A Story About Discount
I shared about my oversized postcard announcing that I am eligible to save $200 off windows or $400 off doors for my home. I also will not have an interest for a year but I read I cannot use both offers at the same time though I know that for this offer it is a gimmick.
The president of J.C.Penny, Michael Frances said they were going to stop marking up prices in order to have fake sales. A quote from Time Magazine Business section online said ‘In early 2012, JC Penney promised the end of “fake prices”—ones that were inflated just so that shoppers could be tricked into thinking the inevitable discounts represented amazing deals. Well, it’s already time to welcome back discounts and inflated prices alike.’ (2013)
According to the , Penney’s ousted president Michael Francis after just eight months on the job, saying his marketing strategy had failed to explain the pricing strategy to consumers; this in reaction to a 10% drop in store traffic in the first quarter and worse after that.
|We can give you affordable and effective windows. You need to supply the view.|
The New York Times from April 4, 2013, explains “But most shoppers, coupon collectors or not, want the thrill of getting a great deal, even if it’s an illusion. In recent months, Penney recognized that human trait and backtracked on its pricing policy, offering coupons and running weekly sales again. And it started marking up items to immediately mark them down for the appearance of a discount.
The problem, economists and marketing experts say is that consumers are conditioned to wait for deals and sales, partly because they do not have a good sense of how much an item should be worth to them and need cues to figure that out.”
You see ladies, gentlemen and intelligent dolphins; in marketing this is called anchoring. Consumers infer that they get a great deal based on the reference point provided by the higher, presale price. Social scientists refer to this idea as anchoring, and it applies to all sorts of consumer behavior and expectations. Without that anchor, consumers have trouble determining whether the store is actually giving them a good price. Even the words a retailer uses in its marketing can affect how a customer judges a deal — “sale” or “special” leads people to think the item has a high value, but a straight markdown leads them to think it’s a cheaper item. This is according to a study in the Journal of Retailing. (2005)
|Big Sale-Limited Time-Don't Wait|
How do I know the information in this coupon is a gimmick using the principle of anchoring? For years every two to three months we dedicated a sales meeting to what offer shall we advertise. If a company constantly advertises the same sale, without changing the offer, the Better Business Bureau and some state attorney generals question is the sale price the regular price. Is the sale legitimate?
Let us hear what industry expert Dave Yoho, a sales trainer with over forty years in the business, has to say about the Washington State attorney general going after contractors and how the industry is being affected
“He doesn't understand marketing or the emotional connotation of the buy/sell relationship. He understands law not psychology. He says: I want to take the emotionalism out of selling these products. Well, there is no such thing as a cold, rational buyer purchasing this type of product purely on merit. Some people want a Cadillac, some want a Lincoln. Color, style, accessories ... it's about how that product makes the [consumer] feel. “
“A vinyl window in this industry, totaling 90 united inches, could range in price, at retail, from $350 to $950 or more. What does that imply? That there are different products offered at different prices. What the attorney general wants to know is how you establish your retail price and how many jobs do you sell at this price. That's where he's utilizing prior Federal Trade Commission guidelines.
Yoho went on to say “Two of the companies tell me that their lawyers told them drops like that aren't illegal because they do it in the automotive business. Well, it's not illegal, but it doesn't defend well in court. The price of jobs can vary for many reasons, but if you don't have a base price and sell jobs at that price occasionally, you're going to run into trouble in front of a jury.”
The company that sent me the coupon always has some type of special or sale but changes it every month or so. The bottom line is the phone will not ring if you do not perceive a savings. I will not share any specific numbers because it is unethical to but I can attest from memory that the sales price, the discount from list, closing rates, and salesmen commissions were pretty constant month to month no matter what the offer. The company is a good reputable company with caring people and great products but fake sales and discounts are the standard operating conditions of the industry and the consumer’s mindset.
|We offer you straightforward advice and no gimmick pricing. E-mail us for an upfront estimate. The best bargain is no bargain unless the product, service, and customer experience is worthy.|
If everybody believes a lie, does it make it true?
Clifford S., Rampell C. (2103) Retrieved May 24, 2013 from http://www.nytimes.com/2013/04/14/business/for-penney-a-tough-lesson-in-shopper-psychology.html?pagewanted=all&_r=0
No Author (2011) Dave Yoho on Deceptive Sales Practices Retrieved December 17, 2011 from http://www.replacementcontractoronline.com/contractors/q---a--dave-yoho-on-deceptive-sales-practices-and-the-washington-state-civil-suits.aspx
Ryan D. (20120 Frequent Sales vs Everyday Low Prices Retrieved May 22, 2013 from http://rswpartners.com/frequent-sales-vs-everyday-low-pricing/
Jerry Hartman is an expert in fenestration, a 25 cent word for windows and doors, but novice at life. He is the owner of American Renovations Ltd. a remodeler specializing in commercial and residential windows, doors, insulated siding, metal roofing, and walk in tubs in Cincinnati Ohio. He may give you a better discount if you share your LEGO brand building blocks.