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If you’ve been searching for cheap office supplies online or discount stationery in the area, then right 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 a suitable price to pay for pens, paper, printer ink or biscuits – particularly 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 find yourself paying 2 to 3 times on the odds. A price reduction promotion or buy-one-get-one-free offer is actually a warning signal, and more than likely 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 in to the big secret – but also for the rest of us, here’s usually the one secret that’s planning 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 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 component of managing your office budget. Rather, it’s an issue of Bayesian signalling; Gricean logic; and, ultimately, basics of pricing. Even though there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to travel following the option with the big shiny ‘discount’ sticker on the front – even when it’s higher priced. It’s a bizarre little quirk of the human brain, and one that’s difficult to turn off – as US retailer JC Penney discovered for 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 at a permanent discount. Like most supermarkets, JC Penney was artificially inflating their shelf prices before offering them an arbitrary discount. At times, 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 the fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or other shifty tactics. The new system was intended not just in lower prices, but to aid consumers make informed decisions regarding their groceries and budgets. The fact 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 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 the same products with a lower pricetag, customers still preferred to pay for the higher price – as long because it had a discount sticker onto it.
Actually, JC Penney customers were so offended by 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 – sometimes more than they originally were. A business commentator had this to state:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. What it really has discovered is that the prices of certain items-designer furniture, specifically-have risen by 60% or maybe 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 same item was as much as $245.”
Discount pricing strategies are pretty much par for that course on the high-street – and, because the BBC uncovered, many of them are as arbitrary and misleading as JC Penney’s. And, for the most part, they create sense from the 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 the early 2000s.
We live in the information age: a arena of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers want to make decisions quickly based on limited information. Discounting is definitely an immediate recognisable signal that the wise purchasing decision is being made, (whether true or not).
* For someone associated with B2B procurement, however, discount pricing ought to be public enemy number 1.
* Unfortunately, every workplace from the local chip shop to the state of brand new York has at one time or any other fallen victim for the same ruses that operate in the supermarket.
* Promotional pricing strategies in the workplace
* It’s often said disparagingly of politicians which they don’t know the buying price of a pint of milk, (or perhaps in the case in the mayor of brand new York, the price of a pen and paper).
In all honesty, however, none of us do. Milk, bread, and other staples are generally far cheaper than they must be – for any number of reasons:
They could be used as being a loss leader, to attract in customers who’ll then pay more for other things.
They could 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 good example, but you will find invisible examples like coffee strainers and coffee (or printer and printers).
They might be employed to build trust or complacency in the shopper, who can often judge all the prices of any retailer based on the first or most typical items that they purchase from them.
They could use secrets to human perception – like charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 etc); or even just including information seems relevant but isn’t. A thing that is advertised as “Only £1.99 when you buy 2!” may look like a discount, however, if the single unit costs £0.99 then it’s actually more expensive.
All the tricks outlined above, used 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 most current receipt.
In day-to-day life there’s very little we can do about this kind of obfuscation. Very few individuals have time, resources or inclination to analyze and compare grocery prices on an item-by-item level – and also the opportunity costs of rushing from supermarket to supermarket in the search for the most affordable potatoes by gross weight in fact probably reeydf the rewards. That’s why JC Penney’s customers are slowly returning as the prices are rising.
A company facing similar purchasing options, however, has the benefit of a monetary director to guard its decision-making process.
There’s still scope, even or possibly particularly in age information, to have someone on staff who can perform considered, researched procurement. Somebody that can spend some time to conduct a proper cost analysis; engage in slow thinking; and come to your conclusion based upon facts rather than 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 would rather provide an impartial cost analysis to the prospective customers, along with the benefit of our genuinely huge discounts. With CP Office, there’s no fuss with no tricks – just an honest discussion about what’s right for you as well as your office.