If you’ve been trying to find Cheapest School Supplies or discount stationery in your town, then at this point 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 cover pens, paper, ink or biscuits – specifically when you’re ordering in big amounts. Whomever your supplier is, you’re likely to achieve massive savings over high-street prices.
On the contrary, it is possible to still find yourself paying two to three times over the odds. A discount promotion or buy-one-get-one-free offer is really a warning signal, and more than likely forms part of a pricing strategy which will look at you paying more for stationery and office supplies.
If you’re a monetary director or office administrator, you might be clued in to the big secret – but throughout us, here’s usually the one secret that’s going to wipe off just as much as half your workplace supplies expenses in just one swift movement:
Stop looking 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 get the cost 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 question of Bayesian signalling; Gricean logic; and, ultimately, fundamental principles of pricing. Though there are complicated concepts at work, it depends upon simple human nature.
We’re hard-wired to travel following the option using the big shiny ‘discount’ sticker on the front – even if it’s more expensive. It’s a bizarre little quirk from the human brain, and something that’s difficult to switch off – as US retailer JC Penney discovered for their ongoing regret.
Way back in 2012, the supermarket giant announced that they were putting a stop to their promotional pricing strategy, which saw everyday staples with a permanent discount. Similar to most supermarkets, JC Penney was artificially inflating their shelf prices before providing them with an arbitrary discount. Occasionally, a 50% discount was really a 10% increase on the recommended retail price.
The incoming CEO Ron Johnson announced a shift to a different, ‘honest’ system of pricing with no fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or other shifty tactics. The newest system was intended not only to affordable prices, but to help consumers make informed decisions with regards to their groceries and budgets. The truth that Honourable Ron became Jobless Johnson within less than a year probably informs 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; and the company quickly returned to their previous strategy of artificial markdowns. When offered exactly the same products with a lower pricetag, customers still preferred to pay for the higher price – provided that it enjoyed a discount sticker onto it.
In fact, JC Penney customers were so offended from 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, however the client base stayed away until prices were raised – in some instances more than they originally were. An industry commentator had this to say:
“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, in particular-have risen by 60% or even more at JC Penney almost overnight. One week, a side table was listed at $150; a few days later, the “everyday” price for the same item was as much as $245.”
Discount pricing strategies are virtually par for the course on the high-street – and, as the BBC uncovered, most of them are as arbitrary and misleading as JC Penney’s. And, for the most part, they create 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 that they were in the early 2000s.
We are now living in the details age: a arena 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 an immediate recognisable signal which a wise purchasing decision will be made, (whether true or otherwise).
For a person involved in B2B procurement, however, discount pricing ought to be public enemy number one. Unfortunately, every workplace out of your local chip shop to the state New York City has at the same time 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 cost of a pint of milk, (or in the case of the mayor of the latest York, the cost of a pen and paper). In every honesty, however, none of us do.
Milk, bread, as well as other staples are typically far cheaper than they must be – for a variety of reasons:
They might be used as being a loss leader, to attract in customers who’ll then pay more for other items.
They may be inferior-quality versions utilized to undercut competitors.
They may be bundled along with other items included in an up-sell; sandwich-drink-and-snack deals at lunchtime are a good example, but you can find invisible examples like coffee strainers and coffee (or printer and printers).
They could be used 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 frequent things that they purchase from them.
They can use secrets to human perception – like charm pricing (like.9 or.7); pricing under benchmarks (like £1, £5, £10 etc); or even just including information that appears relevant but isn’t. Something which is advertised as “Only £1.99 whenever you buy 2!” may look like a reduction, but if the single unit costs £0.99 then it’s actually higher priced.
Each of the tricks outlined above, employed 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 couple minutes of searching – or checking your most recent receipt.
In everyday life there’s not much we could do about this sort of obfuscation. Not many people have the time, resources or inclination to analyze and compare grocery prices upon 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 in reality probably outweigh the rewards. That’s why JC Penney’s customers are slowly returning because the costs are rising.
A company facing similar purchasing options, however, has the advantage of a monetary director to guard its decision-making process.
There’s still scope, even or maybe particularly in age of information, to have someone on staff who are able to perform considered, researched procurement. Somebody who can spend some time to do a proper cost analysis; take part in slow thinking; are available to your conclusion based on facts as opposed to on sound and fury.
While honesty didn’t figure out very well for Ron Johnson, we at CP Office still feel that it’s both worthwhile and worth a shot. So, unlike various other stationers and vendors of Buying In Bulk, we choose to offer an impartial cost analysis to the potential prospects, in addition to the benefit of our genuinely huge discounts. With CP Office, there’s no fuss with no tricks – just a sincere discussion about what’s most effective for you along with your office.