Critically Thinking About Bargain Tags and "Sales"

What a bargain, two for £3 or £1.49 each!

When shopping, make an effort to check what youíre being led to believe is a bargain is a bargain. Recently, I noticed a boldly advertised £1 deal on some own-brand breadcrumbs. Next to them was a premium-brand product, which was more expensive per packet. On closer inspection, however, I noticed that the more expensive packet contained twice the quantity of breadcrumbs and was actually cheaper by weight. If you buy a multi-pack of beans, you would expect it to be cheaper per can than buying the cans individually or cheaper per can than a smaller multi-pack. But thatís not always a sound assumption.

It can be financially worthwhile to compare unit price or weight price as you shop. This is especially true for packed or bagged fruit. Often, something like a bag of apples that looks like a budget buy (especially given the big, red "Only £2" sticker) is more expensive per apple than if you selected the apples individually. Iím not talking about those posh-looking packs of four perfect-looking apples in a cardboard carton versus four apples out of the basket. Iím talking about a bag of apples packed like a bag of spuds versus the same number of apples out of the basket. Supermarkets lead you believe itís a bargain and then sting you for a few extra pence per apple. They justify this by claiming that their customers do not mind paying for the convenience of pre-packed items. Thatís fine, but they package it in a way that leads the customer to think itís a budget pack, and thatís sly. So, check the unit price or weight price.

Nowadays, many supermarkets do this for you on their shelving price tags. Theyíll happily tell you the price per kg, per lb or per item. Be aware though that sometimes they mix them up to cloud the issue. For example, itís not uncommon to see onions expressed as price per kg next to onions expressed as price per lb. When theyíre not "clouding" by mixing baselines in this way, those tags are very helpful, but theyíre also doing something else to you. Theyíre giving you long-term confidence in your bigger-pack-cheaper-items assumption.

And this is the main point. The supermarket relies on you being mentally lazy and letting them do your shopping for you, as human beings we actually like to be told what to buy. This kind of manipulation is also prevalent in other places, such as bookshops. For example, a lot of the signage (like the one on the breadcrumbs) implies a bargain where there isnít one to be had.

And donít shop when youíre hungry. Research has shown you spend more and buy more junk food than if you shop on a full stomach. Your hunger pangs catalyse the hyperbolic discounting and irrational justification effects that make you buy junk.

In summary, stores know the overwhelming majority of their customers are either too lazy or too busy to invest time doing the maths or research to determine whether a bargain is really a bargain. And, boy, do they exploit it.

Shopping in the "sales"

End-of-season sales are another ploy used by shops to weave their mind magic on you. When youíre looking around the end-of-season stock, be aware that retailers sometimes deliberately purchase too much stock just so it can be reduced in the sale where they know they will still make a margin on it. This means that you should not be influenced into buying something you donít really want or need just because you think itís a bargain. The trick with sales is to compare the price with what other shops are offering. Itís often a mistake to focus on the discount being claimed. Sometimes though, this is harder than you might think.

Buying a new sofa is an experience fraught with non-existent sales. In stores like DFS, itís hard to find a time when they donít have a sale. Their sales are marketing ploys designed to make you feel youíre getting a better deal than you are. Itís a common practice at the end of the "sale" for them to change the name and pattern of the sofa, and put it back on "sale". Shops like DFS and SWS also offer interest-free credit deals. This is a fallacy Ė the price of the interest-free credit is built into the price of the sofa, i.e. by making the sofa slightly more expensive, the "free" credit can be offered as an incentive.

I doubt Iím telling you anything new, and when youíre not in the market for a new sofa, youíre probably making fun of DFSís TV ads about their massive bank-holiday sales too. But attitudes change when you actually need a new sofa. Suddenly, these deals start to look a lot more attractive. At the point of buying, you want the savings and the interest-free deals to be true. And if you want them to be, they are. Thatís how it really works. So, when you need a new sofa, it is hard to treat their "deal" as the marketing tool you know it to be.

Now you should consider having a look at critically thinking about pricing strategy.