I was just reading about this online sale that a large company was implementing where it was selling various items at a huge discount. To add to the suspense you won’t know what is going to be on sale until the last minute. Therefore, you have everyone scattering at the last minute which creates buzz. While they are definitely good deals, the stock quantity is extremely limited. Example, imagine buying a $1000 TV that is on sale for $500 and they only have one available for sale.
Usually companies do this simply for exposure. Especially those that want you to sign up for say a newsletter to do so. I know many times people would ask how they can afford to lose that much money selling the product even if it is for exposure. For that point, just think of how much say a traditional TV ad can cost.
Let’s be nice and say it is $20,000 for a 30 second TV spot. So like with the TV let’s pretend it has to sell for a thousand just for you to break even. Instead, for this promotion you sell it for $200. Assuming we are using the $20,000 example that you would have normally spent for advertising, instead you now sell 25 of those TV’s for $200 which means a $20,000 loss. Considering every other place sells it for $1000+, you can imagine the buzz and word of mouth advertising that could be generated this way.
In many ways you can consider these as loss leaders too. But a lot of times as a consumer when I see companies offer these types of promotion with such limited quantities I am not exactly going to spend all day hoping to get one at that low price as it is almost like winning the lottery. In so many cases too usually someone on the inside gives away the information ahead of time to friends and family members who end up getting it first too as well. Time better spent making more money I’d say.