How Companies Make Money on Black Friday

1. Lure customers in with freakish deals (a.k.a. doorbusters/loss-leaders).
2. Expose them to more profitable/better offerings that rival their target buys.
3. Strengthen business with more profits.

For instance:

1. "Item X for $50!"
2. Customer sees Item Y, which is better/nicer/more-profitable.
3. Customer chooses Item Y instead.

The ideal result is the company sells more profitable items than the unprofitable ones.

What Smarter Companies Do First

Speculating that the above will happen = gambling (results in a net profit growth of zero if done over the long-term).

BOO.

The financially-smarter companies would do this instead:

1. First, test an intended campaign with a sample group -- e.g., 1000 prospects -- with (a) the freakish-unprofitable deal, and (b) a profitable deal.
2. See what buys result from the test.
3. If the test results in ideal profits, promote and run with the campaign on Black Friday (or some other large scale campaign).

That is:

• 'We're okay with losing $ on Item A.'
• 'The marketing of Item A however will bring in more customers, which allows us to expose more prospects to the better/stronger/more-profitable rival, Item B'

And If All Else Fails

The shady trick:

1. Stock a super limited supply of Item X.
2. Promote the %$^@ out of it to attract large numbers.
3. When the first 0.01% buys Item X, the store will expose the other 99.99% to the profitable Item Y instead.

(More numbers. More pitches. More sales.)

The Cumulative Results.

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