If you’ve been looking for Cheap School Supplies 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 cover pens, paper, printer ink or biscuits – specially when you’re ordering in bulk. Whomever your supplier is, you’re prone to achieve massive savings over high-street prices.
On the other hand, you are able 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 almost certainly forms part of a pricing strategy which will view you paying more for stationery and office supplies.
If you’re an economic director or office administrator, you might already be clued into the big secret – but for the rest of us, here’s the one secret that’s likely to wipe off just as much as half your workplace supplies expenses in one swift movement:
Stop searching for discounted office supplies
It’s not just a call to arms over quality control – for a few situations, it may be also appropriate to go for your budget option rather than the high-end one. Nor could it be about wastage and logistical planning, although proper cost analysis is an important component of managing your office budget. Rather, it’s a matter of Bayesian signalling; Gricean logic; and, ultimately, fundamental principles of pricing. Even though there are complicated concepts at work, it depends upon 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 from the human brain, and one that’s challenging to turn off – as US retailer JC Penney discovered with their ongoing regret.
Back in 2012, the supermarket giant announced that 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 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 an alternative, ‘honest’ system of pricing without any fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or some other shifty tactics. The brand new system was intended not just in less expensive costs, but to help consumers make informed decisions with regards to their groceries and budgets. The reality that Honourable Ron became Jobless Johnson within under a year probably tells you how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a feeling of anger over what they perceived as a betrayal; revenue and share price went into freefall; and the company quickly returned with their previous technique of artificial markdowns. When offered exactly the same products having a lower pricetag, customers still preferred to pay the higher price – provided that it experienced a discount sticker into 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 customer base stayed away until prices were raised – in some cases higher than they originally were. A niche 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 maybe more at JC Penney almost overnight. One 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 pretty much 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, in most cases, they can make sense coming 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 during the early 2000s.
We are now living in the data age: a arena of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers need to make decisions quickly based on limited information. Discounting is surely an immediate recognisable signal that the wise purchasing decision has been made, (whether true or otherwise not).
For a person involved with B2B procurement, however, discount pricing should be public enemy number one. Unfortunately, every workplace from the local chip shop to the condition of New York has at one time or any other fallen victim towards 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 buying price of a pint of milk, (or when it comes to the mayor of brand new York, the cost of a pen and paper). In every honesty, however, none people do.
Milk, bread, and other staples are generally far less than they should be – for any number of reasons:
They might be used being a loss leader, to attract in customers who’ll then pay more for other considerations.
They might be inferior-quality versions employed to undercut competitors.
They may be bundled with some other items as an element of 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 ink and printers).
They could be employed to build trust or complacency in 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 could use tricks of human perception – including charm pricing (like.9 or.7); pricing under benchmarks (like £1, £5, £10 and so forth); or perhaps just including information seems relevant but isn’t. Something which is advertised as “Only £1.99 when you buy 2!” may appear to be a discount, however, if the single unit costs £0.99 then it’s actually more expensive.
Each 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 on your own with only a few minutes of searching – or checking your latest receipt.
In day-to-day life there’s not a whole lot we can do about this kind of obfuscation. Only a few people have time, resources or inclination to investigate and compare grocery prices upon an item-by-item level – as well as the opportunity costs of rushing from supermarket to supermarket in the quest for the most affordable potatoes by gross weight actually probably outweigh the benefits. That’s why JC Penney’s consumers are slowly returning as the charges are rising.
An organization facing similar purchasing options, however, has the main benefit of a financial director to guard its decision-making process.
There’s still scope, even or possibly particularly in the age of information, to possess someone on staff who are able to perform considered, researched procurement. Someone who can spend some time to conduct a proper cost analysis; engage in slow thinking; and come to a conclusion based upon facts instead of on sound and fury.
While honesty didn’t work out very well for Ron Johnson, we at CP Office still think that it’s both worthwhile and worth a go. So, unlike a number of other stationers and vendors of Wholesalers, we choose to offer an impartial cost analysis to the potential prospects, along with the benefit from our genuinely competitive prices. With CP Office, there’s no fuss without any tricks – just a genuine discussion about what’s most effective for you along with your office.