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In grade school, I had a teacher who taught us a little math and a little bit of business at the same time. There was a cupcake fundraiser and she suggested a sign saying that one cupcake would sell for 50 cents, but if you buy 3 you only pay $1.50!! Sure, you won’t fall for this as an adult, but some of our fellow school mates hadn’t mastered their math skills yet!
Marketers spend hours trying to devise ways to get consumers to open their wallets. It is their job and they are pretty good at it. They are paid to research and find ways to get people to spend.
In 2012, J.C. Penney’s told shoppers that they were getting rid of sales and promoted everyday low prices. They called it “fair and square prices.” I actually enjoyed their commercials making fun of retailers for having door busting sales that end at a certain time. They made fun of stores for pricing things at $X.99 so shoppers will perceive them to be cheaper. Check out a few of their ads.
Instead of door busting sales that end at a certain time, why not great prices all the time. They also promoted “no games, just fair prices.” The campaign made sense to me. I didn’t shop there, but I don’t really shop generally.
Well J.C. Penny’s ad campaign promoting fair prices flopped. I have no idea whether their prices were actually fair and square, but I don’t think that was the reason their marketing campaign failed. I think the reason it failed was because people like sales and coupons. People want to think they are getting big savings (whether or not they actually are getting those savings). Shoppers armed with coupons think they are getting a better deal than the shoppers without them. Shoppers who get to the store early for the “door busting” deals think they are getting a better deal because they woke up early and got to the store earlier than shoppers who were either too lazy or didn’t know about the time restriction. All bargain hunters want to boast to their friends that they got a steal of a deal by using a coupon or getting a great find at the clearance rack. No one really boasts of getting an everyday low price.
So what other methods do stores use to “trick” shoppers into thinking that they are getting a good deal?
Markdowns:
You’ve seen it. 30% off! Then the 30% is crossed off and it now says 40% off!! Wow, an even better deal right? Well stores often markup their prices right before sales to make it seem like there was a markdown. Actually, back in June, J.C. Penney’s was caught marking up prices only to “mark it down” later. Well shoppers didn’t like their everyday low prices and “fair and square” prices so what did you expect? On ABC’s “The Lookout,” the investigative reporters booked a travel deal to the Dominican Republic which advertised a 44% discount, but they found that it was cheaper booking directly from the hotel. Groupon has some good deals sometimes, but make sure they are actually good deals before buying.
Only a few discounted items available:
You know this trick. This is a favorite of retail stores during Black Friday sales. They advertise deeply discounted prices on popular items, but only have a few in stock. What happens? We get shoppers waiting in line before they’ve finished eating their Turkey on Thanksgiving.
Buy one get one free:
But what if you don’t need that many of the product? Well, many people will just buy more since they’re getting one free and assume they’ll find a way to use it. Plus, often times they’ll mark up the price of the item you are paying for when giving one for free.
Are you easily fooled by tricks that stores use to lure you in to get you to buy? What other ways do stores use to get shoppers to buy their stuff?
It’s the old Spend Money To Save Money dynamic. I bought this! Look how much I saved!
Speaking of JCPenney, that was doomed from Day One. Ron Johnson had probably never been to a JCP in his life and had no CLUE who the customer base was.
That was a train wreck you could see coming from a mile away.
No Waste recently posted…I Hate Fashion
Yes I think that most shoppers love deals and love to boast about how much they saved. As much as everyday low and fair prices make sense…it doesn’t sell.
I’m not lured in by sales because I absolutely hate shopping. The only exception is garage sales, craigslist, and Goodwill!
Holly@ClubThrifty recently posted…My Frugal Weekend Getaway with Credit Card Rewards
That is rare! Good for you…I”m sure you save a lot.
We’re usually not lured by the sales as we both hate to shop. As long as we stay off of Amazon then we’re usually good. Being in advertising ourselves, it’s interesting to see the two sides and thankfully we have our financial wits about us.
John S @ Frugal Rules recently posted…When It Comes To Investing, Be The One Who Dives In Head First
I guess being in advertising, you probably know all the “tricks” that markets use to try to get you to buy, so they probably can pull one over you guys.
I used to be fooled by this. Now, I hardly ever go shopping so I’m not as tempted!
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That’s good…some people go shopping even if they don’t want to buy anything and I’m sure the sales/discounts tempts them to buy things they don’t need or want.
I like sales, but these days it’s mostly for groceries and BOGO’s are usually for items I always like to have around (i.e., beans, canned tomatoes, pasta, etc.).
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I like sales too for groceries, but I still need to learn the prices of the items. Just because it says “SALE” doesn’t mean it’s a good price.
I love sales, but I always make sure that I am getting the most for my money. I will research and think about purchases a good while, especially if it’s a bigger item. I don’t like the shady marketing tactics most places use, so you have to be smart about shopping. I am always wary of the “buy one get x free” sales, because I probably don’t need two or three of the same thing. Grocery stores can be tricky when they say, “2 for $4” and then in little tiny print “must buy 2.” So if you buy a lesser amount, you pay more, sometimes without realizing it! I always double check that.
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I’m like you…I also do a lot of research when I buy stuff. I’ve notice a lot of the “2 for $4” deals…but sometimes they don’t say “must buy 2” but people assume you have to. I never know and sometimes have to ask. Kinda annoying.
I love sales too, but these days it’s much easier to check price on your phone. I also don’t buy as much crap anymore so it’s not too bad.
retirebyforty recently posted…7 Compelling Reasons to Use Cash Instead of Credit
Yea, that’s probably one way that my smartphone has saved me money. I always check out the price on Amazon.
I mostly get lured into the buy one get one half off or for free. The others ones like spend $75 and get $25 off, I don’t really give into because either way I’d be spending more money then I need to.
Romona @Monasez recently posted…Importance of a Savings Plan
Yea I know those types of deals $25 off $75 where people end up trying to buy more things just to get the $25 off.
I think we’re all more susceptible to marketing ploys than we like to think. The rub is that when you end up purchasing something (and regardless of our frugality, we still all buy things), you never really know the impact advertising, sales, coupons, etc. had on your decision. There’s no clear baseline, so it’s tricky to figure out whether the advertising worked or not. That said, it’s a fair bet that you are not always in the 100% rational minority who isn’t swayed by cheap tricks or gimmicks. As always, We are Not So Smart.
To be clear though, the $1.50 for three cupcakes is a better deal. Because you get three cupcakes instead of one. That’s a win regardless.
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Very good point. I always say that I’m not susceptible to marketing ploys and don’t buy things that I don’t need or want…but the marketing ploys are pretty good…it is sometimes very hard to resist something that appears to be a great deal. And an even better point about having 3 cupcakes as a win! haha
I’m a sucker for these deals. I think it is human nature. Though we don’t like to admit it, we are competitive. We want to get the best deal and we certainly don’t want to be “suckers” who paid full price.
Michael | The Student Loan Sherpa recently posted…Meet Jess: Learn how a state school can cost over $400,000.00
Yep…it is human nature and everyone wants to say they got the best deal. Paying an “everyday low price” is not as exciting.
Unfortunately, I am one of the people who is lured in by sales. And in 90% of the cases I end up buying things that I don’t really need and I am mad afterwards. But when you see the big shiny discount signs, you think you are about to hit the best deal in the world. 🙂
In the past few months I managed to reduce the spending on sale items, unsubscribed from most online shops (if I don’t know about the sales, I won’t buy!) and I am trying to go for a more need vs wand approach. It doesn’t always work, but at least I try :))
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I know…those big shiny discount signs are always dangerous! It’s true that if you don’t know about the sales, you won’t buy. I used to go on deal sites all the time. While I’d find some really good deals on things I needed anyway, there were times I’d see a good deal on something I didn’t really need but the deal was too good to pass up.
The grocery stores that have those shopper card sales is crap. They double the price then give you a “discount”. Electronic stores used to do that, but with Amazon you know the true price.
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Yea those shopper card sales are always that great…but if you don’t have the card at all, you sometimes end up buying even more. Electronic stores are trying to lure in shoppers who actually buy nowadays since Amazon has created a lot of shoppers who are just showrooming.
I would definitely say BOGOs get me. My wife and I like to take advantage of BOGOs at restaurants and coffee shops.
DC @ Young Adult Money recently posted…Career Crossroads – What are You Willing to Sacrifice?
BOGOs are always tempting. You feel like you’re getting something for free…who doesn’t like free?
I think we all get fooled from time to time, which is why it’s so important to do your own research, especially for bigger purchases. If you see the word “sale” and immediately think you’re getting a deal, you’re going to get yourself in trouble. But if you take a little bit of time to do some actual comparison shopping you’ll make out okay. For me, that kind of work isn’t something I want to do all of the time, but for bigger purchases it’s definitely worthwhile.
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Same with me. For bigger purchases I do my research so I’m not tricked by those sale signs especially when you can check online to comparison shop. But for lower cost items…sometimes you see “Sale” and assume it must be a good deal. But now that I’ve been shopping more for groceries and other household items, I’m learning what a good price really is and do the math when I see those “Sale” signs.
Stores are definitely good at putting out eye popping sales, but I don’t fall for them. Before I go shopping, I make a list of what I need. If it’s not on the list, it doesn’t go in the cart.
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That’s good that you have a list and you don’t buy whatever isn’t on the list. That’s a good idea. I try to do that too, but if I see something that I generally use and it’s on sale, I might get it.
I actually hate shopping. I only shop when I want to buy something specific. Otherwise, fuggetaboutit!
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Yea I don’t like shopping either, but I use to go on the deal sites online and some of the “hot deals” were tempting.
I hate BOGO deals, especially when it is buy 1, get 1 for 50% off – that is clearly just a trick to get you to buy more crap than you need. Glad I found your blog!
Kyle | Rather-Be-Shopping.com recently posted…Are Frugal People Sexier?
Thanks Kyle! BOGO deals may be okay for a bigger family or people with more space but with only a wife a newborn in a small one bedroom apartment…I have no space for extra crap.
There’s definitely a huge psychological aspect to marketing. The perception of getting a better deal oftentimes trumps actually getting a better deal!
Emotional > rational is so many areas of life!
Mr. Utopia @ Personal Finance Utopia recently posted…Are Financial Planners Worth It?
Great point…we always try to be rational but emotions sometimes take over. That’s what the marketers are paid to do…tap into our emotions. And yes it’s true that this happens in other areas of life.
My grandma owns one of the most popular department stores in my town so I know these tricks. She is still old school and uses pricing guns to price items. First a regular white sticker goes on the item “regular price” and then every single item is marked with an orange “sales sticker” You would think that since 80% of the items in the store are marked like this that people would catch on…..nope they don’t. They think they are getting an item that is “on sale” it blows my mind. But you’re absolutely right people like to think they are getting a good deal whether they really are or not. Maybe it helps them justify their spending.
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That’s a great point. I think a lot of people justify spending when it’s on sale. “I had to buy it, it was on sale!” “It was a great deal!”
Pretty cool that your grandma still uses the pricing guns…and interesting that even though most of the store is on sale, nobody thinks anything of it.
That JCP example is an interesting one. Clearly they were trying to do what Walmart has done to its competitors, but it didn’t work. I guess they now realize that humans respond to sales even if they are irrational.
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Yea I think maybe with clothes people don’t necessarily want to say they got it “cheap.” They’d prefer to say they got it at a deep discount. Funny how the mind works.
I don’t think I’m lured in by sales now, but I definitely used to be. I’d buy anything that was on sale! Sometimes, I still get enthusiastic about sales but I almost always reign myself in and remind myself it’s probably not even that great of a deal.
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That’s good that you’re able to reign yourself in. A lot of times when you step back and think about it…the “sale” really isn’t always a great deal.
The worst is Buy One Get One Half Off. So you want me to buy an extra of something I don’t really need AND STILL pay half price? ugh.
Yea I don’t like those either. Usually the one you bought was probably marked up too.
I don’t get lured by sales at all. But I think it’s good to know the typical value of something so you can pick it up when it’s cheaper. Occasionally there is a BOGO on soon to expire chicken at the grocery store. I’ll always go for that because I know I can freeze it.
The tricks you noted are all true. I worked at a retailer once that marked up prices before a big sale. So sleazy! I hated that place!
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The marked up prices and the big sales are getting a little extreme nowadays where I see “70% or 80% off!!!” Really? I highly doubt the retail stores are giving us that great of a deal!
I don’t pay much attention to sales. When I need something, I look for the best price. The only exceptions I can think of are when Osprey Packs (headquartered in my hometown) does it’s local’s sale and when the CSU orchard does an end of the year fruit sale for $.75/lb. Those are times when I know the prices will be well below market.
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I try to do that too, but I had to learn what the best price is. My wife is better with knowing what the prices should be. Well prices are well below market…and you’re gonna use it…then it does make sense to buy.
You know I don’t shop much, and I never pay retail, but I do look for sales. Probably in a different manor than most, but I still believe in sales.
Of course it’s all relevant, paying $20 for a shirt because it’s marked down from $30 is nonsense. That’s no sale at all. When I think sales, I think clothing or items that are 80% off. Shirts and shorts under $10, and hopefully under $5.
As far as JCP goes – they used to have some really good closeout sales. My parents always got these additional 30% off coupons to use on top of that, so great deals were available to be had. Now, most everything is overpriced, although they actually still run sales. I was just in a JCP and found a great deal on sport coats and a nice dress shirt.
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There definitely can be good finds with sales. You just have to make sure the price is good and not blindly buy because it’s on sale. I haven’t gone to JCP in awhile, but they’re similar to the TJ Maxx, Kohls, Century 21 type places where you can name brands for less.
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I indeed love sales but I am a bit careful when this buy one and get one free sales are on. The prices are generally doubled and then you will be indirectly paying for the free one also but not fully may be. These type of sales will be there to woo customers round the year
Exactly…the prices are often doubled or close to it so it’s not really like you got it for free. They just want to make you feel like you did.
I don’t think you have a good sample since they are already on a personal finance blog. Although if you think about it who would admit to falling for the ploy after you rip on it?! lol its like raising your hand and saying, “yes I am the ass”
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Hey I’ll admit that those signs that say 70% off make me think “Wow what a deal!” If it’s an item that I don’t know what the price should be…sure…I’d think it was a great deal. But you’re right…most people who read pf blogs are different than your average consumer.
We’re “frugal” enough now that we can spot these tricky tactics a mile away. I feel like Superwoman when I go into the store now. Those sale prices bounce off me like nobody’s business. 🙂
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Yes Laurie..you are a Superwoman! It definitely pays to know what the tricky tactics are so you can avoid the temptation.
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