I’m in the market for a new car (new to me, at least), which means I’m wading through hidden costs; unknown documentary and licensing fees; questionable business practices; and opaque pricing hidden behind the invoice price, MSRP, rebates, cash back, and 0% APR financing that may or may not apply to any living human being. Just once I want to walk into a dealership and scream, “Fine, but what does the car cost!?!”
But do people really want a clear, unambiguous price they can depend on? Consumer reporter Bob Sullivan posted a nice piece about the death knell of clear pricing, shown by JCPenney’s horrible quarter, the first in which it tried to simplify its pricing. Like most department stores, JCPenney used to live and die by the nearly constant sale, holding more than 600 a year, according to Sullivan. After a while, it’s impossible to remember what a real price actually is underneath all of the constant discounts. It’s like driving by those infamous furniture stores that are in the seventh year of their urgent “going out of business” sale. Prices are slashed, inventories are liquidated, and clearance prices of 50%-70% are set knowing full well it will drive the distraught owners to penury. Every week. I would never buy furniture at a place so incompetent that it doesn’t even know how to go out of business properly. Hire me for a week and I’ll show them how it’s done. (First step: Free sofa with every ottoman purchase.)
JCPenney’s new CEO, Ron Johnson, formerly of Apple’s wildly successful retail stores, abandoned this type of constant sale on February 1, substituting instead a clear-pricing scheme with everyday lower prices. As Sullivan points out, the overhaul even did away with prices ending in 99 cents, because everyone knows charging $19.99 for an item instead of $20 is just a psychological ploy.
But psychological ploys work. JCPenney’s first quarter using the strategy saw customer traffic drop 10%, while revenue plummeted 20%. One of the main reasons people shop at department stores was taken away. Consumers have been trained to expect big discounts, often caring more about the size of the discount than the final price. Many shoppers are unconsciously biased to buy something that’s 20% off even though the original price was jacked up in the first place. The discount is a mental trigger that fires us into action, regardless of how little of a value it really is (70% off MSRP doesn’t mean much if the MSRP was set by people who live in a magical land of unicorns and tooth fairies).
I’m rooting for JCPenney’s strategy to ultimately work. Hopefully we consumers can be retrained to shop by value rather than artificial discounts, if only because I’m a sucker for them. “Oh, you’ll give me a deal on the car’s extended warranty and 70% off the rust-proofing? Sign me up!”
Jeremy Ryan
Social Media Managing Editor
Wells Fargo Daily Advantage
FDIC report shows economic recovery http://ping.fm/uqeQg
North Shore Bank Awarded Top Workplace Award by Milwaukee Journal Sentinel | North Shore Bank - Member FDIC http://ping.fm/aeiIt
The Mortgage Market Guide Weekly // Weekly Newsletter http://ping.fm/KhKUA
Rates Hit Record Bests in the Mortgage Markets http://ping.fm/eg6nE
*Please note, the sender’s email address has not been verified.
You have received the following link from mkellman@northshorebank.com
********************
If you are having trouble with any of the links in this message, or if the URL’s are not appearing as links, please follow the instructions at the bottom of this email.
Title: WSJ.com - Borrowers Face Big Delays in Refinancing Mortgages
This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.
Copy and paste the following into your Web browser to access the sent link:
http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=1848877573&pt=Y
Copy and paste the following into your Web browser to SAVE THIS link:
http://www.savethis.clickability.com/st/saveThisPopupApp?clickMap=saveFromET&partnerID=150&etMailToID=1848877573&pt=Y
Copy and paste the following into your Web browser to forward this link:
http://www.emailthis.clickability.com/et/emailThis?clickMap=forward&etMailToID=1848877573&partnerID=150&pt=Y
********************
Email pages from any Web site you visit - add the EMAIL THIS button to your browser, copy and paste the following into your Web browser:
http://www.emailthis.clickability.com/et/emailThis?clickMap=browserButtons&pt=Y”
*********************
Instructions:
Jobs Report Disappoints and so does Europe in the weekly economic and mortgage rate newsletter http://ping.fm/39oXd
