If you’ve been looking for inexpensive office supplies online or discount stationery in your town, then at this point you’re probably feeling like you’ve stumbled onto the set of Carry On At The Circus. It’s tough to get a read on what’s the right price to pay for pens, paper, ink or biscuits – particularly when you’re ordering in big amounts. Whomever your dealer is, you are likely to achieve massive savings over high-street prices.
On the other hand, you can still wind up paying 2 to 3 times over the odds. A price reduction promotion or buy-one-get-one-free offer is actually a warning signal, and more than likely forms element of a pricing strategy that can view you paying more for stationery and office supplies.
If you’re an economic director or office administrator, you may already be clued in the big secret – but for the rest of us, here’s the main one secret that’s going to wipe off just as much as half your business supplies expenses in a single swift movement:
Stop looking for Office Supplies Cheap
It’s not really a call to arms over quality control – for a few situations, it might even be appropriate to choose your budget option rather than the high-end one. Nor is it about wastage and logistical planning, although proper cost analysis is a crucial element 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 the job, it comes down to simple human nature.
We’re hard-wired to travel right after the option with the big shiny ‘discount’ sticker on the front – even if it’s more expensive. It’s a bizarre little quirk in the brain, and one that’s challenging to switch 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 at a permanent discount. Like most supermarkets, JC Penney was artificially inflating their shelf prices before providing them with an arbitrary discount. Sometimes, 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 without any fake discounts; two-for-one deals; coupons; prices ending in 9 or 7; or any other shifty tactics. The brand new system was intended not just to less expensive costs, but to help consumers make informed decisions with regards to their groceries and budgets. The truth that Honourable Ron pxuovj Jobless Johnson within under a year probably lets you know how successful that strategy worked.
Customers abandoned JC Penney in hordes, some with a feeling of anger over whatever they regarded as a betrayal; revenue and share price went into freefall; as well as the company quickly returned for their previous technique of artificial markdowns. When offered the identical products having a lower pricetag, customers still preferred to cover the larger price – provided that it enjoyed a discount sticker into it.
Actually, JC Penney customers were so offended by the disastrous strategy that brand loyalty not only 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 – sometimes higher 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 really has discovered would be that the prices of certain items-designer furniture, particularly-have risen by 60% or maybe more at JC Penney almost overnight. One week, a side table was listed at $150; a few days later, the “everyday” price for the very same item was approximately $245.”
Discount pricing strategies are basically par for the course on the high-street – and, as the BBC uncovered, a lot of them are as arbitrary and misleading as JC Penney’s. And, in most cases, they can make sense from the B2C perspective. The Chartered Institute of Marketing claims that attention spans are restricted to 8 seconds, rather than the 12 seconds they were during the early 2000s.
We are now living 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 according to limited information. Discounting is an immediate recognisable signal which a wise purchasing decision has been made, (whether true or not).
For someone involved in B2B procurement, however, discount pricing needs to be public enemy number 1. Unfortunately, every workplace from your local chip shop to the state of New York City has at once or other fallen victim to the same ruses that function in the supermarket.
Promotional pricing strategies at the office. It’s often said disparagingly of politicians that they don’t know the cost of a pint of milk, (or in the case of the mayor of the latest York, the buying price of a pen and paper). In every honesty, however, none people do.
Milk, bread, along with other staples are usually far less than they ought to be – for a variety of reasons:
They might be used being a loss leader, to draw in customers who’ll then pay more for other considerations. They could be inferior-quality versions employed to undercut competitors. They could be bundled along with other items included in an up-sell; sandwich-drink-and-snack deals at lunchtime are a good example, but there are invisible examples like coffee strainers and coffee (or ink and printers). They may be utilized to build trust or complacency within the shopper, who can often judge each of the prices of any retailer based on the first or most typical things that they buy from them.
They might use tricks of human perception – like charm pricing (like.9 or.7); pricing under benchmarks (including £1, £5, £10 etc); as well as just including information that appears relevant but isn’t. A thing that is advertised as “Only £1.99 when you buy 2!” may appear to be a price reduction, however, if the single unit costs £0.99 then it’s actually more expensive.
All of the tricks outlined above, utilized 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 few minutes of searching – or checking your most current receipt.
In daily life there’s not much we are able to do about this sort of obfuscation. Only a few folks have enough time, resources or inclination to research 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 fact probably outweigh the advantages. That’s why JC Penney’s consumers are slowly returning as the prices are rising.
A business facing similar purchasing options, however, has the main benefit of a financial director to safeguard its decision-making process.
There’s still scope, even or possibly particularly in age of information, to possess someone on staff that can perform considered, researched procurement. Somebody who can take time to perform a proper cost analysis; participate in slow thinking; and come to your conclusion according to facts as opposed to on sound and fury.
While honesty didn’t figure out so well for Ron Johnson, we at CP Office still feel that it’s both worthwhile and worth a shot. So, unlike various other stationers and vendors of office supplies, we would rather offer an impartial cost analysis to our own potential customers, as well as the benefit of our genuinely competitive prices. With CP Office, there’s no fuss with no tricks – just a genuine discussion about what’s right for you as well as your office.