If you’ve been trying to find Cheapest School Supplies or discount stationery in the area, then by 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 an appropriate price to fund pens, paper, ink or biscuits – particularly when you’re ordering in large quantities. Whomever your supplier is, you’re likely to achieve massive savings over high-street prices.
On the other hand, it is possible to still find yourself paying two to three times on the odds. A reduction promotion or buy-one-get-one-free offer is really a warning signal, and almost definitely forms a part of a pricing strategy that can see you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you could already be clued in to the big secret – but throughout us, here’s the main one secret that’s planning to wipe off around half your workplace supplies expenses in one swift movement:
Stop looking for discounted office supplies
It’s not really a call to arms over quality control – for many situations, it could be also appropriate to get your budget option instead of the high-end one. Nor could it be about wastage and logistical planning, although proper cost analysis is a crucial part of controlling 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 the office, it comes down to simple human nature.
We’re hard-wired to go after the option using the big shiny ‘discount’ sticker on the front – even when it’s more expensive. It’s a bizarre little quirk from the human brain, and something that’s difficult to shut down – as US retailer JC Penney discovered for their ongoing regret.
In 2012, the supermarket giant announced that they were putting a conclusion for their promotional pricing strategy, which saw everyday staples with a permanent discount. Like the majority of supermarkets, JC Penney was artificially inflating their shelf prices before giving them an arbitrary discount. Sometimes, a 50% discount was actually a 10% increase on the recommended list price.
The incoming CEO Ron Johnson announced a shift to a new, ‘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 new system was intended not just in less expensive costs, but to help consumers make informed decisions regarding their groceries and budgets. The truth that Honourable Ron became Jobless Johnson within under a year probably lets you know how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a feeling of anger over the things they regarded as a betrayal; revenue and share price went into freefall; and also the company quickly returned with their previous strategy of artificial markdowns. When offered exactly the same products with a lower pricetag, customers still preferred to cover the larger price – as long as it had a discount sticker onto it.
Actually, JC Penney customers were so offended through 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, nevertheless the customer base stayed away until prices were raised – sometimes 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 would be 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 very same item was as much as $245.”
Discount pricing strategies are basically par for the course on the high-street – and, as the BBC uncovered, many of them are as arbitrary and misleading as JC Penney’s. And, typically, they make sense from the B2C perspective. The Chartered Institute of advertising claims that attention spans are limited to 8 seconds, as opposed to the 12 seconds they were in the early 2000s.
We live in the details age: a world of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers have to make decisions quickly based on limited information. Discounting is definitely an immediate recognisable signal that a wise purchasing decision is being made, (whether true or otherwise not).
For a person involved with B2B procurement, however, discount pricing ought to be public enemy number one. Unfortunately, every workplace out of your local chip shop to the state of New York has at once or some other fallen victim towards the same ruses that function in the supermarket.
Promotional pricing strategies in the workplace. It’s often said disparagingly of politicians they don’t know the buying price of a pint of milk, (or in the case of the mayor of the latest York, the cost of a pen and paper). In all honesty, however, none individuals do.
Milk, bread, along with other staples are typically far cheaper than they ought to be – for a variety of reasons:
They could be used being a loss leader, to attract in customers who’ll then pay more for other considerations.
They may be inferior-quality versions employed to undercut competitors.
They might be bundled with other items as part of an up-sell; sandwich-drink-and-snack deals at lunchtime are a good example, but you will find invisible examples like coffee strainers and coffee (or printer ink and printers).
They may be utilized to build trust or complacency inside the shopper, who will often judge each of the prices of the retailer based on the first or most frequent items which they purchase from them.
They could use tricks of human perception – like charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 and so on); as well as 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 of the tricks outlined above, used for milk and bread, apply equally well to equivalent office basics like pens and paper. It is possible to verify that for yourself with just a couple minutes of searching – or checking your most recent receipt.
In daily life there’s not a whole lot we are able to do about this sort of obfuscation. Not many people have the time, resources or inclination to investigate and compare grocery prices upon an item-by-item level – and the opportunity costs of rushing from supermarket to supermarket in the quest for the cheapest potatoes by gross weight actually probably outweigh the benefits. That’s why JC Penney’s clients are slowly returning because the costs are rising.
A company facing similar purchasing options, however, has the main benefit of a monetary director to safeguard its decision-making process.
There’s still scope, even or maybe especially in age information, to get someone on staff who are able to perform considered, researched procurement. Somebody that can take time to conduct a proper cost analysis; engage in slow thinking; are available to a conclusion based on facts rather than on sound and fury.
While honesty didn’t work out so well for Ron Johnson, we at CP Office still think that it’s both worthwhile and worth a try. So, unlike various other stationers and vendors of Buying In Bulk, we prefer to provide an impartial cost analysis to the potential customers, along with the benefit from our genuinely huge discounts. With CP Office, there’s no fuss with no tricks – just an honest discussion about what’s most effective for you as well as your office.