s a good idea to take a moment to think about items that aren’t on the list, determine if they’re actually needed, and then buy them.
• Take advantage of discounts and benefits: Try taking advantage of discounts or additional benefits when purchasing bait products. You can use discount coupons or earn points to use on your next purchase.
• Check inventory status: Since bait products are often sold in limited stock, it is recommended to check inventory status and buy them early in order to actually purchase the products you need.
• Check out the multiple discounts and benefits: See if you can enjoy multiple discounts and benefits by comprehensively considering not only discounts on the bait product itself, but also cashback benefits on credit cards and membership rating benefits.