Wednesday, December 23, 2015

Why do Women pay More?

The Washington Post is reporting that NYC Department of Consumer Affairs has found that items targeted to women/girls are pretty consistently higher priced than those targeted to men/boys. Often the only perceptible difference is the color and packaging, as in these scooters:
Or these razors:
Across 800 products you get this pattern:
Possible explanations:

  • Informational disadvantages: Women are not as informed about the prices of alternatives and so are more willing to suck it up and pay the higher price.
  • Indirect Price Discrimination: Women have more inelastic demand and so it is profitable to charge them more.
  • Selection by preference for quality: These products may have lower quality, 'generic' versions, the price of which we do not observe. It could be that men/boys are more willing to trade-off quality for price while the women/girls who prefer the quality product really prefer the quality product.
  • Cost differences from scale economies: Women/girls may prefer a greater variety of consumer goods (e.g., wedding dresses versus wedding suits). This means that there are fewer units purchased for any specific item. With economies of scale, the version for men/boys will have lower average cost than the version for women/girls.

24 comments:

  1. I love this topic that was posted by Michael Ward because as a women I couldn't understand why we paid more for certain items. I have compared women products to men products and notice the price difference. From this blog its clear to see that its a women tax and there is nothing that can be done to change it. This has been going on for many years and it definitely wont change now. Its amazing how women are charged differently when it come to car repairs, mortgages, even health insurance. Big brands claim that manufacturing woman specific products is more expensive.

    Myeshia Wagner

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  2. I happen to see a TV news spot on this and it really brought the issue to the top. I am a man so I may have a different point of view than women. First I believe if a company can avoid reducing price that is already inflated, it will. Why should they give up margin when there is no real reason to? For instance look at women’s razors. It’s quite possible that the men’s and women’s razors are identical however there is a marked increase for women’s razors. It’s possible there isn’t as much volume in sale versus men’s razors but if the underlying product is identical should it matter? Is there a higher cost of manufacture of women’s razors…I doubt it. I believe unless the users of the women’s razors create some user response such as moving to men’s razors, manufacturers won’t adjust price.
    This brings up another question…if the men’s and women’s products are identical, why would women pay more? One reason is that distributors don’t put these products near each other. Is it by choice so as to pull a fast one on the consumer [not to keep like products together for men and women] or is it for convenience? Maybe now that this is in the open people will raise awareness and demand change.

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  3. There is another option which could be related to the female to male working index in the US published by the world bank which is at 82%. If this is the case then we can assume that some higher percentage of women are spending other people's money which will make them less price sensitive... I believe this article by Milton Friedman roughly explains the principle http://www.mises.ch/de/aulaartikel.php?id=13

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  4. I can understand the point on "cost differences from scale economies" where women might have a bigger variety of consumer goods leading to lesser amount sold and therefore increase in cost of goods. But the scooter and razor prices astonished me because they "boy" version is the same as the "girl" version. And this might be due to the fact that women are not as conscious of high priced items as men might be. But I agree with JimO -- stores do not always stock men and women items right next to each other, so it's reasonable to the think that women are cheated into paying significantly higher prices for the same product.

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  5. I was also surprised by the large price difference between the products targeted at women. However, there are some products that are priced higher when targeted for men. For example, some lotions that are marketed for men are marked up despite the similar product, usually marketed for women, are priced lower. Other products, such as the Clarisonic, have specifically made products targeted to men, priced higher, despite the same product that is a bit more feminine. This touches upon the recent popular discussion regarding the "fragile male ego" and how certain products, despite being unisex, have become specifically targeted for men to attract a higher male consumer base. Therefore, these products have become marked up, despite being the same product with different packaging.

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    1. Linda, I’m glad you brought up the inflated prices for items targeted toward men. I’ve noticed this in many cases. Someone early mentioned a “women tax” on these items. I think she was on the right track, however it is more of a convenience tax. These items are targeted to a certain consumer who is too rushed to stop and educate themselves on their options. For example, Gerber makes juices for infants and toddlers. It comes in small container (maybe a 20oz bottle) that is almost double the price per oz of the large containers made by Ocean Spray. When you stop and read the labels, it is the same juice with no additional additives. When a woman enters the store looking for a “ladies razor” and finds packaging indicating exactly what she was looking for, she should look for the similar product in a generic version; the same with men shopping for lotions. However, if consumers choose not to shop around for the best deal, they will have to settle with paying more.

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  6. I was also surprised by the large price difference between the products targeted at women. However, there are some products that are priced higher when targeted for men. For example, some lotions that are marketed for men are marked up despite the similar product, usually marketed for women, are priced lower. Other products, such as the Clarisonic, have specifically made products targeted to men, priced higher, despite the same product that is a bit more feminine. This touches upon the recent popular discussion regarding the "fragile male ego" and how certain products, despite being unisex, have become specifically targeted for men to attract a higher male consumer base. Therefore, these products have become marked up, despite being the same product with different packaging.

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  7. This comment has been removed by the author.

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  8. Here is another potential explanation, albeit for items that are not identical.
    http://marginalrevolution.com/marginalrevolution/2015/12/from-the-comments-on-sexist-pricing.html

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  9. I find this topic very interesting, especially in today's digital world where it is reasonable to compare prices on many items online. The fact that women are getting overcharged for basically the same items should come as no surprise to us when we think about the disparity in pay that still exists for men and women in the workplace. It is not right or fair, but as one person wrote, until women stand up and demand changes, employers and retailers can continue to get away with the practice.

    I don't much buy into the argument of economy of scale on many of these items. For the scooter example, you are talking a difference in dyes on the injection molded plastic of the scooter. For the razors, perhaps there is a difference in cost because usually the handle of the razor is shaped a little different. However, does that mean the end product should cost more, I doubt it. I can't imagine that there is a big difference in the total number of male vs female razor consumers. If anything, female razors should cost less to produce in an economy of scale, because I would argue a female razor dulls or rusts quicker than a male razor and thus has a shorter life. Women are shaving two legs compared to one face each time they shave, and if most women are like my wife, their razor stays in the shower, thus exposing it to more corrosive situations than my razor which stays in the cabinet between uses. Therefore women should be using more razors than men, which should mean more are required and should cost less per unit to produce. In the end it should mean lower per unit cost of goods sold.

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  10. Chapter 17

    "Just when you think society was making progress on women’s issues, the corner store proves you wrong.
    In December, an investigation by the New York City Department of Consumer Affairs found that in a study of nearly 800 products – from toys to personal items like shampoo – many were priced differently for men and women. Men’s razors went for $14.99, for example, while the same razors marketed toward women were being sold for $18.49. A pink Radio Flyer children’s scooter in pink was double the price of a red “boys’” version. In total, the investigation found that of the products they looked at, items were priced on average 7% more for women than those for men.
    A report this month on products in the UK found something very similar: when it came to the same products marketed differently for men and women, there was a whopping 37% difference in price. Beauty products, toys, everything. It doesn’t even get better as you age: adding insult to injury, women are even charged more for adult diapers. " The Guradian


    The article highlights the blatant price discrimination that exist in today's marketplace between the two genders. The price for same quality brand items are decidedly higher for women than men, the interesting fact is that this phenomenon exists in multiple countries which suggests that this gender based pricing is not necessarily cultural or geographical. In the event that both genders shared the same value system toward shopping then according to Froeb sellers would face uncertainty in pricing, Froeb states : " When customers have unknown values, you face a familiar trade-off: Price high and sell only to high-value customers or price low and sell to all customers". However Froeb goes further that if sellers are able to "identify high-value and low-value customers, you can price discriminate and avoid the trade-off" .
    The price discrimination suggests that maybe there is a difference in attitude/values towards shopping between the two sexes- what was not clear was whether men tend to be more price sensitive than women or if it is that women have a propensity to shop no matter the price and as a result can be exploited
    Froeb also states that "to avoid being discriminated against, high-value customers will try to mimic the behavior and appearance of low value customers." Therefore women will use articles such as these to highlight these disparities and fight to be treated equal to men in terms of receiving similar prices as men so as to not lose money just because of their gender when men receive the same quality and brand at a lower cost.

    http://www.theguardian.com/commentisfree/2016/jan/25/women-over-charged-everyday-imagine-if-happened-to-men

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  11. This is pretty interesting to read about. There seem to be many different explanations. I have to agree that certain products designated as either 'mens' or 'women' are not placed next to each other, so a price comparison may be so much as an after thought.
    I truly do not believe that is not related to women being less informed. For example, I started using the same brand razor that my boyfriend uses. Why? Several thoughts went through my mind. 1. if there is one that is better quality, I would think that it would be mens razors as they are typically used on a more sensitive area (face rather than legs). 2. There are regular coupons for the brand he uses and I am able to save more money by purchasing bulk razor blades combined with the coupon.
    In regards to other things, such as clothing or 'girls vs boys' design of toys - women may be more particular. There are always certain things that both women and men are not willing to give up to save a few dollars. Depending on the types of products you are looking into, I'm sure we could find more specific reasoning for these differences.

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  12. This is a pretty interesting topic albeit a discriminatory one. Why else would women on average pay 48 percent more for goods such as shampoo, conditioner, and gel? According to a DCA Commissioner, women paying more for the same items show an insidious form of gender discrimination, and to add insult to injury, Federal data shows that women in the United States earn about 79 cents for every dollar for every dollar paid to men (Paquette, 2015). Sellers know this information and exploit it even more by boosting their prices according to who's buying. They are focused on profitability and target women, a certain group of consumers, to boost their sales. Maybe it's because women will most likely buy the product despite the price, especially if it is something they really want or need. Sellers will use Aggregate Demand to determine how many of the items a group of consumers will purchase at a given price (Froeb, et al, 2016). If they know they can get consumers to purchase items at this given price, then they are not likely to lower it.

    According to (Froeb, et al, 2016), if Dell could identify the customers that are less price sensitive and figure out a way to charge them higher prices, they could increase profit. Business owners and sellers benefit by charging different prices to different consumer groups. It is discriminatory pricing and illegal; however, it is still occurring in stores nationwide and globally.

    Froeb, L. M., McCann, B. T., Shor, M., Ward, M. R. Managerial Economics. A Problem Solving Approach. 4th Ed. Cengage Learning.

    Paquette D. (2015). Why You Should Always Buy the Men’s Version of Almost Anything. Retrieved from https://www.washingtonpost.com/news/wonk/wp/2015/12/22/women-really-do-pay-more-for-razors-and-almost-everything-else/

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  13. On an average, women pay more for items than men, because women love to shop more than men. Years ago, my husband went shopping with me at a large department store. When we walked into the shoe department, a row of chairs were lined against the wall and men were seated while women shopped. My husband was glad to join the other spouses. The average man has one wallet and maybe one brief case in comparison to many wallets and purses than women own. Retailers know that on an average women love to shop and they like to shop for brands. Therefore, retailers raise the prices on items in order to promote the idea of quality. It’s not that women are not informed shoppers it’s just that women love brands. When we look at the Academy awards and the Red Carpet event, the spotlight is usually on women and what brand they are wearing. The whole idea of linking quality with brands created more inelastic demand for women which allows retailers to charge women more. “To discriminate directly, you must be able to identify different customer groups with different elasticities. Then, you set an optimal price for each group” (Froeb, et al., 2016, p. 166).


    Froeb, L.M., Shor, M., McCann, B.T. and Ward, M.R. (2016). Managerial economics: A problem solving approach, 4th ed. MA: Cengage Learning.

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  14. I think Michael’s comment about economies of scale, and women/girls preferring greater variety of goods to really hit the mark. Take for example a t-shirt. If you walk into the men’s department, the t-shirts are all structured the same way. However, if you go to the women’s department there are several different styles of t-shirts available. There is the straight, unisex style (same as the men’s), the Ladies Tee style, the Ladies V neck style (sorry, I can’t name them all).

    Each style of shirt is priced differently. And the more towards a ladies style it is, the higher the price goes. So it would be easy to believe this price discrimination is occurring on other products. The manufacturers need to ensure they are able to make up the cost difference as a result of offering so many differences within the same product.

    While it has been a while since I clipped coupons, the last time I did, there were more coupons for men’s products than for women’s. I don’t know if this is also part of the price discrimination scheme, but that coupons were more widely offered on male products than female products just seems to increase the difference between the two markets. I think the male and female consumer groups are the easiest ones to distinguish because it is such a straight line between who is going to need or use which product. So using that as a general price discriminatory manner is highly favored by companies.


    Froeb, L.M., Shor, M., McCann, B.T. and Ward, M.R. (2016). Managerial Economics: A Problem Solving Approach, 4th ed., MA: Cengage Learning.

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  15. Brittany HippenstielNovember 20, 2016 at 8:07 AM

    The pricing with all of the studies shows that women pay more for some (most) items. I believe there is a science behind this, and without the statistics and the facts right in front of you, I wonder how many women notice this regularly? The razors, men have a choice to shave, and women HAVE to shave. (Most women these days do) Companies manufacturing these products have done the research. Why mark up prices on a product you won’t sell as many of? The scooters I believe is all on the coloring. Red, is a neutral color in my eyes? BUT if a boy was using a red toy, it would be a color that matched, but the perception of girl items being pink and purple, and that is what is in demand. There was always a story growing up that the reason big buildings such as barns were painted red, was because red was the cheapest color. This may also be a factor in this.
    Another factor us…..”Cost differences from scale economies” This discusses the items in demand for women are greater. They want a larger variety of items than men. A lot of these items being specialty items such as wedding dresses. These are sold in a lower scale so these items will be marked up. This plays into the items like clothing, and makeup/accessories as well. The demand is higher, but these items are ONLY geared towards women.
    “By now, you've probably heard about the "pink tax" -- the idea that the "female" versions of the same products and services cost more than the male versions. A recent study by the New York City Department of Consumer Affairs surveyed almost 800 products and found in 42% of cases, women paid more for the same items as men” (http://money.cnn.com/2016/03/07/pf/pink-tax/)

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  16. This is a very interesting topic, why are women always paying more than guys? Perhaps one of the reasons is because women tend to focus in getting products that are of higher quality and in that sense the products may be able to have a longer shelf life in their use. This is contrary to goals who in many instance focus in the value of the product, the function and the price associated with it. One could argue that men are not as compulsive as women when it comes to purchasing, they buy things as needed while women tend to have a more compulsive behavior by buying things by the way the look and the future of their use.
    It remains questionable why the difference in packaging and color increases the cost of an article much higher for women than men? Perhaps the cost associated with the color/shape/package for a pink color is much higher than that of Red/Black. Usually when it comes to pain, one color is sometimes offer at a higher cost then the other even if the pain is the same brand. In addition, one might argue the products for women go thru a higher level of quality service due to their more sensitive posture as it relates to skin/hair/style.

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  17. I've bought razors made for men before. They work on legs- go figure. System successfully hacked. The Anonymous comment above about "spending other people's money" above gave me a chuckle. I wonder if that guy ever made it to counseling with his big spender. Kidding, kidding. Adelyn

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  18. When I first read this blog post the second possible explanation listed made sense to me: "Indirect price discrimination - women have more inelastic demand so it's profitable to charge them more." According to Froeb, et al, when change in quantity changes less than change in price, demand is said to be inelastic. In this case, companies will maximize profit by increasing price.
    After researching this topic a bit more though, I don't fully agree with this possible explanation, especially the word "indirect". It appears to me that there's nothing indirect about it; companies are blatantly charging women more to maximize profit. According to an article in CNN Money, during a study in NYC concerning 800 products women paid more for the same product 42% of the time. The so-called "pink tax" applies to many products including those listed in this blog post. The author states that there's "mischief" in pricing women's products, but "difficulty in knowing where in the supply chain the mischief is taking place." (Sebastian, 3/7/16). The retailers aren't necessarily to blame but finding where to place blame is elusive.
    I believe one possible fix is to educate women on the "pink tax" and encourage them to comparison shop or buy products made for men when possible.

    References:
    Froeb, et al (2016). Managerial Economics: A Problem Solving Approach. Cengage Learning: Boston, MA.

    http://money.cnn.com/2016/03/07/pf/pink-tax/

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  19. Gender equality is a topic that woman mainly have been fighting for some time now. Although women have come a long way in history there are still some differences in the way woman and men are treated. This topic of woman paying more than men is something that I have not noticed much of. As a woman, I never paid much attention to what products that men pay for is significantly less than what I pay for. Some reasons that was stated in this blog such as women preferring quality over price or women not being informed on price alternatives is just a generalization in my opinion. I believe that woman cannot be grouped into one category and this needs to be looked at even further demographic wise. As more and more woman are raising children on their own I feel as though they are the most informed about price alternatives than men because they are becoming the head of the household in a lot of single family households. This forces them to do more research especially on every day products and services and not on major financial spending decisions. The inequality in price points is unfair because of the simple fact that women make less than men usually. This goes further than just buying a bar of soap or deodorant, but what about when woman pay more than men mortgages? This article I came across speaks on lending firms that are gender-blinded in the unbiased lending system that we live in. The article states that if women on average earn less than men and tend to have less of an education than men are usually more likely to buy houses with less of a down payment. They are offered a 30-year fixed mortgage rate which tends to have the highest interest rates. Since the growth on single family homes and woman being the head of those households automatically are considered to have more expenses and earn less money which places them at risk to borrow a lot more money from the bank in the midst of purchasing a home. A recent survey done by Prudential found that two-thirds of women feel inadequate to make personal financial decisions. The lack of knowledge perhaps could be the main cause in the complex world of mortgage shopping (Cheng, Lin, Liu, 2011).

    Cheng, P., Lin, Z., & Liu, Y. (2011). Do Women Pay More for Mortgages?. Journal Of Real Estate Finance & Economics, 43(4), 423-440. doi:10.1007/s11146-009-9214-y

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  20. I thought this was a very interesting article in regards to women and shopping. I agree with the fact that it's women and kids that are mostly targeted. Color and packaging is certainly a good way to target the consumer. However, could it be true that the reason why women are targeted the most is because "Women have more inelastic demand and so it is profitable to charge them more?" Are all women insensitive to changes in price? This is tricky and I believe that at the end of the day it all depends on the situation.

    From personal experience, I can certainly confirm that when I have an immediate demand for a product or service I am willing to pay whatever it takes without thinking twice. However, this is not because I am insensitive to the changes in price, it is mainly because as a consumer I am seeking instant gratification for a good or service which is highly needed right away. This is especially true when time is of the essence. On the other hand, if I have the time and I am willing to wait before making the purchase then I will certainly do the research and find the best available price elsewhere. At the end of the day, it all depends on how long a consumer is willing to wait before making the purchase.

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  21. In solidarity for International Women’s Day (March 8), it seemed fitting comment on this blog article today. Why certain products targeted towards women and girls are more expensive, might not be as much of a mystery, as a combination of factors. I’m no expert, but do tend to look around and question these inequalities often.

    Why do companies charge women more? The post mentions several possibilities: An Informational Disadvantage (a patronizing assumption, but I’ll play along); Indirect Price Discrimination (companies charge more because they can); Preference for Quality (could simply be common sense); and Economies of Scale (I wouldn’t want a pink scooter either).

    Informational Disadvantage. Even Froeb (2016, p169) quoted, “only schmucks pay retail prices.” I’ll leave it at that.

    Indirect Price discrimination. I have been riding motorcycles for over three decades, and I can’t tell you the amount of times us girls wished that there was serious protective gear made specifically for women, that would fit properly, be functional, and wouldn’t chafe. Were we willing to pay more for this “feature”? Heck yes, because we didn’t see it as a mere convenience – it was a safety issue. That was the added value we needed. Thankfully women have more choices now and possibly more of an economy of scale for the producers, but that precedence or being charged more remains (but hey, the gear fits!).

    Preference for Quality. It seems ridiculous that razors cost so much, regardless of gender. Yet every time I’ve bought cheap razors, they rust before the week is out. It is easy to justify spending more for quality (or at least there is less guilt associated with it) when talking about items used daily, like good shoes or eye glasses. Let’s say I have a choice between $60 shoes and $100 shoes. If the cheaper shoes wear out sooner, I’ll need a new pair. What if in five months that $60 replacement costs $75? Not taking future cost into account likely means more will be spent in the long run. Unless cash flow is an issue, spending more now – ie, buying quality items – makes economic common sense. Now, if we shroud this idea with indirect pricing discrimination as well, the shoe manufacturer will make sure the $60 shoe is hideous, driving consumers to buy the $100 version instead.

    Other factors? Not sure we can disregard the fact it’s a man’s world. Look at stats for how many CEOs of Fortune 500 companies are women: 4.2%. Women make $0.80 per a man’s dollar, and that’s if you are a white woman. Latinas make a paltry $0.54 and our African American sisters $0.64 (AAUW, 2017). It looks like health care for women will be more expensive again and contraceptive not necessarily covered if the ACA is truly repealed; women pay more for mortgages; the list goes on. My point is, for a majority of people inequality it is the accepted ‘norm’. Not enough people are aware to question it, realize it’s happening, care enough, or have the power to make it change. We could use a bit of change.


    REFERENCES:
    Froeb, L. M., McCann, B. T., Shor, M., & Ward, M. R. (2016). Managerial economics: A problem solving approach. Boston, MA: Cengage Learning.

    Miller, Kevin (2017, Spring). The Simple Truth About Gender Pay Gap. American Association of University Women. Retrieved from http://www.aauw.org/research/the-simple-truth-about-the-gender-pay-gap/

    Sebatian, Clare (2016, March 7). Why Women pay more than men for the same stuff. CNN Money. Retrieved from http://money.cnn.com/2016/03/07/pf/pink-tax/

    What Society Would Look Like if Women were Equal to Men. http://www.huffingtonpost.com/karin-kamp/gender-equality_b_2120430.html

    Escobedo Shepherd, Julianne (2015, December 22). Study: Retailers Charge Women More Than Men for the Same Products. Jezebel. Retrieved from http://jezebel.com/study-retailers-charge-women-more-than-men-for-the-sam-1749286464

    Zarya, Valentina (2016, June 6). The Percenteage of Female CEOs in the Fortune 500 Drops to 4%. Fortune Magazine. Retrieved from http://fortune.com/2016/06/06/women-ceos-fortune-500-2016/

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  22. I found this article to be interesting when I came across it. I definitely believe in price discrimination between woman and men when it comes to large ticket items like electronics, home appliances, home purchases and especially automobile purchases and repairs. I believe when it comes to certain items companies or sales associates in the old school world where men do the shopping and woman just agree. A company feels that woman will spend the extra money for the better quality or the brand name of the product versus the generic brand. Companies have grown to realize that society is all about keeping up with each Jones’s per say and willing to pay whatever necessary for the brand specific item. Companies have learned through shopping surveys and market tests that men just grab what they need and go. They don’t do any research on the products and generally don’t compare prices or use coupons. I would think it would be a better strategy to charge men the higher prices for men’s items as they would never question it versus a woman who looks into things. They could easily inflate the price, increase their revenues without making any changes at all to the product.
    I know in my house I am a price shopper especially when it comes to big items. I like to search for the best deal between multiple stores or dealerships. I like to read reviews on the items before I made a decision. I like to make sure I am getting the best value for my purchase price. I also like to research all the warranties or extended warranties on products so I am prepared when I go to the make my purchase. I have been on the receiving end of discrimination purchasing several times when taking my vehicle to the garage for repairs. My parents taught me a long time ago what car parts are and taught me how to research what the normal range of repairs costs. Garages are surprised when I said let me check Napa for the price of that part it seems high or really it takes 4 hours to put that part in, let me look it up. Amazing how the tone changes when they realize they can’t take advantage of me and inflate the price.

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  23. This blog presented itself in a very easy and clear way. Owner of this blog found a very simple way to express its view but when you read this blog completely, you would get to know about how hard it could be to express such in a easy way.
    รองเท้า เพื่อ สุขภาพ ผู้หญิง ยี่ห้อ ไหน ดี

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