A few weeks back, I heard of a supermarket chain seeing a dip in their profits and losing market share to a discount supermarket chain. I then thought “Well, why don’t you follow suit and really lower your prices?”
Don’t all supermarkets do that at some point? I hear you say. It certainly looks this way to the untrained eye.
Have you ever noticed that sometimes a “buy and get one free” offer is more expensive than if you get the same products separately ie instead of 2 X 2 litre cartons of juice, you get 4 X 1 litre cartons? Or sometimes a price is made to stand out as if it was a discounted price but on inspection turns out not to be one?
Yes, retailers use tricks. Some are easily forgiven, others not so easily. But we can beat them to their own game. Here’s how.
1. Track prices, don’t fall for the flashy “discount” sign.
The unethical version of the “hi low pricing” strategy.
Discounts are a common way of clearing stock. But sometimes, even a discount label doesn’t mean you are getting a bargain. Some prices are hiked up a few days or weeks before the discount is applied so the discounted price can still be higher than the real retail price!
2. Don’t follow the crowd.
The dark side of “dynamic pricing“.
We all understand the theory of how prices follow the law of demand and supply. When demand is low, prices are low, when demand is high, prices too are high. It makes sense because supply is limited. Raising prices help control the demand to an extent.
But the dark side is that this strategy can also be employed purely to maximise profits.
Prices can be raised in high traffic (online) or off line retail outlets. So avoid doing like everybody else. Shop online during the day time (early if you can), shop offline late evening.
3. Shop around.
The name says it all : “decoy marketing“.
This one is counter intuitive but it works. It’s the introduction of a third option that can sway the buyer into choosing the option the seller really wants them to pick. In the picture below, courtesy of www.dmn3.com/dmn3-blog, the seller would want you to pick B.
It’s a really powerful one because it tricks you into thinking B is the best out of the 3. The antidote is shopping around to see whether you are really getting the best value for your money.
4. Round prices up
The “left digit effect”
Why is 59.99 so much more attractive than 60 ? Because of the left digit effect. We tend to pay more attention to the digit on the left, 5 so we subconsciously round the price down to 59. But we are so wrong!
This is the easiest trick to beat.
But here you go. You can save yourself a bundle now.
I’d love for you to leave a comment, share what you think.
Reflect, Redefine, Rise!