By: Tyler Finigan
The holidays mean many different things, but two of them we can all agree on are the giving of gifts and the family friendly atmosphere. Whether it’s buying presents during Christmas time, buying costumes and candy for Halloween, or getting something for that special someone on Valentine’s Day, money is being spent and the majority of the time it is the deciding factor that determines what you end up buying. Everyone is looking for the best sales and the lowest prices on items so that they can get the best deal possible. There is no time throughout the year when prices change more than during the holidays. Companies, brands, and stores are competing at the highest level during this time, and often greatly advertise how low they are dropping the prices or what new sales and discounts they are offering. However, are the consumers really getting the great deals they think they are getting, or is there something else going on?
The article, “Trick or Treat? How to Spot Retail Traps”, focuses on the pricing and marketing strategies used by retailers during the holidays to get consumers to spend more; in this case, for Halloween. The first strategy is setting the stage in the store to get customers in the mood to shop. Pretty displays of pumpkins and scents of cinnamon and pumpkin surround the customer and evoke feelings of the Halloween season. Research has shown that when customers are greeted with a shopping experience that reflects the season, they will usually stay longer in the store and spend more on products. Threshold offers are a second strategy and is used as an upselling trick. For online orders, once a certain value is spent on products, the customer will receive free shipping for their order. This order value is often up to 50% more than the average order value. The same idea applies for shopping in store; if you spend X amount of dollars than you receive a percentage discount. Another strategy is the decoy effect. This is when a store prices one product higher than a second product. This higher priced product is more likely to drive the purchase of the second product, even though the lower priced product might not be priced that low. A fourth strategy this article mentions is bounce-back offers. These deals are a bonus or discount to be used at a later date for spending a minimum required amount. These types of offers get shoppers to return and make additional purchases, or the shoppers forget to redeem the bonus and end up spending more than they planned at their original visit.
All of this matters because it affects both the retailers and marketers that are trying to sell this product and the consumers that are buying these products. Marketers have to come up with these deals that will make their products more appealing than their competitors, as well as to aim to get consumers to spend as much as possible to maximize revenues. We consistently see different companies offering different discounts during the holiday seasons, and how marketers go about this competition will lead to thriving or failing of products and brands.
From the perspective of the consumer, we are trying to do nice things and buy nice gifts for the people we care about. How should we feel about these deceptive tactics retailers and marketers implement during the holidays to get us to spend more? They are offering so many deals that it seems like consumers are saving a bunch of money, when in reality they are not. Is it up to marketers and retailers to not deceive consumers and actually offer the savings they are supposedly offering, or is it up to us as the consumer to be smarter and see what they are actually putting out there? In my opinion, it is up to the consumer to outsmart the marketer and the retailers; because if the marketers and retailers get us to spend more on the products that they are marketing and pricing, then they are doing their job right and earning their paycheck.