If you’ve been searching for cheap office supplies online or discount stationery in your town, 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 the right price to pay for pens, paper, printer ink or biscuits – particularly when you’re ordering in big amounts. Whomever your supplier is, you’re likely to achieve massive savings over high-street prices.
On the other hand, you can still find yourself paying 2-3 times on the odds. A discount promotion or buy-one-get-one-free offer is really a warning signal, and almost definitely forms element of a pricing strategy that will view you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you might be clued in the big secret – but for the rest individuals, here’s the one secret that’s going to wipe off just as much as half your business supplies expenses in one swift movement:
Stop searching for discounted office supplies – It’s not really a call to arms over quality control – for a few situations, it may even be appropriate to choose the cost option rather than the high-end one. Nor is it about wastage and logistical planning, although proper cost analysis is a crucial element of managing your office budget. Rather, it’s a matter of Bayesian signalling; Gricean logic; and, ultimately, basic principles of pricing. Even though there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to travel right after the option with 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 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 stop to their promotional pricing strategy, which saw everyday staples in a permanent discount. Like 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 list price.
The incoming CEO Ron Johnson announced a shift to an alternative, ‘honest’ system of pricing without the fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or other shifty tactics. The new system was intended not just to lower prices, but to assist consumers make informed decisions regarding their groceries and budgets. The fact 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 sense of anger over whatever they perceived as a betrayal; revenue and share price went into freefall; and also the company quickly returned for their previous technique of artificial markdowns. When offered the identical products with a lower pricetag, customers still preferred to pay for the larger price – as long because it enjoyed a discount sticker onto it.
In reality, JC Penney customers were so offended from the disastrous strategy that brand loyalty not merely went down, with perceived trustworthiness falling as prices decreased; but stayed down too. The company actually issued an apology to jilted shoppers, but the customer base stayed away until prices were raised – sometimes higher 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 has discovered is that the prices of certain items-designer furniture, specifically-have risen by 60% or even more at JC Penney almost overnight. 1 week, a side table was listed at $150; a few days later, the “everyday” price for the similar item was up to $245.”
Discount pricing strategies are virtually par for the course on the high street – and, since the BBC uncovered, most of them are as arbitrary and misleading as JC Penney’s. And, for the most part, they create sense from a B2C perspective. The Chartered Institute of advertising claims that attention spans are restricted to 8 seconds, instead of the 12 seconds they were in the early 2000s.
We live inside the information age: a world of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers want to make decisions quickly based on limited information. Discounting is surely an immediate recognisable signal which a wise purchasing decision is being made, (whether true or not).
* For somebody associated with B2B procurement, however, discount pricing ought to be public enemy number 1.
* Unfortunately, every workplace from the local chip shop for the state of brand new York has at the same time or some other fallen victim towards the same ruses that function in the supermarket.
* Promotional pricing strategies in the office
* It’s often said disparagingly of politicians which they don’t know the buying price of a pint of milk, (or perhaps in the case in the mayor of New York, the buying price of a pen and paper).
In most honesty, however, none people do. Milk, bread, as well as other staples are usually far less than they should be – for numerous reasons:
They may be used being a loss leader, to draw in in customers who’ll then pay more for other things.
They may be inferior-quality versions used to undercut competitors.
They might be bundled with other items included in 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 might be employed to build trust or complacency within the shopper, who can often judge all of the prices of the retailer based on the first or most typical items which they purchase from them.
They could use tricks of human perception – including charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 and so on); or even just including information that appears relevant but isn’t. A thing that is advertised as “Only £1.99 once you buy 2!” may look like a 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 can verify that yourself with just a couple of minutes of searching – or checking your most current receipt.
In day-to-day life there’s very little we can do relating to this kind of obfuscation. Not many people have enough time, resources or inclination to investigate and compare grocery prices on 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 reality probably reeydf the rewards. That’s why JC Penney’s consumers are slowly returning as the prices are rising.
A company facing similar purchasing options, however, has the advantage of an economic 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 can perform considered, researched procurement. Somebody who can take time to perform a proper cost analysis; take part in slow thinking; are available to your conclusion according to facts instead of 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 shot. So, unlike many other stationers and vendors of office supplies, we would rather offer an impartial cost analysis to the prospective customers, in addition to the benefit from our genuinely competitive prices. With CP Office, there’s no fuss without any tricks – just a sincere discussion about what’s right for you along with your office.