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If you have been searching for cheap office supplies online or discount stationery in the area, then by now you are 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 pay for pens, paper, printer ink or biscuits – specifically 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, you can still end up paying 2-3 times over the odds. A reduction promotion or buy-one-get-one-free offer is actually a warning signal, and more than likely forms element of a pricing strategy that can view you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you might be clued into the big secret – but also for the rest people, here’s the main one secret that’s planning to wipe off just as much as half your business supplies expenses in one swift movement:
Stop looking for discounted office supplies – It’s not just a call to arms over quality control – for a few situations, it may even be appropriate to go for the cost option rather than the high-end one. Nor is it about wastage and logistical planning, although proper cost analysis is an important component of controlling your office budget. Rather, it’s an issue of Bayesian signalling; Gricean logic; and, ultimately, basic principles of pricing. Though there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to go following the option using the big shiny ‘discount’ sticker on the front – even when it’s higher priced. It’s a bizarre little quirk in the human brain, then one that’s challenging to turn off – as US retailer JC Penney discovered to their ongoing regret.
Back in 2012, the supermarket giant announced that they were putting a conclusion with their promotional pricing strategy, which saw everyday staples with 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 really a 10% increase on the recommended list 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 other shifty tactics. The new system was intended not only to lower prices, but to help consumers make informed decisions regarding their groceries and budgets. The fact that Honourable Ron became Jobless Johnson within under a year probably informs you how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a feeling of anger over whatever they perceived as a betrayal; revenue and share price went into freefall; and also the company quickly returned to their previous technique of artificial markdowns. When offered the identical products with a lower pricetag, customers still preferred to pay the greater price – as long since it enjoyed a discount sticker into it.
In fact, 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, nevertheless the customer base stayed away until prices were raised – in some cases higher 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 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 same item was approximately $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 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 that they were in early 2000s.
We live in 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 upon limited information. Discounting is surely an immediate recognisable signal that the wise purchasing decision is being made, (whether true or not).
* For a person involved in B2B procurement, however, discount pricing ought to be public enemy number 1.
* Unfortunately, every workplace from your local chip shop to the state of New York has at once or other fallen victim to the same ruses that operate in the supermarket.
* Promotional pricing strategies in the office
* It’s often said disparagingly of politicians they don’t know the price of a pint of milk, (or even in the case in the mayor of New York, the price of a pen and paper).
In every honesty, however, none of us do. Milk, bread, along with other staples are typically far cheaper than they ought to be – for numerous reasons:
They might be used as being 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 may be bundled with other items included in an up-sell; sandwich-drink-and-snack deals at lunchtime are a great example, but there are invisible examples like coffee strainers and coffee (or ink and printers).
They could be utilized to build trust or complacency in the shopper, who can often judge each of the prices of the retailer based on the first or most common items that they purchase from them.
They can use tricks of human perception – like charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 and so forth); or even just including information that looks relevant but isn’t. A thing that is advertised as “Only £1.99 whenever you buy 2!” may look like a reduction, however if the single unit costs £0.99 then it’s actually more costly.
Each of the tricks outlined above, used for milk and bread, apply equally well to equivalent office basics like pens and paper. You can verify that for yourself with just a short while 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 individuals have the time, resources or inclination to research and compare grocery prices with an item-by-item level – and also the opportunity costs of rushing from supermarket to supermarket in the quest for the most affordable potatoes by gross weight actually probably reeydf the benefits. That’s why JC Penney’s consumers are slowly returning because the prices 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 possibly especially in age of information, to possess someone on staff who can perform considered, researched procurement. Somebody that can take time to perform a proper cost analysis; participate in slow thinking; and are available to your conclusion according to 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 go. So, unlike many other stationers and vendors of office supplies, we prefer to offer an impartial cost analysis to the prospective customers, along with the benefit of our genuinely competitive prices. With CP Office, there’s no fuss without any tricks – just a genuine discussion about what’s right for you along with your office.