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 the right price to pay for pens, paper, printer ink or biscuits – specially 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 wind up 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 element of a pricing strategy that will look at you paying more for stationery and office supplies.
If you’re a monetary director or office administrator, you might already be clued in the big secret – but also for the rest individuals, 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 trying to find discounted office supplies – It’s not a call to arms over quality control – for many situations, it may even be appropriate to go for your budget 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, basic principles of pricing. Although there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to visit after the option with the big shiny ‘discount’ sticker on the front – even when it’s more expensive. It’s a bizarre little quirk in the human brain, and something that’s difficult to switch off – as US retailer JC Penney discovered with their ongoing regret.
Back in 2012, the supermarket giant announced that they were putting a stop with their promotional pricing strategy, which saw everyday staples in 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 some other shifty tactics. The new system was intended not only to lower 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 lets you know how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with feelings of anger over the things they regarded as a betrayal; revenue and share price went into freefall; and the company quickly returned for their previous strategy of artificial markdowns. When offered exactly the same products having a lower pricetag, customers still preferred to pay the higher price – as long because 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, however 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. Exactly what it has discovered is the fact that 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 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, as the BBC uncovered, many of them are as arbitrary and misleading as JC Penney’s. And, typically, they can make sense from a B2C perspective. The Chartered Institute of Marketing claims that attention spans are limited 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 a wise purchasing decision has been made, (whether true or otherwise).
* For someone associated with B2B procurement, however, discount pricing should be public enemy number one.
* Unfortunately, every workplace from your local chip shop to the state of New York has at once or some other fallen victim for 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 in the case of the mayor of brand new York, the price of a pen and paper).
In every honesty, however, none people do. Milk, bread, as well as other staples are typically far less expensive than they ought to be – for any number of reasons:
They could be used as being a loss leader, to draw in in customers who’ll then pay more for other items.
They could be inferior-quality versions utilized to undercut competitors.
They may be bundled with some other items included in an up-sell; sandwich-drink-and-snack deals at lunchtime are a wonderful example, but there are invisible examples like coffee strainers and coffee (or ink and printers).
They might be utilized to build trust or complacency within the shopper, that will often judge all the prices of any retailer based on the first or most common things that they buy from them.
They might 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 that appears relevant but isn’t. A thing that is advertised as “Only £1.99 whenever you buy 2!” may look like a discount, however if the single unit costs £0.99 then it’s actually more costly.
All 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 most current receipt.
In day-to-day life there’s not much we can do about this kind of obfuscation. Not many folks have the time, resources or inclination to research and compare grocery prices with an item-by-item level – as well as the opportunity costs of rushing from supermarket to supermarket in the search for the cheapest potatoes by gross weight in reality probably reeydf the rewards. That’s why JC Penney’s clients are slowly returning because the charges are rising.
A company facing similar purchasing options, however, has the main benefit of a monetary director to guard its decision-making process.
There’s still scope, even or possibly specifically in age information, to get someone on staff who can perform considered, researched procurement. Somebody who can spend some time to do a proper cost analysis; take part in slow thinking; are available to some conclusion based upon facts as opposed to 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 go. So, unlike various other stationers and vendors of office supplies, we prefer to provide an impartial cost analysis to our own potential prospects, in addition to the advantage 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 and your office.