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If you have been looking for cheap office supplies online or discount stationery in the area, 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 pay for pens, paper, printer ink or biscuits – specially when you’re ordering in bulk. 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 2-3 times within the odds. A price reduction promotion or buy-one-get-one-free offer is really a warning signal, and almost certainly forms part of a pricing strategy that will look at you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you might be clued into the big secret – but also for the rest people, here’s the one secret that’s going to wipe off as much as half your workplace supplies expenses in just one swift movement:
Stop trying to find discounted office supplies – It’s not really a call to arms over quality control – for some situations, it may even be appropriate to choose the budget option as opposed to the high-end one. Nor is it about wastage and logistical planning, although proper cost analysis is an important component of controlling your office budget. Rather, it’s a question of Bayesian signalling; Gricean logic; and, ultimately, fundamental principles of pricing. Though there are complicated concepts at work, it boils down to simple human nature.
We’re hard-wired to travel following the option with all 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 one that’s difficult to turn off – as US retailer JC Penney discovered to their ongoing regret.
Back in 2012, the supermarket giant announced they were putting a conclusion with their promotional pricing strategy, which saw everyday staples with a permanent discount. Like most supermarkets, JC Penney was artificially inflating their shelf prices before offering them an arbitrary discount. Occasionally, 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 regarding their groceries and budgets. The fact that Honourable Ron became Jobless Johnson within under a year probably informs you how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a sense of anger over the things they perceived as a betrayal; revenue and share price went into freefall; and also the company quickly returned to their previous strategy of artificial markdowns. When offered the same products using a lower pricetag, customers still preferred to pay the greater price – as long since it enjoyed a discount sticker onto 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 greater than they originally were. An industry 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 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 as much as $245.”
Discount pricing strategies are pretty much par for your course on the high-street – and, since the BBC uncovered, a lot 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, rather than the 12 seconds that they were during 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 need to make decisions quickly according to limited information. Discounting is an immediate recognisable signal which a wise purchasing decision will be made, (whether true or otherwise).
* For someone associated with B2B procurement, however, discount pricing needs to be public enemy number one.
* Unfortunately, every workplace out of your local chip shop to the state of brand new York has at one time or some other fallen victim for 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 price of a pint of milk, (or perhaps in the case in the mayor of the latest York, the cost of a pen and paper).
In every honesty, however, none people do. Milk, bread, as well as other staples are typically far less than they must be – for a variety of reasons:
They might be used as a loss leader, to draw in in customers who’ll then pay more for other considerations.
They could be inferior-quality versions utilized to undercut competitors.
They might be bundled with some other items as part of an up-sell; sandwich-drink-and-snack deals at lunchtime are a great example, but you can find invisible examples like coffee strainers and coffee (or printer ink and printers).
They could be used to build trust or complacency in the shopper, who will often judge each of the prices of any retailer based on the first or most typical things that they purchase from them.
They could 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 that looks relevant but isn’t. A thing that is advertised as “Only £1.99 when you buy 2!” may look like a reduction, 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 for yourself with just a few minutes of searching – or checking your most current receipt.
In day-to-day life there’s not a whole lot we can do about this kind of obfuscation. Very few folks have time, resources or inclination to research and compare grocery prices on an item-by-item level – and the opportunity costs of rushing from supermarket to supermarket in the quest for the cheapest potatoes by gross weight in reality probably reeydf the advantages. That’s why JC Penney’s clients are slowly returning since the charges are rising.
A company facing similar purchasing options, however, has the main benefit of a monetary director to protect its decision-making process.
There’s still scope, even or possibly especially in age information, to get someone on staff who can perform considered, researched procurement. Somebody who can take time to do a proper cost analysis; participate in slow thinking; and 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 believe that it’s both worthwhile and worth a try. So, unlike a number of other stationers and vendors of office supplies, we prefer to offer an impartial cost analysis to the prospective customers, as well as the benefit from our genuinely competitive prices. With CP Office, there’s no fuss with no tricks – just a genuine discussion about what’s most effective for you and your office.