" A drink that wasn't selling well becomes a bestseller when labeled 'second item half price.' Besides 'second cup half price,' there's also 'second item half price,' 'second bowl half price'... What's the secret behind this marketing tactic? " The 'second cup half price' promotion is most familiar from Western fast-food brands like KFC and McDonald's—compared to other promotions, it never seems to go out of style and offers something new every year. Ice cream, cold drinks, egg tarts, chicken wings... all have 'second item half price.' This marketing tactic is now seen in almost every food and beverage outlet. What's the real secret behind it? 01 Consumers have a 'bargain-hunting' psychology ▼ Here are two examples:

  1. You're shopping with a girl and feeling tired, so you want a drink. Faced with various tea shops around, you're overwhelmed by choice, but then you see 'second cup half price.' You think it's a good deal, so you take her there.
  2. You're a foodie who hasn't visited a certain restaurant in a while and miss it. Just then, you happen to know about the 'second cup half price' promotion. Thinking it's a loss to go alone, you start calling friends to join you. From these two examples, the merchant uses the 'second cup half price' discount to attract potential customers (first example) and drive additional consumption (second example), successfully exploiting consumers' desire to 'snag a bargain.' 02 If the second item is half price, where does the profit come from? ▼ 1. Boost single-item sales and launch new products Besides driving consumption, the items on 'second item half price' are often limited to one or two types. This setup can quickly increase sales of those specific items. On one hand, merchants can use this to introduce new products; on the other, they need to strengthen supply chain control, prepare in advance, and ensure speed and efficiency. 2. Promote special items and clear inventory Some merchants offer 'second cup half price' on drinks that might be 'special items.' For example, products that customers rarely order, but which need to be sold quickly to use up ingredients. Such products can be divided into two types: One type is high-margin but low-demand items; Another type is products like fresh-squeezed juice that 'maximize ingredient use.' A staff member at a drink shop in Beijing's Chaoyang Joy City told Neicanjun that fresh-squeezed juice is most often offered as 'second cup half price.' For instance, their orange juice uses four and a half oranges per cup. If they only make one cup, half an orange needs to be stored for next time; if they make two cups, they can directly squeeze nine oranges. 3. Pave the way for price increases Another scenario is to prepare for price hikes. As Xiao Ma Song said, no matter how reasonable your reasons for raising prices, consumers just don't like price increases. For regular customers, the price of a single item goes up, but with the 'second cup half price' strategy, the increase is offset by the half-price second cup, giving consumers a sense of 'getting a deal.' And for new customers, they might not even notice that the merchant just raised prices before the promotion. 03 What economic principles are behind 'second item half price'? ▼ 1. Price discrimination Price discrimination isn't really 'discrimination' but a differential pricing strategy. Price discrimination can mean charging different prices to different consumers, or charging different prices for different quantities purchased by the same buyer. Suppose a product has consumers willing to pay anywhere from 10 to 100 yuan— If priced at 100 yuan, it earns high unit margin but scares off low-price consumers; If priced at 10 yuan, it retains low-price consumers but doesn't fully capture the margin from high-price consumers. In this case, the best strategy for the merchant is to set different prices for different consumers. In 'second cup half price,' 'price discrimination' is aimed at price-sensitive consumers who aren't willing to pay full price for the second cup. For the merchant, of course, every bit of profit counts. But since consumers won't pay the same amount for a second serving, a differential pricing strategy is used—this is what's called 'price discrimination.' 2. Law of diminishing marginal utility Utility can be understood as the satisfaction a customer gets from consuming a product. The law of diminishing marginal utility in economics means that each additional unit consumed brings less satisfaction (utility) than the previous one. Take 'second cup half price' as an example: the consumer's 'utility' is the satisfaction from drinking the beverage. Assume satisfaction is rated from 0 to 10. The first drink might take you from 0 to 7, while the second from 7 to 9. Clearly, the first drink provides a greater boost in satisfaction than the second. If you pay the same price for both drinks, the second seems 'not worth it' or 'optional.' In this case, 'second cup half price' encourages more consumers to buy that second cup. 04 |Summary| ▼ Using 'second cup half price' has at least two benefits: First, it maximizes merchant profit. For customers who only plan to buy one drink, 'second cup half price' doesn't affect their purchase; for those who already plan to buy two, it's effectively a 25% discount; for those on the fence about a second cup, they might buy it to get the deal or persuade others to buy it. Thus, the merchant attracts price-sensitive customers with a discount, achieving promotion, while not giving discounts to those who aren't price-sensitive. This strategy increases profit more than a simple discount. Of course, the premise of 'second item half price' is to carefully calculate your costs. Second, it creates a gimmick. As a marketing tool, 'second cup half price' has an obvious purpose: to create a promotional gimmick, maintain customer relationships, and drive additional consumption. It must be admitted that compared to direct discounts or offers, 'second cup half price' inherently carries a marketing gimmick. For example, in the trend of teasing singles a few years ago, there was a saying: 'There's a kind of loneliness called second cup half price.' And in recent years, as singles started fighting back and singlehood became popular, there's also: Of course, there's another scenario, unrelated to 'loneliness' but related to 'foodies': 'Only single dogs think second cup half price is loneliness; single pigs don't, because they can drink both cups.' In any case, consumers' response to the 'second cup half price' marketing strategy proves they really fall for it. And as long as consumers are willing to pay, the marketing is a success. Source: Restaurant Owners' Internal Reference (ID: cylbnc) The 2017 (3rd) FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will focus on the theme 'New Forces, New Ecology' and invite 1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to explore a new chapter of cross-industry integration! Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 'FMCG + Internet' Summit Forum -END-