If you’ve been trying to find Cheap School Supplies or discount stationery in the area, then right now you’re probably feeling like you’ve stumbled onto the set of Carry On At The Circus. It’s difficult to get a read on what’s a suitable price to cover pens, paper, printer or biscuits – specifically when you’re ordering in bulk. Whomever your supplier is, you’re prone to achieve massive savings over high-street prices.
On the contrary, it is possible to still find yourself paying 2 to 3 times on the odds. A price reduction promotion or buy-one-get-one-free offer is a warning signal, and almost definitely forms part of a pricing strategy that will see you paying more for stationery and office supplies.
If you’re a monetary director or office administrator, you could already be clued in to the big secret – but for the rest of us, here’s the main one secret that’s going to wipe off just as much as half your workplace supplies expenses in one swift movement:
Stop looking for discounted office supplies
It’s not a call to arms over quality control – for some situations, it may be appropriate to choose your budget option as opposed to the high-end one. Nor could it be about wastage and logistical planning, although proper cost analysis is a vital element of controlling your office budget. Rather, it’s a question of Bayesian signalling; Gricean logic; and, ultimately, fundamental principles of pricing. Though there are complicated concepts at the job, it depends upon simple human nature.
We’re hard-wired to visit after the option with all the big shiny ‘discount’ sticker on the front – even if it’s more expensive. It’s a bizarre little quirk from the brain, and one that’s hard to switch off – as US retailer JC Penney discovered for their ongoing regret.
Back in 2012, the supermarket giant announced that they were putting a conclusion for their promotional pricing strategy, which saw everyday staples in a permanent discount. Similar to most supermarkets, JC Penney was artificially inflating their shelf prices before providing them with an arbitrary discount. Sometimes, a 50% discount was actually a 10% increase on the recommended retail price.
The incoming CEO Ron Johnson announced a shift to a new, ‘honest’ system of pricing with no fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or any other shifty tactics. The new system was intended not just in less expensive costs, but to assist consumers make informed decisions about their groceries and budgets. The reality that Honourable Ron became Jobless Johnson within less than a year probably lets you know how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with feelings of anger over what they perceived as a betrayal; revenue and share price went into freefall; and the company quickly returned for their previous technique of artificial markdowns. When offered exactly the same products with a lower pricetag, customers still preferred to pay for the larger price – as long as it enjoyed a discount sticker onto it.
In reality, JC Penney customers were so offended from the disastrous strategy that brand loyalty not only went down, with perceived trustworthiness falling as prices decreased; but stayed down too. The sgzvks actually issued an apology to jilted shoppers, however the customer base stayed away until prices were raised – in some cases greater than they originally were. An industry commentator had this to express:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. What it has discovered is that the prices of certain items-designer furniture, particularly-have risen by 60% or more at JC Penney almost overnight. 1 week, a side table was listed at $150; several days later, the “everyday” price for the similar item was up to $245.”
Discount pricing strategies are basically par for that course on the high street – and, because the BBC uncovered, a lot of them are as arbitrary and misleading as JC Penney’s. And, for the most part, they can make sense from a B2C perspective. The Chartered Institute of Marketing claims that attention spans are restricted to 8 seconds, rather than the 12 seconds they were during the early 2000s.
We are now living in the information age: a world of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers need to make decisions quickly according to limited information. Discounting is definitely an immediate recognisable signal that a wise purchasing decision is being made, (whether true or otherwise).
For someone involved in B2B procurement, however, discount pricing needs to be public enemy primary. Unfortunately, every workplace from your local chip shop to the state New York City has at one time or other fallen victim for the same ruses that function in the supermarket.
Promotional pricing strategies in the workplace. It’s often said disparagingly of politicians that they don’t know the buying price of a pint of milk, (or when it comes to the mayor of New York, the buying price of a pen and paper). In most honesty, however, none individuals do.
Milk, bread, and other staples are generally far less expensive than they ought to be – for a variety of reasons:
They may be used as being a loss leader, to draw in customers who’ll then pay more for other items.
They could be inferior-quality versions used to undercut competitors.
They may be bundled with other items as an element of an up-sell; sandwich-drink-and-snack deals at lunchtime are a wonderful example, but you can find invisible examples like coffee strainers and coffee (or printer and printers).
They could be utilized to build trust or complacency inside the shopper, who can often judge all the prices of the retailer based on the first or most frequent items which they purchase from them.
They might use secrets to human perception – such as charm pricing (like.9 or.7); pricing under benchmarks (like £1, £5, £10 etc); or even just including information that appears relevant but isn’t. Something which is advertised as “Only £1.99 when you buy 2!” may look like a reduction, however if the single unit costs £0.99 then it’s actually more expensive.
Each of the tricks outlined above, employed for milk and bread, apply equally well to equivalent office basics like pens and paper. You are able to verify that for yourself with just a few minutes of searching – or checking your most current receipt.
In everyday life there’s not much we are able to do about this kind of obfuscation. Not many people have enough time, resources or inclination to analyze and compare grocery prices upon an item-by-item level – as well as the opportunity costs of rushing from supermarket to supermarket in the search for the most affordable potatoes by gross weight in fact probably outweigh the benefits. That’s why JC Penney’s customers are slowly returning because the charges are rising.
A business facing similar purchasing options, however, has the advantage of a financial director to safeguard its decision-making process.
There’s still scope, even or perhaps specifically in the age of information, to get someone on staff who are able to perform considered, researched procurement. Someone who can spend some time to conduct a proper cost analysis; participate in slow thinking; are available to some conclusion based upon facts rather than on sound and fury.
While honesty didn’t figure out so well for Ron Johnson, we at CP Office still think that it’s both worthwhile and worth a try. So, unlike many other stationers and vendors of Wholesalers, we prefer to present an impartial cost analysis to the potential customers, in addition to the benefit from our genuinely competitive prices. With CP Office, there’s no fuss with no tricks – just a sincere discussion about what’s right for you as well as your office.