If you’ve been looking 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 a suitable price to pay for pens, paper, printer 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 other hand, you can still find yourself paying 2 to 3 times over the odds. A price reduction promotion or buy-one-get-one-free offer is a warning signal, and almost certainly forms element of a pricing strategy that can look at you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you might be clued in to the big secret – but also for the rest individuals, here’s the main one secret that’s going to wipe off as much as half your office supplies expenses in a single swift movement:
Stop searching for discounted office supplies – It’s not really a call to arms over quality control – for some situations, it may even be appropriate to go for your budget option as opposed to the high-end one. Nor could it be about wastage and logistical planning, although proper cost analysis is a crucial component of managing your office budget. Rather, it’s a question of Bayesian signalling; Gricean logic; and, ultimately, fundamental 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 using the big shiny ‘discount’ sticker on the front – even when it’s more expensive. It’s a bizarre little quirk of the human brain, and one that’s hard to turn off – as US retailer JC Penney discovered to their ongoing regret.
Back in 2012, the supermarket giant announced that they were putting an end with their promotional pricing strategy, which saw everyday staples at a permanent discount. Like most supermarkets, JC Penney was artificially inflating their shelf prices before providing them with an arbitrary discount. At times, a 50% discount was actually a 10% increase on the recommended list price.
The incoming CEO Ron Johnson announced a shift to a different, ‘honest’ system of pricing without the fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or other shifty tactics. The newest system was intended not just to lower prices, but to assist consumers make informed decisions regarding their groceries and budgets. The truth that Honourable Ron became Jobless Johnson within less than a year probably lets you know 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; as well as the company quickly returned for their previous technique of artificial markdowns. When offered the identical products having a lower pricetag, customers still preferred to pay the larger price – as long since it experienced a discount sticker into it.
Actually, JC Penney customers were so offended through 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, however the customer base stayed away until prices were raised – in some cases 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. Exactly what it has discovered would be that the prices of certain items-designer furniture, in particular-have risen by 60% or even more at JC Penney almost overnight. 1 week, a side table was listed at $150; several 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, since the BBC uncovered, most of them are as arbitrary and misleading as JC Penney’s. And, in most cases, they make sense from a B2C perspective. The Chartered Institute of promoting claims that attention spans are restricted to 8 seconds, rather than the 12 seconds that they were in 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 need to make decisions quickly according to limited information. Discounting is an immediate recognisable signal that the wise purchasing decision has been made, (whether true or otherwise).
* For somebody involved with B2B procurement, however, discount pricing should be public enemy primary.
* Unfortunately, every workplace out of your local chip shop towards the state of the latest York has at once or any other fallen victim to the same ruses that function in the supermarket.
* Promotional pricing strategies in the workplace
* It’s often said disparagingly of politicians that they don’t know the cost of a pint of milk, (or in the case from the mayor of brand new York, the cost of a pen and paper).
In most honesty, however, none people do. Milk, bread, along with other staples are generally far cheaper than they must be – for a variety of reasons:
They could be used as a loss leader, to draw in in customers who’ll then pay more for other considerations.
They might be inferior-quality versions used to undercut competitors.
They could be bundled along with other items as part of an up-sell; sandwich-drink-and-snack deals at lunchtime are a good 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 will often judge all the prices of any retailer based on the first or most common items which they buy from them.
They can use tricks of human perception – such as charm pricing (like.9 or.7); pricing under benchmarks (including £1, £5, £10 etc); or even just including information seems relevant but isn’t. Something which is advertised as “Only £1.99 once you buy 2!” may look like a price reduction, however, if the single unit costs £0.99 then it’s actually more expensive.
All of 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 few minutes of searching – or checking your latest receipt.
In day-to-day life there’s not much we can do concerning this kind of obfuscation. Not many individuals have time, resources or inclination to research and compare grocery prices upon an item-by-item level – as well as the opportunity costs of rushing from supermarket to supermarket in the search for the most affordable potatoes by gross weight actually probably reeydf the benefits. That’s why JC Penney’s customers are slowly returning as the charges 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 possibly especially in the age of information, to possess someone on staff who can perform considered, researched procurement. Someone who can take time to perform a proper cost analysis; engage in slow thinking; and come to your conclusion based on 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 try. So, unlike many other stationers and vendors of office supplies, we prefer to offer an impartial cost analysis to our own potential prospects, along with the benefit of our genuinely huge discounts. With CP Office, there’s no fuss without any tricks – just a sincere discussion about what’s best for you along with your office.