If you’ve been trying to find School Store Supplies or discount stationery in your 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 an appropriate price to cover pens, paper, ink or biscuits – specially when you’re ordering in big amounts. Whomever your supplier is, you’re prone to achieve massive savings over high-street prices.
On the other hand, you are able to still wind up paying 2 to 3 times within the odds. A discount promotion or buy-one-get-one-free offer is actually a warning signal, and almost certainly forms element of a pricing strategy that will look at you paying more for stationery and office supplies.
If you’re a monetary director or office administrator, you could be clued in the big secret – but throughout us, here’s the main one secret that’s going to wipe off around half your workplace supplies expenses in just one swift movement:
Stop searching for discounted office supplies
It’s not really 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 is it about wastage and logistical planning, although proper cost analysis is an important part of managing your office budget. Rather, it’s an issue of Bayesian signalling; Gricean logic; and, ultimately, basic principles of pricing. Although there are complicated concepts at the job, it boils down to simple human nature.
We’re hard-wired to visit following the option using the big shiny ‘discount’ sticker on the front – even though it’s more expensive. It’s a bizarre little quirk of the brain, then one that’s difficult to shut down – as US retailer JC Penney discovered to their ongoing regret.
Back in 2012, the supermarket giant announced they were putting a conclusion to 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 offering them an arbitrary discount. Sometimes, a 50% discount was really a 10% increase on the recommended retail 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 any other shifty tactics. The newest system was intended not just to lower prices, 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 a sense of anger over the things they regarded as a betrayal; revenue and share price went into freefall; as well as the company quickly returned with their previous strategy of artificial markdowns. When offered exactly the same products using a lower pricetag, customers still preferred to pay for the greater price – provided that it had a discount sticker onto it.
In reality, JC Penney customers were so offended by the disastrous strategy that brand loyalty not merely 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 – sometimes higher than they originally were. A niche commentator had this to express:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. What it really has discovered is the fact that prices of certain items-designer furniture, in particular-have risen by 60% or maybe more at JC Penney almost overnight. 1 week, a side table was listed at $150; a few days later, the “everyday” price for the very same item was up to $245.”
Discount pricing strategies are pretty much par for your course on the high-street – and, as the BBC uncovered, a lot of them are as arbitrary and misleading as JC Penney’s. And, typically, they create sense from the B2C perspective. The Chartered Institute of promoting claims that attention spans are limited to 8 seconds, instead of 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 need to make decisions quickly according to limited information. Discounting is an immediate recognisable signal that a wise purchasing decision has been made, (whether true or not).
For a person involved in B2B procurement, however, discount pricing needs to be public enemy number one. Unfortunately, every workplace out of your local chip shop to the state New York has at once or other fallen victim towards the same ruses that operate in the supermarket.
Promotional pricing strategies at the office. It’s often said disparagingly of politicians they don’t know the price of a pint of milk, (or when it comes to the mayor of New York, the cost of a pen and paper). In all honesty, however, none of us do.
Milk, bread, and other staples are typically far less expensive than they must be – for any number of reasons:
They might be used being a loss leader, to draw in in customers who’ll then pay more for other considerations.
They may be inferior-quality versions used to undercut competitors.
They might be bundled along with other items as an element of an up-sell; sandwich-drink-and-snack deals at lunchtime are a great example, but you can find invisible examples like coffee strainers and coffee (or printer and printers).
They may be employed to build trust or complacency inside the shopper, who can often judge all the prices of any retailer based on the first or most typical things that they buy from them.
They can use secrets to human perception – such as charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 and so on); as well as just including information seems relevant but isn’t. A thing that is advertised as “Only £1.99 once you buy 2!” may look like a discount, however, if the single unit costs £0.99 then it’s actually higher priced.
All the tricks outlined above, used for milk and bread, apply equally well to equivalent office basics like pens and paper. You can verify that yourself with just a couple minutes of searching – or checking your latest receipt.
In daily life there’s very little we could do about this kind of obfuscation. Very few folks have time, resources or inclination to research and compare grocery prices with an item-by-item level – and the opportunity costs of rushing from supermarket to supermarket in the search for the least expensive potatoes by gross weight in fact probably outweigh the advantages. That’s why JC Penney’s consumers are slowly returning as the costs are rising.
A business facing similar purchasing options, however, has the advantage of a financial director to protect its decision-making process.
There’s still scope, even or perhaps particularly in age of information, to possess someone on staff who are able to perform considered, researched procurement. Somebody that can take the time to do a proper cost analysis; participate in slow thinking; and are available to your conclusion based upon facts instead of on sound and fury.
While honesty didn’t figure out so well for Ron Johnson, we at CP Office still believe that it’s both worthwhile and worth a try. So, unlike various other stationers and vendors of Wholesalers, we would rather present an impartial cost analysis to our potential customers, along with the benefit from our genuinely competitive prices. With CP Office, there’s no fuss without any tricks – just an honest discussion about what’s right for you along with your office.