BOGOF (Buy One Get One Free) was a concept derived back in the 18th Century, by an English Entrepreneur Adrian Gladwin. His work consist of inventing Modern Marketing where BOGOF falls under.
Modern Marketing is a holistic, adaptive methodology that connects brands with real customers and drives business results by blending strategy, creative, technology, and analysis.
BOGOF is a very common sales promotion technique found in many industry and the concept behind its success is based on the fundamentals of the actual price actually factoring into 2 products being sold. The price of ‘one’ is somewhat nominal is typically used as part of the buy one get one free model. Whilst the cost per item is proportionately cheaper than if bought on its own, if is not actually half price.
During the inception of this concept, many economist argued the value proposition of BOGOF vs a Value added product or a Discounted Product and the impact on the bottom line. A carefully designed BOGOF can be much more profitable for stores than any value added product or discounted sale.
Let’s assume that a consumer values their first pizza at $15.00 and the second one for $5.00. If the Pizza store runs a Buy 1 Get 1 Free offer for $20.00, this forces the the consumer to purchase 2 pizza’s versus if a the Pizza store were to run a 50% off discount sale, the consumer will probably only buy 1 Pizza for $10. The effectiveness of the the BOGOF offer will potentially double the revenue vs the discounted product offering
BOGOF Revenue
$20.00 – $3.00 – $3.00 = $14.00 Revenue
Discounted Offer (50%)
$10.00 – $3.00 = $7.00 Revenue
Carefully designed BOGOF’s increases the bottom line of your company, because you adjust the price more firmly, what economist call “Price Discrimination”, at $20.00 Value, the BOGOF is equivalent in charging $15.00 for the first slice and $5.00 for the second slice. These prices are ideal for the company since in the case of the Pizza industry the maximum amount pizza’s a consumer is usually willing to pay is 2. Any more will have to be up from analytics to see the effectiveness of its promotion. (I see you 3 For 1 Pizza, don’t know if this business model is more profitable than the 2 for 1 offering.) <- This will definitely have some correlation with the obesity issue in the West, but this is a whole new can of worms i don’t really want to get into with this post.
The emergence of BOGOF
Similar to what was discussed above, many mobile games have incorporated this business model by identifying the maximum amount of ‘Pizza’s’ they are willing to purchase in one sitting.
This concept is called STEP GACHA
Step Gacha is a concept that provides a step by step product offering where users can move onto the second product under the condition that they purchase the first product. Publishers are providing users with a low hanging fruit for every step a user takes with the best product offering at the last step.
Dragon Ball: Dokkan Battle has recently hit the top grossing chart by effectively executing a step gacha in one of their events, where they offered a 8 Step Multi Pull gacha.
The first few steps gives the player an initial 40% – 50% off in the multi pull summon until they reached the 4th Step.
The 4th Step is FREE!! What? Buy 3 Get 1 free!!! Shout outs to Adrian Gladwin and Modern Marketing.
Every step after the 4th provides players with an additional 5 Free Summon Tickets that goes along with their Multi Summon. Although these tickets are a lesser form versus the Premium multi summon bucket, it seem this product is elusive enough for players to opt in until they get to the 8th Step which is also Free!! BUY 8 GET 2 FREE!!
I mentioned earlier in this post that it is important that you identify the MAXIMUM amount of X your consumer is willing to buy. In the case of the Pizza Store, a consumer can only consume a certain amount of pizza, whether it’s 2 or 3. The pizza store is restricted based on the size of your stomach where these conditioned don’t apply in the mobile space. BOGOF is designed to maximize revenue by identifying the maximum amount of product your customer is willing to buy in one sitting. Based on the success of Dragon Ball: Dokkan Battle,
Buy 3 Get 1 Free
Buy 8 Get 2 Free
Is a viable product offering that players are willing to pay for, this theory hold true as Dragon Ball: Dokkan Battle hit the top grossing in the US with this product offering.
Dragon Ball: Dokkan Battle
Just a bit of a background with the developers of Dragon Ball: Dokkan Battle, although Namco Bandai publishes the game, a mid size development studio called Akatsuki plays a huge factor in the success of the title. Granted Dragon Ball is one of the biggest most recognized anime series in the world, but there’s a reason why this game still remains relevant even with its outdated traditional Japanese style Trading Card game design. Their ability to turn events, desirable product offerings and consistent content updates plays a major role in their success that extends much longer than the strength of the IP.
[ Read Dawn of Titans: The struggle to remain relevant ]
Notable other games that incorporate the Step Gacha system in their game and are top grossing in Japan
Gumi’s For whom the Alchemist Exist (誰か為のアルケミスト）
This games provides multiple step gachas, 3 step, and 9 Step Gacha.
They take their product offering a bit further than the BOFOG marketing system and created a step gacha system:
Buy 9 Choose any Hero you want to unlock for Free!
Although you still have to purchase the 9th Step, this product offering removes all probabilities and lures users to go through all the steps to obtain the character you desire. A value prop that is irresistible for whales.
For a user to choose any character they want to unlock versus a probability table is a product positioning that Gumi choose because of the hard regulations that were set in Japan with respect to Gacha system and the friction between Gacha and the drop rates. Japanese companies are forced to display the drop rates for every gacha product they provide and on top of this, in 2016 a new regulation was passed where Dev studios are required to let users obtain any character in the game after a certain bar in spending.
[ Read Japan Game Developer to self regulate their gacha system ]
Now, these regulations only apply in Japan and the drop rate is still very exploitable in the Western Market. Many companies have drop rates for their rarest characters at as low as 0.002% and it’s only a matter of time when the government will start cracking down on these systems.