If you’ve been trying to find School Store 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 the right price to pay for pens, paper, printer or biscuits – specially when you’re ordering in big amounts. Whomever your supplier is, you’re very likely to achieve massive savings over high-street prices.
On the contrary, it is possible to still find yourself paying two to three times within the odds. A discount promotion or buy-one-get-one-free offer is a warning signal, and almost definitely forms element of a pricing strategy which will view you paying more for stationery and office supplies.
If you’re a monetary director or office administrator, you could be clued in to the big secret – but throughout us, here’s usually the one secret that’s planning to wipe off just as much as half your office supplies expenses in one swift movement:
Stop searching for discounted office supplies
It’s not a call to arms over quality control – for many situations, it could be appropriate to go for your budget option as opposed to the high-end one. Nor will it be about wastage and logistical planning, although proper cost analysis is an important element of managing your office budget. Rather, it’s a matter of Bayesian signalling; Gricean logic; and, ultimately, basic principles of pricing. Though there are complicated concepts at work, it comes down to simple human nature.
We’re hard-wired to go right after the option with all the big shiny ‘discount’ sticker on the front – even though it’s higher priced. It’s a bizarre little quirk in the brain, and one that’s hard to shut down – as US retailer JC Penney discovered with their ongoing regret.
Back in 2012, the supermarket giant announced they were putting an end for their promotional pricing strategy, which saw everyday staples at a permanent discount. Like most supermarkets, JC Penney was artificially inflating their shelf prices before giving them an arbitrary discount. Occasionally, a 50% discount was actually a 10% increase on the recommended list price.
The incoming CEO Ron Johnson announced a shift to a different, ‘honest’ system of pricing without the fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or some other shifty tactics. The newest system was intended not just to less expensive costs, but to help consumers make informed decisions with regards to their groceries and budgets. The reality that Honourable Ron became Jobless Johnson within less than a year probably tells you how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with feelings of anger over the things they perceived as a betrayal; revenue and share price went into freefall; as well as the company quickly returned to their previous strategy of artificial markdowns. When offered exactly the same products using a lower pricetag, customers still preferred to pay the higher price – as long as it enjoyed a discount sticker onto it.
In reality, JC Penney customers were so offended by the disastrous strategy that brand loyalty not just went down, with perceived trustworthiness falling as prices decreased; but stayed down too. The sgzvks actually issued an apology to jilted shoppers, nevertheless the subscriber base stayed away until prices were raised – in some instances more than they originally were. A business commentator had this to state:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. What it really has discovered is that the prices of certain items-designer furniture, specifically-have risen by 60% or more at JC Penney almost overnight. One week, a side table was listed at $150; several days later, the “everyday” price for the same item was approximately $245.”
Discount pricing strategies are virtually par for that course on the high street – and, as the BBC uncovered, many of them are as arbitrary and misleading as JC Penney’s. And, in most cases, they make sense coming from a B2C perspective. The Chartered Institute of promoting claims that attention spans are limited to 8 seconds, rather than the 12 seconds they were in the early 2000s.
We reside in the details age: a world of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers want to make decisions quickly according to limited information. Discounting is an immediate recognisable signal that the wise purchasing decision is being made, (whether true or otherwise not).
For a person involved with B2B procurement, however, discount pricing needs to be public enemy number 1. Unfortunately, every workplace out of your local chip shop to the state of New York has at one time or other fallen victim to the same ruses that function in the supermarket.
Promotional pricing strategies in the office. It’s often said disparagingly of politicians that they don’t know the price of a pint of milk, (or with regards to the mayor of brand new York, the buying price of a pen and paper). In all honesty, however, none individuals do.
Milk, bread, along with other staples are typically far cheaper than they must be – for any number of reasons:
They could be used as a loss leader, to attract in customers who’ll then pay more for other things.
They might be inferior-quality versions utilized to undercut competitors.
They could be bundled along with other items as part of an up-sell; sandwich-drink-and-snack deals at lunchtime are a good example, but there are invisible examples like coffee strainers and coffee (or printer ink and printers).
They may be utilized to build trust or complacency in the shopper, who can often judge each of the prices of any retailer based on the first or most frequent items that 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 and so on); or even just including information that looks relevant but isn’t. Something which is advertised as “Only £1.99 whenever you buy 2!” may seem like a price reduction, however if the single unit costs £0.99 then it’s actually more expensive.
All the tricks outlined above, utilized for milk and bread, apply equally well to equivalent office basics like pens and paper. You are able to verify that on your own with just a few minutes of searching – or checking your most current receipt.
In daily life there’s not much we could do about this kind of obfuscation. Only a few folks have enough time, resources or inclination to research and compare grocery prices upon an item-by-item level – and the opportunity costs of rushing from supermarket to supermarket in the search for the most affordable potatoes by gross weight actually probably outweigh the rewards. That’s why JC Penney’s customers are slowly returning as the prices are rising.
A company facing similar purchasing options, however, has the benefit of an economic director to safeguard its decision-making process.
There’s still scope, even or possibly especially in the age of information, to possess someone on staff who are able to perform considered, researched procurement. Somebody who can take time to conduct a proper cost analysis; participate in slow thinking; and are available to some conclusion based upon facts instead of on sound and fury.
While honesty didn’t exercise very well for Ron Johnson, we at CP Office still believe that it’s both worthwhile and worth a shot. So, unlike various other stationers and vendors of Wholesale Distributors, we prefer to offer an impartial cost analysis to the potential customers, along with the advantage of our genuinely competitive prices. With CP Office, there’s no fuss without any tricks – just a sincere discussion about what’s best for you as well as your office.