Every year, seasonal promotions come back, and every year,
consumers wonder: should I buy or should I not?
Originally a Northern American concept, gravitating around the
Thanksgiving holiday, Black Friday is now synonymous with sales even
in parts of the world that do not celebrate Thanksgiving. Why?
Primarily because consumers are always savvy and looking for
discounts and sales. In fact, most consumers find it difficult to
resist discounts. The larger the discount, the more consumers will
consider a product or service, even if they do not really need the
product. There is also a social influence component to explain the
success of these types of sales. Buying is often related to
displaying one's power and status. Therefore, if every one else is
buying, that is displaying their power and status, one will
certainly want to compete and do the same!
The wariest consumers often wonder whether stores are playing
tricks on them. Are there any? Increasing the price of a product
prior to a period of sales - to create the illusion of a larger
discount - is actually illegal. Consumer laws are now quite
prescriptive to make sure consumers are not abused by fake sales or
artificially created bargains. However, this does not mean some
stores do not have tricks to increase their sales. Some have been
known to produce items specifically for sales periods. Stores can
also make actual discounts more difficult to calculate, or create
incentives for consumers to buy more - sometime beyond what
consumers are initially prepared to pay. This is often achieved by
using offers such as '3 for 2', or by increasing discounts as
consumers buy more items (e.g. 20% off for £100 spent, 30% for
£150, etc). This can lead consumers to buy goods they do not always
need or even want in the first place.
A final specificity of sales weeks is that many consumers now
spend a significant amount of time in store and online to try and
get the best possible deal on their target item. There is also a
known phenomenon called 'showrooming' where consumers go in store to
gather information on products and receive advice, before buying it
online, at a lower price. This phenomenon emerged with the
beginning of price comparison websites on the Internet, in the late
1990s. Interestingly, this obsession of saving money is something
that can be detrimental to consumers' welfare. For instance, if we
spend a day to compare prices for a £50 item, this can end-up being
an irrational decision. In principles, a moderate obsession with
price comparison is a good thing, but a complete obsession can lead
people to simply spend too much time on a decision, and this costs
us in two ways. First research suggests we make better decisions
when we make them instantly. Second, consumers should not forget
that the time they spend on searching and comparing actually 'cost'
them at least minimum wage (that is, we could get paid minimum wage
for the time we have spent searching for information)!
MSc in Marketing and Creativity
Executive Master in Marketing and Creativity