Cosmetic companies often use gift-with-purchase offers to promote their products. For example, with any $35 Estee Lauder purchase at Nordstrom’s, you can choose a free gift of creams and makeup valued at $135, plus a designer cosmetic bag.
But Clarins has put a new spin on these offers with what it calls “gift with purpose.” Spend $75 on Clarins items at Macy’s and you will receive free products and the companies will provide school meals to children in need. Clarins and Macy’s hope that cosmetic buyers, many of whom are women with children, will find this opportunity to feed children particularly compelling.
Questions:
1. If you were an executive at Clarins or Macy’s, what would you want to know before approving this promotion?
2. Would you approve this promotion if it were not profitable on its own account? How much of a subsidy would you be willing to grant?
