CONSUMER FOCUS: Fake sale tactics
Beware of phony "sales"
How retailers make you think you’re getting a bargain — even when you’re not
What makes us buy stuff? Marketing experts have spent millions of dollars figuring that out. And, armed with data on how consumers think, feel and react, retailers have devised clever ways to use that power against us in the way they sell us things.
Researchers know it’s tough to resist a good bargain. So, they’ve gone to great lengths figuring out how to make us think we’re getting a great deal, even when we’re not.
“The entire retail industry is built upon creating an environment of emotion and excitement,” said Arun Jain, professor of marketing at the University at Buffalo School of Management. “Retailers create this perception that you are getting a tremendous value and that if you don’t take advantage of it, it won’t be available later.”
In other words, retailers are using our brains against us to take our money.
And it works. Take, for example, the line of giddy shoppers zigzagging through a Niagara Falls Bath and Body Works store a few weeks ago, hurling glittery tubes of lotion and bottles of body spray into shopping bags as they inched forward.
“I have never waited in line to get into a Bath and Body Works,” said one shopper, who seemed amused to find herself there.
The store’s popular $10.50 signature product line was being offered “buy three, get two free,” and the store was packed with customers stocking up.
But just days earlier, the same products were selling five for $25 — an even better deal — yet people barely noticed. So what made the difference?
The “buy three get two free” sale happened in an ultra hype-filled atmosphere — Black Friday. On that day, consumers are conditioned to believe retailers have put out the best of their best deals, and the large crowds present give the impression they’re competing for them.
“Black Friday is not much different from Boss’ Day or Secretary’s Day or a birthday in that you’re given a deadline, and you feel like you have to buy something before [your time is up],” said Charles Lindsey, associate professor of marketing at UB.
Offering a “deal” on a deadline stacks the deck in the retailers’ favor, and they know it. In this economy, we’re even more focused on finding bargains. But with retailers struggling against low consumer spending, it’s even harder to sniff out the hype. Sneaky sales and pricing tactics are more prevalent than ever, as stores use the perception of retailers’ desperation to their benefit.
Stores spend a lot of time trying to convince buyers that they’re coming out ahead at the retailer’s expense. Now media reports confirm the stores are in trouble, and there’s a widespread feeling that shoppers have the upper hand.
“This is exactly how retailers want you to feel. They want you to feel like you’re taking advantage of them, like you’re bleeding them dry. They want you to feel like their loss is your gain,” said Jain.
Think back to those Crazy Eddie commercials. He wanted you to think his prices were “Insane!” Getting a bargain from a crazy person is like stealing candy from a baby, right?
But in reality, consumers who walk into a store convinced they have the upper hand are much more likely to let their guard down, overbuying and often overpaying.
A great example is the “Going Out of Business” sale. Nothing gets a bargain-hunter’s blood pumping harder than the prospect of a weak retailer, forced to slash prices far below their retail value. Shoppers circle the soon-to-be corporate carrion like vultures, acting on instinct and waiting to swoop. And an entire legion of professional liquidators has built a very tidy business playing upon those consumer instincts.
Look at bankrupt home store Linens N Things, where florescent yellow and bright red signs in the windows scream “Everything Must Go!” and employees stand on street corners next to “Store Closing!” sandwich boards. At first glance, it’s a retailer in distress, offering great bargains to get rid of as much as it can before the clock runs out.
But upon closer inspection, those “great bargains” aren’t all they’re cracked up to be. That’s because the clock ran out on Linens N Things long ago. The “desperate” sales you see under the Linens N Things marquee are actually being carried out by third-party liquidators, a group of which bought the company’s remaining inventory.
But, that’s not all. The first thing these liquidators did was jack up prices on the deeply discounted merchandise to its original selling price, then offer them at a 10 percent to 20 percent “discount.”
As inventory began to dwindle, the liquidators leisurely continued marking prices down, to 30 percent and 40 percent. It’s still better than the original price, but not nearly as good a deal as when Linens N Things was at the wheel, slashing prices before it went out of existence.
Consider the Hummer stereo CD player, a stack of which sat below a giant 40 percent off sign at a former Linens N Things in Cheektowaga. The tag read “Was $129.99, You Pay $77.99.” What a bargain, right? But underneath the $129.99 tag was a clearance sticker with the price $64.99 blacked out with magic marker. So, after weeks of sitting on liquidator shelves, the price still hadn’t come down as low as where Linens N Things had left it.
In fact, an investigation by ABCTV’s “Good Morning America” into third-party liquidators found the companies brought in outside products that had never been sold in the bankrupt stores. Each one of them was marked with an “original” and discounted “going out of business” price, intended to create the false impression of a bargain.
So how do we separate the real deals from the fakes?
Lindsey suggests watching out for some favorite retailer emotional tactics designed to short-circuit our rational thinking:
• Sales in multiples. Often, you don’t need to buy a specified quantity of something to get the sale price. But, marking something “Ten for $10” as opposed to $1 apiece gets you thinking — and spending — big.
• Buy one get one free. Did somebody say free? I’ll take it!
Our brains light up like Christmas trees at the mention of the word “free.” But, would you rather buy a shirt for $20 or buy one for $40 and get the next one “free”? This is another way stores get us to buy more than we intend.
• Limited quantities. Watch for wording like, “While supplies last.” We are hard-wired to react to a perceived sense of scarcity.
• False time constraints. “Saturday Only,” “Two Days Only,” “12-hour” sales and even holidays themselves create a false sense of urgency, giving the impression you must beat the deadline by purchasing something — anything — quickly, before your chance is gone.
• Direct mail, e-mail advertising and text message alerts. Giving a company permission to contact you directly with special offers and unannounced sales gives the impression of exclusivity. It feels like a special privilege, a V. I. P. perk to get the heads up about a sale that others aren’t privy to. But you could be one of hundreds of thousands receiving the same message.
• Words like “sale,” “half off” and “50 percent discount.” Sure, it’s cheaper than it was before, but who says the original price wasn’t outrageous?
• Prices ending in the number nine. This is an oldie, but a goodie. Studies have proven a price of $19.99 is far more attention grabbing than $20 flat, even though it’s only a one-cent difference.
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