SMART HYVEE GAS STATION MARKETING TACTIC FOOLS THE MASSESThe HyVee company has a sneaky marketing tactic that takes them straight to the bank. It is so stupidly obvious as to how it works that it is brilliant. What has me stumped is why people fall for it month after month.
Here's how it works...
The HyVee gas station has a "sale" on gas every once in a while, ranging from three cents to a whopping fifteen cents off per gallon when you pay inside the convenience store and show a valid HyVee grocery store receipt. Sounds like a fair offer. You get a great discount on gasoline, and all you have to do is to have the courtesy of shopping their grocery store for the things you have to buy anyway. Today just happens to be one of the big fifteen-cents-per-gallon discount days, and there is a line backed up growing out of the parking lot for the discount.
I used to get as excited as everyone else about the 15-cent discount when it happened, until I figured out what they were doing. By simple observation, I found out what the hucksters behind the HyVee promotion are really doing.
My first observation relates to gas pricing trends. I noticed that the 15-cents discount only shows up when gas seems to be in a free-fall. Not once do I remember ever seeing the 15-cent deal occurring when gas prices are on the rise. Today, gas in Missouri is averaging $2.20 per gallon. It's still priced at $2.35 in Jefferson City. I travel the state for my job, so I always take note of gas pricing trends in different areas. Earlier this week, I had seen gas stations on the West side of the state pricing gas as low as $2.15, and stations on the East side settling in at the $2.20 level.
But back to the point... coming home each day, I noticed that gas was still sitting at $2.35 a gallon, but it was obvious that we were about to fall back towards $2.20 where the rest of the state happens to be. Coming home today I drove past HyVee gas station, and there is the sign outside with the "15 cents discount!" out on the parking lot.
So why did they pick today as the 15 cent discount day? It's because the market price has already dropped to $2.20. But instead of just dropping the price like everyone else, they keep the per-gallon price set at $2.35 and offer the 15 cent discount. Either way, the gasoline is still going to be $2.20 per gallon. But to the unsuspecting public, it looks like a massive discount on a commodity that normally is never discounted.
The lines are long, and it is pure mayhem at the HyVee gas station. And it goes without saying that the HyVee grocery store is jam-packed with people making purchases just to get the receipt they need to qualify for the discount at the gas station.
The most brilliant part about this marketing scheme is the fact that HyVee benefits in THREE WAYS. They are as follows:
1. An extremely high number of people will buy HyVee gasoline, and they will build loyalty for providing such a great gas "discount", unlike any other gas station.
2. The grocery store will turn in great sales totals for the day, because the customers are required to have HyVee grocery store receipts to get the gas discount. Even though a receipt from any day of the week will work, most people don't keep them. So they have to go back and buy more stuff to get a fresh receipt.
3. You cannot get the discount at the gas station if you pay at the pump. You have to pay inside and present your HyVee grocery store receipt. Forcing the mob to pay inside means a spike in convenience store sales, thus generating even more profit.
And all of this is made possible by hanging on the the price of gas during a declining market, just for one extra day, instead of changing the price when it should be changed. Tomorrow, all of the people who waited in line to get their 15-cent-per-gallon discount will have full tanks of gas, and won't be back to the gas station... to notice that the price has dropped by the same amount.
Brilliant.
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