Retailers and other business owners have mastered the art of manipulation. They have studied consumer trends for years and now they use this knowledge for the sake of corporate success.
Have you ever wondered why deals, steals and promotions pop up when you don’t really need them? Think about it from a business perspective. The person selling you the goods may say that discounts are meant to encourage customer loyalty. What they fail to mention is the fact that customer satisfaction is meaningless if it does nothing for a company’s bottom line. Here are a few of the tricks they use to keep their consumers docile:
Discounts
Discounts are some of the most popular strategies retailers use to boost their sales. The concept is simple. A business owner offers less for a product that would usually cost more. The seller knows that the buyer will be tempted to capitalize on what might be a once in a lifetime opportunity. Take for instance, a 50% discount on milk. Your house may be fully stocked but you buy more anyway.
What consumers fail to realize is that discounts are seasonal. They come and go depending on how the retailer plans to offload his stock or increase his revenue. To make matters worse, the discount may in fact be the actual price of the product. People often forget to ask themselves why someone would charge less for something when they could sell it for so much more. In such cases, the retailer is still making a profit in spite of the lower sales margins.
Some retailers are even so desperate to clear their shelves that they’ll use any given opportunity as an excuse to get more sales. One shop in particular, offered a discount on condoms as part of a Back to School offer.
Buy One Get One Free
This is an equally common scam that lets the consumer think that they are buying two items for the price of one. The truth of the matter is that the retailer has accounted for the cost of both the first and second item.
Deals which offer a third item for the price of two are no better. Someone may purchase 2 sodas instead of 1 and leave the store with 3. They then convince themselves that they saved money but they actually spent more on something they don’t need.
Customer Loyalty Cards, Points and Vouchers
Bonga Points represent just one of the many reward-based scams that companies pull to maintain customer loyalty. The more calls you make, the more points you earn. It’s like getting paid to breath. Or is it?
Bonga Points reward Safaricom subscribers at a rate of 10% on all calls. This means that every KES 100 represented 10 points. 10,000 points therefore amounts to KES 100,000 worth of calls. And what can these points get you?
With the current deals Safaricom has to offer, 10,000 points gets you a phone worth KES 8,500. If you still think this is fair, try investing KES 100,000 in Treasury Bills for 5 years and see how much more you would earn. With a fixed rate of 10% for every 3 month offer, you would make KES 200,000 worth of profit.
Smart Cards and gift vouchers are no different. Some retailers claim that consumers can save more money using points and vouchers but these so called loyalty… Whatever points a customer earns are part of an overall budget. Over a period of time, the points become significantly less than the money spent to get them. Nakumatt’s Smart Card gives 1 point for every KES 100 spent. The more you spend, the more points you accumulate. According to a report by First Data, such offers encourage impulse purchases where the consumer is buying goods they don’t need for the sake of gaining more points.
Worse still is the fact that supermarkets set limits and restrictions for their reward system. Some retailers only let their customers redeem their points on special occasions.
Product Placement
Have you ever noticed that the some items are usually a few inches away from other products in many different supermarkets? Don’t be fooled. That is not a coincidence. It’s a marketing strategy known as product placement.
Product placement is a term used to describe the act of strategically putting items where everyone will see them. All major outlets put sweets, gum and cigarettes next to the counter so that the customer is tempted to purchase them as they wait in line. The same thing applies to the entertainment industry, where a fictional character uses a particular brand familiar to the person watching a movie or a programme on television.
Retailers strategically place products next to each other with the knowledge that their customers will make impulsive shopping decisions. One such situation is where the shop owner knows that dry foods are often accompanied by soft drinks. Customers are therefore psychologically inclined to buy some juice with every packet of biscuits they purchase.
The best way to avoid impulse purchases and marketing tricks is to stick to your budget. A bit of self-control can mean the difference between a few basic but important items in your cabinets and empty wallet.