Home » Opinion » Book review
Behind sales, discounts and bargains: it's fixed
By Ni Tao |
July 3, 2010, Saturday
|
Print Edition
Print Edition
SEVERAL years ago, when I bought an English novel, it greatly intrigued me to find on the book's front flap its price, which ends in 99 cents. Over time, my curiosity about this arcane pricing mechanism grew as I came in contact with more books that command prices denominated in one or a few cents short of making a dollar.
A colleague once told me this 99-cent phenomenon -- or 98-cent, as long as the number behind the decimal point falls into the same pattern -- is a careful move by publishers to reap maximum profits from book sales, while also lowering their taxable sales, since the threshold for taxation usually is a rounded number.
His logic sounds flawed as not all prices ending in nine necessarily exempt publishers from higher tax rates. Instead, the reason lies in a fact that many of us take for granted when making purchases we think are good bargains.
For instance, if a product sells for US$9.99 instead of US$10, it is the dollar part of the price that first jumps out at buyers and makes them believe it's really cheap, while the penny discount only helps them save marginally.
I got a better grasp of this typical form of psychological pricing after reading "Cheap: The High Cost of Discount Culture" by Ellen Ruppel Shell.
Besides the 99-cent gimmick, other deceptive pricing tactics abound, so much so that the author felt it necessary to warn us to think twice, become suspicious and doubt the value before scoring deals that offer seemingly generous discounts.
"Prices are devilishly slippery things, open to interpretation and manipulation," Shell observes.
As an anatomy of the discount practice in the retail industry, the book gives a roundup of pricing tricks commonly pulled to woo customers, or more precisely, bargain hunters.
A buy-one-get-one-free campaign is now an old story. What we experience most frequently as shoppers are essentially rip-offs disguised as handsome discounts, especially in garment stores.
In the weeks leading up to Christmas Day, a festival that has been stripped of all but its consumerist dimension in China, retailers go all out to promote their sales campaigns, bombarding customers with advertising slogans like "rock-bottom prices now or never" and "buy now and save up to 50 percent off the original price."
But once you step on their premises, it takes only a few seconds to see the measure of disingenuousness. On the surface, goods sell for prices half or a quarter of what they would have been before the "tremendous" cuts. However, their original prices have obviously been tinkered with to render the discounts almost meaningless.
As these flimflams are increasingly exposed and deplored in media reports, this raises the question: why do shoppers fall for tricks they could have easily seen through and avoided?
Bargain hunters certainly aren't known for rational choice. They may not recognize it but in their subconsciousness they are acting out of a desire to win a virtual retail game by pulling the cheapest stuff off racks at the fastest speed possible.
Snapping up a towel for a few cents cheaper than yesterday may seem too trivial a purchase to brag about in the eyes of many. But some people relish the joy of getting their hands on it before others can, with a fervor resembling that of the Spanish conquistadors, only on a different battlefield -- between aisles in supermarket.
When bargain hunting is held up as a test of serendipity, it "reflects a deeper individual desire for economic control," Shell notes.
"Obsessed with 'getting ours,' we sometimes failed to notice or acknowledge the real price we paid for all those marvelous bargains," she says.
Apart from the time wasted in queues, an extreme, tragic price of the struggle or mayhem over bargains are periodical fatal stampedes.
In November 2007, a stampede over a brand of 5-liter cooking oil, which sold for 11.5 yuan (US$1.70) less than usual in a Carrefour outlet in southwest China's Chongqing City, killed three people and landed scores more in hospital.
An invisible price of the discount business is exacted on workers providing menial labor to churn out products at ever-lower prices. Price wars between retailers often force manufacturers to take aggressive cost-cutting measures that leave rank-and-file workers in deeper poverty.
Western countries have long accused China of "dumping activities" in overseas markets, while being largely ignorant of what really makes Chinese products miraculously cheap.
Domestic exporters try everything to depress their prices and the fight for market share is already on before goods clear customs. Naturally, workers' wages are the first among many costs to be reduced to please a foreign clientele.
Luckily, as more Chinese workers stand up for themselves in negotiating better pay, the era of cheap Made-in-China goods as we know it may finally come to its deserved end.
"It is a terrible irony that the global demand for ever cheaper food has pushed the most vulnerable -- poor families in the developing world -- to the brink," Shell says.
Such is the hypocrisy that some "bleeding heart" capitalists are eyeing the poorest corners of the developing world for future growth, while cloaking their outright commercial ends in humanist rhetoric.
The Wall Street Journal reported on June 30 that cosmetics giant "L'Oreal SA sells sample-sized sachets of shampoo and face cream in India for a few cents." Don't be fooled into believing that companies are there out of a genuine wish to help people who get by on one dollar a day. They are not offering discounts for charity or PR purposes, but for future dominance and manipulation, period.
A colleague once told me this 99-cent phenomenon -- or 98-cent, as long as the number behind the decimal point falls into the same pattern -- is a careful move by publishers to reap maximum profits from book sales, while also lowering their taxable sales, since the threshold for taxation usually is a rounded number.
His logic sounds flawed as not all prices ending in nine necessarily exempt publishers from higher tax rates. Instead, the reason lies in a fact that many of us take for granted when making purchases we think are good bargains.
For instance, if a product sells for US$9.99 instead of US$10, it is the dollar part of the price that first jumps out at buyers and makes them believe it's really cheap, while the penny discount only helps them save marginally.
I got a better grasp of this typical form of psychological pricing after reading "Cheap: The High Cost of Discount Culture" by Ellen Ruppel Shell.
Besides the 99-cent gimmick, other deceptive pricing tactics abound, so much so that the author felt it necessary to warn us to think twice, become suspicious and doubt the value before scoring deals that offer seemingly generous discounts.
"Prices are devilishly slippery things, open to interpretation and manipulation," Shell observes.
As an anatomy of the discount practice in the retail industry, the book gives a roundup of pricing tricks commonly pulled to woo customers, or more precisely, bargain hunters.
A buy-one-get-one-free campaign is now an old story. What we experience most frequently as shoppers are essentially rip-offs disguised as handsome discounts, especially in garment stores.
In the weeks leading up to Christmas Day, a festival that has been stripped of all but its consumerist dimension in China, retailers go all out to promote their sales campaigns, bombarding customers with advertising slogans like "rock-bottom prices now or never" and "buy now and save up to 50 percent off the original price."
But once you step on their premises, it takes only a few seconds to see the measure of disingenuousness. On the surface, goods sell for prices half or a quarter of what they would have been before the "tremendous" cuts. However, their original prices have obviously been tinkered with to render the discounts almost meaningless.
As these flimflams are increasingly exposed and deplored in media reports, this raises the question: why do shoppers fall for tricks they could have easily seen through and avoided?
Bargain hunters certainly aren't known for rational choice. They may not recognize it but in their subconsciousness they are acting out of a desire to win a virtual retail game by pulling the cheapest stuff off racks at the fastest speed possible.
Snapping up a towel for a few cents cheaper than yesterday may seem too trivial a purchase to brag about in the eyes of many. But some people relish the joy of getting their hands on it before others can, with a fervor resembling that of the Spanish conquistadors, only on a different battlefield -- between aisles in supermarket.
When bargain hunting is held up as a test of serendipity, it "reflects a deeper individual desire for economic control," Shell notes.
"Obsessed with 'getting ours,' we sometimes failed to notice or acknowledge the real price we paid for all those marvelous bargains," she says.
Apart from the time wasted in queues, an extreme, tragic price of the struggle or mayhem over bargains are periodical fatal stampedes.
In November 2007, a stampede over a brand of 5-liter cooking oil, which sold for 11.5 yuan (US$1.70) less than usual in a Carrefour outlet in southwest China's Chongqing City, killed three people and landed scores more in hospital.
An invisible price of the discount business is exacted on workers providing menial labor to churn out products at ever-lower prices. Price wars between retailers often force manufacturers to take aggressive cost-cutting measures that leave rank-and-file workers in deeper poverty.
Western countries have long accused China of "dumping activities" in overseas markets, while being largely ignorant of what really makes Chinese products miraculously cheap.
Domestic exporters try everything to depress their prices and the fight for market share is already on before goods clear customs. Naturally, workers' wages are the first among many costs to be reduced to please a foreign clientele.
Luckily, as more Chinese workers stand up for themselves in negotiating better pay, the era of cheap Made-in-China goods as we know it may finally come to its deserved end.
"It is a terrible irony that the global demand for ever cheaper food has pushed the most vulnerable -- poor families in the developing world -- to the brink," Shell says.
Such is the hypocrisy that some "bleeding heart" capitalists are eyeing the poorest corners of the developing world for future growth, while cloaking their outright commercial ends in humanist rhetoric.
The Wall Street Journal reported on June 30 that cosmetics giant "L'Oreal SA sells sample-sized sachets of shampoo and face cream in India for a few cents." Don't be fooled into believing that companies are there out of a genuine wish to help people who get by on one dollar a day. They are not offering discounts for charity or PR purposes, but for future dominance and manipulation, period.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
