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Just in Tme for Black Friday: Loss Leaders and Human Psychology

Last post Mon, Nov 8 2010 7:36 PM by MamaThree. 3 replies.
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  • Mon, Nov 24 2008 8:06 AM

    Just in Tme for Black Friday: Loss Leaders and Human Psychology

     Something for you to think about as you form plans to shop at 5 a.m. this coming Friday--something called "implied scarcity."

    Do you ever get a feeling of superiority when you hit a sale, use a coupon, or whip out your store savings card? Did you know that’s what the store managers intended for you to feel, carefully crafting their ads and displays to make you think you’ve conquered the food budget?

    Some examples of store tricks used to make us think we’re getting a real good bargain:

    · Green beans were being sold for thirty cents per can, and they weren't selling at all. The price got changed from thirty cents to 3/$1.00 (that's a price INCREASE). The green beans started selling like hotcakes.

    The following week, some of these same green beans were moved to the end of the aisle in a special display—no sale price or anything—just moved to a new location with the regular price on them. The end display sold more green beans than the regular shelf stock AT THE SAME PRICE.

    · On another occasion, a store was trying to get rid of some Swanson potpies. On the sign with the price, they wrote "Limit 3." People started buying them up. They even saw people buying three, going out to their cars, then coming back in and buying three more.

    To really make them seem special, some of the potpies got moved to a small freezer display on the aisle end with the same sign. Guess which ones sold fastest?

    Stores do stuff like that all the time, and that’s why it's a good reason to know general prices of things you usually buy.

    Why do retailers bother to put limits on loss leaders? To limit their own loss on these products…same for coupon cards, membership cards, VIP cards, coupons, rebates, etc. Giving a feeling of exclusivity to some customers makes them feel more important, and thereby giving them all the psychological fuel they need to spend more. The store is already taking a loss on the product by discounting it, but they can further reduce the access to that discount by throwing a hurdle in your way through store discount cards, coupons, rebates, etc. Meanwhile, your “discount” experience is boosting your feeling about going there and spending more—about 26% more—than you planned to, even with a list in hand.

    Why put limits on regular-priced merchandise, such as the potpie example above, or the flat-screen TVs, or I-phones, or X-box game consoles, or whatever else stores plan to sell far below normal price to get you in their doors this coming Black Friday? To imply scarcity--the feeling of getting them now while they’re hot. Nothing moves slow-moving merchandise faster than implied scarcity these days.

    With rampant unemployment, don’t we have enough to contend with while trying to feed our families and get by this holiday season? Now we have to watch out for implied scarcity and exclusivity tricks while we try to shop!

    Remember that we’re not special and we don’t care if they run out of something at the regular price or higher. Besides, when the hoopla's over, the stuff usually goes on sale for an even CHEAPER price after the door-buster event's over.

    Just for fun, keep track of the Black Friday prices on some coveted items, then keep track of prices on those items after the event--all the way to January 31st. I bet you'll find that lower prices will be had on the items after the door-busters and holiday sales events are over, because retailers have to clear their inventory for year-end taxes. They'd rather rack up a tax-deductible loss than hang inventory over into another tax year, making it worthless.

    It really DOES pay to wait, and a smart shopper does his/her shopping the tax season before the scheduled holidays in the same year anyway--this means your holiday shopping for 2009 (and beyond) should be done after Christmas (every year) from now on.

  • Mon, Nov 24 2008 11:59 AM In reply to

    • Edey
    • Top 25 Contributor
    • Joined on Mon, Sep 10 2007
    • Los Angeles County, CA
    • Posts 3,869

    Re: Just in Tme for Black Friday: Loss Leaders and Human Psychology

    My husband is a much better shopper than I am and remember prices with ease. He has noticed the trend of stores to make a big deal over a price that is actually higher than it had been. Wal-mart, Rite-aid, Walgreens, and Target all have done this. 

    It is very important, more than ever, to pay attention to pricing.  The stores are hurting for income and will use every trick they can to separate you from your money that you can't afford to give up.  You have to be diligent in every way.  You don't know what income you will have 6 months from now, so hold onto all that you can while you have it, or learn to do without.  Edey

    Edey's Vintage and Current Needlework Blog

    Life is like a quilt - it is made beautiful from all the little pieces stitched together.

    Use a HandCranked tool, it doesn't need to be plugged in or charged up!

    Treadle sewing machines. Get a workout and save electricity all at the same time. Plus it can go anywhere, even outdoors!

    READ THE ARCHIVES! It'll do you good.
  • Wed, Oct 27 2010 1:06 PM In reply to

    • Brandy
    • Top 10 Contributor
    • Joined on Wed, Mar 28 2007
    • Saving in South Mississippi
    • Posts 25,145

    Re: Just in Tme for Black Friday: Loss Leaders and Human Psychology

     This was another older discussion worth looking at again.


    The Dollar Stretcher Community Manager

  • Mon, Nov 8 2010 7:36 PM In reply to

    Re: Just in Tme for Black Friday: Loss Leaders and Human Psychology

    I just experienced this during Halloween. I went to Walmart and the aisles were stocked to the brim with Halloween costumes and accessories (nobody was buying them), all priced around 12-16 bucks. Then I went to Target, the shelves were bare because they had 30% off everything signs everywhere on their Halloween items. Most of their costumes were 29.99. So even with the "sale" Targets prices were 9-12 more than Walmarts, but people bought into it because of the HUGE sale signs, and the implied scarcity of the items and it worked!!  I think shoppers are starting to come around and get educated on sales tactics.

    Here is a blog that I'm following about Black Friday, it also talks about the lure of "sales" and what you can do you increase your savings!


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