Economic Analysis of Business Practice
If you don't want to give cash for the holidays, give a Coffee Pod instead! (It's a great gift. :D)This article screams out one of the primary principles of managerial economics. *Start with the decision, not the cost.*If a shopper gets focused on the "good deal" or "warranty" or "free" or "sale", they will lose sight of what they are really trying to do and perhaps end up purchasing something they don't actually need want. Shoppers beware!
HI All,While reading the advice of the columnist on being a better shopper given all the "hype" about black Friday sales, I realized that economic advise and situations are facing us constantly.No matter what the sale or discount, a key advise would be "a sale is not a sale unless it fits into your budget," would have love to say I made this up, but it is actually the ongoing mantra of my pastor. If wealth is created by moving assists to that of a higher value, then the my money will be better saved or spent at the expense of that sale item that may not be really needed.Dave D.
I absolutely, positively, agree with every single thing this article said, and I have always said the same thing! I was literally just talking with my boyfriend and said that "sale" pricing is just a marketing ploy and in the case of economics, indirect price discrimination. Like I said to him, that shirt that's 50% off of $100 was probably never $100, or $50, so no matter how much we are thinking we are saving, we are not and the store is still making a profit. They just mark up the prices to mark it down to fool you into buying it just "because it is a good deal." Now with all the technology we have at literally our fingertips there should be no excuse not to price shop a little bit to make sure you are not paying some inflated price. I never had, and will shop on black Friday, cyber Monday, or anything other day that fools people into spending more money! Gift cards all the way for me!
Black Friday began as a well-intended ploy for retailers to take advantage of the fact that most working adults and school children were free of their obligations on the day after Thanksgiving. These folks were targeted since many might be looking for an activity during the day off, as well as cost savings for the upcoming Christmas holiday. As we all know, it has evolved into something much more significant for retailers – the last push for profits before year end. Most of the tactics used by retailers are examples of an indirect scheme of price discrimination. There are offers for which shoppers need a coupon to realize savings. Lost leader approaches are also employed. In both these cases, low value and high value consumers are given the same opportunity to save, however a high value consumer may or may not bother taking advantage of any promotion associated with Black Friday, and still go to the store and make purchases as part of the experience and mystique of the day. The article from the Atlantic makes some very poignant observations of “traps” that retailers may fall into on Black Friday. One of those that probably relates more so to the high value consumer is the fact that shoppers should make a list and stick to it, especially if on a budget. Many high value consumers may more willing to spend without a “cap” or pre-determined budget, which puts them at risk for spending needlessly due to what the Atlantic refers to as decision fatigue.With the onset of Cyber Monday and millennials preferring to do just about anything without having to leave their seat, there is a good chance that in a few years a similar article will be published around Cyber Monday rather than Black Friday. According to an article on dealnews.com, Nielsen's holiday spending forecast for 2013, 85% of consumers reported they'd skip the store and about half of shoppers (46%) said that they would shop online for Cyber Monday, up 16 percent from 2012. Those trends have continued and retailers will have to retailers will have to begin to make adjustments to pricing schemes so that the online market is being considered.References:http://www.theatlantic.com/business/archive/2014/11/11-economic-lessons-to-make-you-a-smarter-shopper-for-black-friday/383236/http://dealnews.com/features/ways-cyber-monday-is-different-from-black-friday/
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I agree with most of the lessons this article points out. The sales of Black Friday aren’t always good bargains and the best deals aren’t this week. I tend to start pricing items from several stores in early November and compare them to the store Black Friday advertisements. By doing this I can tell whether the price was actually dropped or not. I started do this because a couple of years ago, I did a preview of the items on the eve of Black Friday at an outlet mall while on vacation. I had time on my hands so I decided to browse the stores with intentions of going back the next day to buy. When I went back to the same store, the merchandise was priced the same with just a banner saying “sales” or “marked down”. I thought maybe the price would be marked down at the register. Took the items to the register and they confirmed that it was priced as marked. Had I not went to the stores the night before I would have been tricked into thinking I was receiving good deals like many of the crazed people flying around the stores. Ever since then, I do not shop on Black Friday. These sales are meant for inelastic customers that will buy the merchandise regardless of the price. Most stores are likely to get away with this during Black Friday because consumers have their minds set on buying particular items because the hype around Black Friday is “everything is sold at a discount”. I personally like to shop the day after Christmas because now I know the price and if it is marked down enough to feel I’m getting a good deal and I know stores are trying to get rid of seasonal items such as hats, coats and sweaters. I tend to find “good deals” and stock up for the next winter at a fraction of the cost.
With Black Friday around the corner, I love this article http://www.theatlantic.com/business/archive/2014/11/11-economic-lessons-to-make-you-a-smarter-shopper-for-black-friday/383236/, makes so much sense in theory but I never listen! I actually was just having this experience the other night. Received a coupon in the mail from Shutterfly, $20 off purchase of $50 or more, and you could use any discounts offered on the website. Great! Christmas cards! Created my card, into the shopping cart it went, prior to discount $180 for 50 cards!! What?!? But I have coupons I thought! Down to $98! Then I thought to myself, still $98 for Christmas cards? They made me feel like I was getting a deal, but I still have to mail these at almost .50 cents a card! Maybe if I leave them in my shopping cart long enough they will send me an email with another better offer, price discrimination at its finest;)