If you’ve been looking for cheap office supplies online or discount stationery in your area, then right 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 – 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 end up paying two to three times over the odds. A reduction promotion or buy-one-get-one-free offer is actually a warning signal, and almost definitely forms part of a pricing strategy which will see you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you might already be clued into the big secret – but for the rest of us, here’s the main one secret that’s planning to wipe off around half your workplace supplies expenses in just 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 choose the budget option instead of the high-end one. Nor could it be about wastage and logistical planning, although proper cost analysis is an important part of controlling your office budget. Rather, it’s an issue of Bayesian signalling; Gricean logic; and, ultimately, basics of pricing. Though there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to visit after the option using the big shiny ‘discount’ sticker on the front – even when it’s more costly. It’s a bizarre little quirk in the brain, and one that’s difficult to switch off – as US retailer JC Penney discovered for their ongoing regret.
Back in 2012, the supermarket giant announced they were putting an end for their promotional pricing strategy, which saw everyday staples with a permanent discount. Like most supermarkets, JC Penney was artificially inflating their shelf prices before giving them an arbitrary discount. At times, a 50% discount was actually a 10% increase on the recommended retail price.
The incoming CEO Ron Johnson announced a shift to a different, ‘honest’ system of pricing without any fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or any other shifty tactics. The new system was intended not just to lower prices, but to help consumers make informed decisions regarding their groceries and budgets. The reality that Honourable Ron became Jobless Johnson within less than a year probably tells you how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a sense of anger over what they regarded as a betrayal; revenue and share price went into freefall; and also the company quickly returned for their previous strategy of artificial markdowns. When offered exactly the same products with a lower pricetag, customers still preferred to pay the greater price – as long as it had a discount sticker into it.
In reality, 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 company actually issued an apology to jilted shoppers, nevertheless the customer base stayed away until prices were raised – in some instances more than they originally were. An industry commentator had this to state:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. 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. One week, a side table was listed at $150; a couple of days later, the “everyday” price for the similar item was approximately $245.”
Discount pricing strategies are virtually par for the course on the high-street – and, since the BBC uncovered, a lot of them are as arbitrary and misleading as JC Penney’s. And, typically, they make sense from a B2C perspective. The Chartered Institute of Marketing claims that attention spans are restricted to 8 seconds, rather than the 12 seconds that they were in early 2000s.
We live within 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 has been made, (whether true or otherwise).
* For a person associated with B2B procurement, however, discount pricing needs to be public enemy number 1.
* Unfortunately, every workplace from your local chip shop to the state of brand 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 that they don’t know the price of a pint of milk, (or in the case in the mayor of brand new York, the price of a pen and paper).
In most honesty, however, none of us do. Milk, bread, as well as other staples are usually far less 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 items.
They could be inferior-quality versions employed to undercut competitors.
They could 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 printer ink and printers).
They could be employed 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 frequent items that they purchase from them.
They can use secrets to human perception – like charm pricing (like.9 or.7); pricing under benchmarks (including £1, £5, £10 and so forth); or even just including information seems relevant but isn’t. Something which 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 expensive.
All 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 on your own with just a short while of searching – or checking your most recent receipt.
In day-to-day life there’s not a whole lot we can do relating to this kind of obfuscation. Only a few individuals 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 search for the least expensive potatoes by gross weight in reality probably reeydf the advantages. That’s why JC Penney’s customers are slowly returning as the charges are rising.
A company facing similar purchasing options, however, has the main benefit of an economic director to safeguard its decision-making process.
There’s still scope, even or maybe especially in age information, to get someone on staff who can perform considered, researched procurement. Somebody who can take the time to perform a proper cost analysis; take part in slow thinking; are available to some 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 feel that it’s both worthwhile and worth a shot. So, unlike a number of other stationers and vendors of office supplies, we choose to provide an impartial cost analysis to our own potential prospects, in addition to the benefit from 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.