If you’ve been looking for School Store Supplies or discount stationery in your 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 a suitable price to fund pens, paper, ink or biscuits – specially 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 end up paying 2-3 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 a part of a pricing strategy which will view you paying more for stationery and office supplies.
If you’re a financial director or office administrator, you could be clued in to the big secret – but for the remainder of us, here’s the main one secret that’s likely to wipe off around half your business supplies expenses in a single swift movement:
Stop looking for discounted office supplies
It’s not a call to arms over quality control – for many situations, it could be also appropriate to choose your budget option as opposed to the high-end one. Nor will it be about wastage and logistical planning, although proper cost analysis is a crucial component of managing your office budget. Rather, it’s a matter of Bayesian signalling; Gricean logic; and, ultimately, basic principles of pricing. Although there are complicated concepts at the office, it boils down to simple human nature.
We’re hard-wired to travel after the option using the big shiny ‘discount’ sticker on the front – even though it’s more costly. It’s a bizarre little quirk from the brain, and something that’s challenging to switch off – as US retailer JC Penney discovered to their ongoing regret.
In 2012, the supermarket giant announced that they were putting a stop for their promotional pricing strategy, which saw everyday staples in a permanent discount. Like the majority of supermarkets, JC Penney was artificially inflating their shelf prices before giving 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 a different, ‘honest’ system of pricing with no 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 affordable prices, but to assist consumers make informed decisions with regards to their groceries and budgets. The fact that Honourable Ron became Jobless Johnson within less than a year probably informs 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 technique of artificial markdowns. When offered the same products having a lower pricetag, customers still preferred to cover the higher price – as long as it enjoyed a discount sticker into it.
Actually, JC Penney customers were so offended from the disastrous strategy that brand loyalty not only went down, with perceived trustworthiness falling as prices decreased; but stayed down too. The sgzvks actually issued an apology to jilted shoppers, nevertheless the client base stayed away until prices were raised – in some cases greater than they originally were. An industry commentator had this to express:
“The bargain-hunting website dealnews has since commenced tracking prices at JC Penney. Exactly what it has discovered is that the prices of certain items-designer furniture, in particular-have risen by 60% or more at JC Penney almost overnight. 1 week, a side table was listed at $150; a few days later, the “everyday” price for the same item was up to $245.”
Discount pricing strategies are virtually par for your course on the high street – and, because the BBC uncovered, many of them are as arbitrary and misleading as JC Penney’s. And, in most cases, they make sense from the B2C perspective. The Chartered Institute of Marketing claims that attention spans are restricted to 8 seconds, instead of the 12 seconds that they were in early 2000s.
We reside in the data age: a world of multitasking; 140 characters; ‘top 10 everything’; truncation and enumeration and fast food; where consumers want to make decisions quickly according to limited information. Discounting is surely an immediate recognisable signal which a wise purchasing decision will be made, (whether true or otherwise not).
For somebody associated with B2B procurement, however, discount pricing should be public enemy primary. Unfortunately, every workplace out of your local chip shop to the state Ny has at one time or other fallen victim for the same ruses that function in the supermarket.
Promotional pricing strategies in the office. It’s often said disparagingly of politicians that they don’t know the buying price of a pint of milk, (or with regards to the mayor of New York, the price of a pen and paper). In most honesty, however, none of us do.
Milk, bread, and other staples are generally far less than they must be – for any number of reasons:
They could be used being a loss leader, to attract in customers who’ll then pay more for other items.
They may be inferior-quality versions utilized to undercut competitors.
They could be bundled with some other items as part of an up-sell; sandwich-drink-and-snack deals at lunchtime are a good example, but you can find invisible examples like coffee strainers and coffee (or printer 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 typical items which they buy from them.
They could use secrets to human perception – such as charm pricing (like.9 or.7); pricing under benchmarks (such as £1, £5, £10 etc); or even just including information that appears relevant but isn’t. A thing that is advertised as “Only £1.99 once you buy 2!” may seem like a discount, but if the single unit costs £0.99 then it’s actually more expensive.
All of the tricks outlined above, employed for milk and bread, apply equally well to equivalent office basics like pens and paper. It is possible to verify that on your own with just a couple minutes of searching – or checking your most current receipt.
In daily life there’s very little we can do about this type of obfuscation. Only a few people have time, resources or inclination to investigate 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 most affordable potatoes by gross weight actually probably outweigh the advantages. That’s why JC Penney’s consumers are slowly returning because the costs are rising.
An organization facing similar purchasing options, however, has the advantage of an economic director to guard its decision-making process.
There’s still scope, even or maybe specifically in age of information, to possess someone on staff who can perform considered, researched procurement. Somebody that can take time to perform a proper cost analysis; engage in slow thinking; and are available to a conclusion based upon facts instead of on sound and fury.
While honesty didn’t figure out very well for Ron Johnson, we at CP Office still think that it’s both worthwhile and worth a try. So, unlike various other stationers and vendors of Wholesalers, we would rather present an impartial cost analysis to the potential prospects, in addition to the benefit of our genuinely competitive prices. With CP Office, there’s no fuss with no tricks – just a sincere discussion about what’s best for you as well as your office.