
The Low Prices vs. Bargains Dilemma - kervokian
https://creativesamba.substack.com/p/the-low-prices-vs-bargains-dilemma-20-01-27
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mft_
This feels like an over-simplification, and not translatable to other
examples.

JC Penney had an established group of customers who liked what it offered -
and for many, this presumably included liking (even enjoying?) the coupons and
sales approach that was offered. In changing the model, JC Penney totally
disenfranchised the whole group of customers _who liked that approach_. (It
doesn't matter why they liked it, or whether other people also like it... it
just mattered to JC Penney at the time that lots of customers did get some
sort of gratification from it.)

Does this mean that no business can therefore ever succeed without a coupons
and sales model? Of course not - and there's plenty of successful businesses
with a different model. They're just started with a different model, and
therefore appeal to a different customer base from the start.

The message of this example _isn 't_ that "people don't want low prices, they
want bargains". It should be that _" you change major aspects of your business
model that your established customers like, at your peril"_.

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pjc50
The discounting model works well for Steam, Amazon etc. There's a variant used
by less reputable retailers where you pretend the product was being sold for a
big price then offer a "discount". People absolutely do love being told
they're getting something cheap.

The "always low prices" model is a bit more complicated to make work than it
sounds, but works for e.g. the "discount supermarkets" of Aldi and Lidl.

I think the repetitiveness of a purchase matters: if you're buying a one-off,
you want the biggest discount and you don't care what the price is at all
other times. If you buy the same thing every week, you may be more interested
in reducing the decision workload by going somewhere consistently cheap.

~~~
lotsofpulp
> There's a variant used by less reputable retailers where you pretend the
> product was being sold for a big price then offer a "discount".

What’s the difference? I don’t follow Steam, but it used to be common
knowledge that every month or so it would offer deep discounts and you should
wait until then to buy and people joked about emptying their wallets due to
it.

How about business to business sales where there is no listed price, even
though the product is the same? Microsoft can sell Windows and Office at
different prices to whoever it wants.

As long as the price is publicly available and transparent, I don’t care what
it was an hour before I buy it or an hour after I buy it.

I also think it’s funny how people seem to relish clothing discounts as it
seems to be causing the same dopamine hits that a scratch off lottery ticket
does. Label the dress $200 crossed out, then put a red 50% off sticker on it
$100, then put a nebulous sign on the rack saying 30% off clearance taken at
register, and you have no idea what the thing costs until it gets scanned. And
then the buyer acts pleasantly surprised at whatever price pops up.

I’d like to see a service that tracks price history for all goods and you can
just look up how much something sold for and easily figure out it’s below
average or above average. Like google flight price history.

~~~
pjc50
The difference is whether or not the product was actually being sold for a
higher price. On Steam it is. As others point out, many places consumer law
requires this to be true for a particular time period before something can be
advertised as a discount.

> As long as the price is publicly available and transparent, I don’t care
> what it was an hour before I buy it or an hour after I buy it.

Most people don't agree with that, and in some places it's the law e.g.
[https://www.asa.org.uk/advice-online/promotional-savings-
cla...](https://www.asa.org.uk/advice-online/promotional-savings-claims.html)

> I’d like to see a service that tracks price history for all goods and you
> can just look up how much something sold for and easily figure out it’s
> below average or above average. Like google flight price history.

"Camelcamelcamel" claims to do this for Amazon.

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DHPersonal
Every time this CEO is brought out and beaten up I feel compelled to come to
his defense. I used to visit JCPenney when I lived in a small city and I was
frustrated by the products that felt overpriced for the coupons to later mark
down. I had to wait to buy a shirt until the sale went on, and sometimes it
meant I searched and bought elsewhere. When this new method arrived I was
excited to know that I never had to worry if the price was going to get better
or be horrible from week to week, so I could buy on my own terms and not feel
cheated.

After the CEO was fired and the prices went back to the seesawing coupon
schedule, I quit going and moved on to something else. He had a good idea. I
will miss the no-nonsense pricing.

~~~
cosmodisk
I'm the complete opposite of my dad. He loves going to shops.He buys mainly on
the basis that there's a discount ( real or made up, doesn't matter) on a
product.I go to shop based on what I need and if there's a discount on a
product I was planning to buy- well, that's great,but that's as much as I care
about it.Never do price hunting, coupons,and etc. The problem is, my type is
minority and my dad's is majority.

~~~
ansible
I'm like you with most things I buy. If I just want a shirt, or a bag of rice,
or some other commodity, I just want to buy it. I've previously selected a
brand with the quality I like, and I don't want to expend any more mental
effort on this subject.

When it comes to computer parts, I _love_ to shop. I will read and analyze for
_months_ , while keeping a close eye on prices.

For example, I'd been in the market for a new GPU for a while. And prices over
the last couple of years due to crypto-mining have mostly sucked, with retail
prices above MSRP for many cards in much of that timeframe.

However, in January, I was able to pick up an open-box RX 580 with 8GB RAM for
$126, which is still a good deal a couple months later. I've been very pleased
with that purchase, and hopefully the rest of my system can handle Baldur's
Gate 3 at a decent quality (when the game comes out later this year).

I'm not sure what my point is... People are complicated?

~~~
Woberto
I think part of the point here is that some commodities may have highly
variable prices for discernible reasons - manufacturing costs, supply/ demand,
etc. - and it makes sense to try and get a good deal. For other products, like
groceries, prices are mostly stable so it doesn't make as much sense. If there
were rice shortages and your brand of rice cost much more all of a sudden,
though, I would expect you might shop around then

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Thorentis
Short, unsubstantiated, unintelligent post lacking much detail, that is better
suited as a comment reply to a more detailed post.

They don't offer examples where their claim holds true, nor go into the
(potentially interesting) detail of why this might be true psychologically, or
link to any studies like these sorts of posts usually do. Even if those
studies make vague claims, at least offer further reading.

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mcv
I hate discounts with special requirements (coupons, bonus cards, etc). Anyone
_can_ get the discount, but has to jump through pointless hoops to actually
get it. Just give everybody the discount.

And I would love a shop that always gave low prices instead of temporary
discounts. At least, that's what I keep telling myself; I don't actually mind
paying more for quality products. There are a couple of very successful Dutch
chains specialising in low prices (Action, Lidl), and I never actually go
there. Instead, I go to more expensive shops that have exactly what I want but
require a bonus card to claim the discount, which I do while hating it.

We're utterly irrational creatures, and I'm no different, apparently.

On the other hand, when I bought my first dishwasher, I found a model that was
discounted from €300 to €200. I shopped around a bit more and found the exact
same model at another shop for €200 and no discount. I bought it at the second
shop. So there I clearly did prefer cheap over discounted.

~~~
7777fps
The hoops are the way such discounts are made affordable. If you're not
willing to jump through those hoops you pay more which then subsidize those
discounts for those who are willing to do so or otherwise unable to afford the
product.

Price segmentation helps businesses extract maximum revenue.

~~~
mcv
Interesting point. So lazy rich people pay more. Although with the bonus
cards, literally every regular customer has them, so it's the irregular
customers that subsidize the regular ones.

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epx
I prefer low prices, every time I see an ad like "Save $x" or "From $x to $y"
I feel someone was ripped off. But most people may really like the "bargains".
Even my wife. I like to tease her "from 3000 to 300 for something that is
worth 3".

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mirsadm
That's depressing if true. I would much rather the price be the real thing all
year round rather than waiting for a fake sale every second week.

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epanchin
I would love to online grocery shop with a core selection of items in my
basket.

The UK service Ocado provides this functionality, but due to its constantly
rotating offers shopping in this manner is inefficient.

I would much rather lower prices than offers.

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bluedino
Clothing is so overpriced. A name-brand button-up shirt or pair of jeans is
not worth $55 to me. Buying the first shirt and getting the next for 50% off
(so 25% off both shirts) is still insulting.

When I go to JCPenny, Macy's, or other stores at our dying mall (I think that
might be all that's left), I head straight for the clearance rack. I'll buy
those clothes for $10 or $15, or less.

It's a low price, and I feel like I'm getting a "$55 shirt" for $10.

~~~
karatestomp
The “real” full price of a lot of non-luxury clothes is more like 60-70% of
“full price” and it’s not a real sale until it dips under that. A lot of
traditionally lower-edge-of-upscale brands have even gone that way.

Between that and vanity sizing buying clothes involves a lot of looking at and
interpreting bullshit numbers.

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Traster
I know that the evidence in this case is very clear, and that consistent, low
prices didn't work. In fact I think there are a few instances of other people
attempting similar strategies like Brandless. But Intuitively I feel like
there must be a place for the consistent low prices model. Maybe intuition is
just dead wrong in this case, or maybe we're just waiting for some visionary
to turn up and everyone will be talking about how crazy it is no one managed
to do that strategy before.

~~~
gmac
I guess the standard discounting approach means that people who care a lot
about low prices can get even lower prices, because to they are to an extent
cross-subsidised by people that don't care.

In the always-low-prices model, no cross-subsidy is available, so you lose a
lot of the people who care about low prices, and you don't gain many of the
people who don't care because, well, they don't care.

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TeMPOraL
My liberal TL;DR: JCPenney failed in switching from coupons to fair and
transparent pricing, not because "people love bargains", but because _everyone
else on the market is manipulating people with bargains_.

Honesty loses to dishonesty on the market.

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jrs235
Again, as evidenced by this phenomenon, humans are not rational, they are
emotional and rationalizing.

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hencoappel
This is barely worth reading. I thought there would be more in it, but just
read the TLDR in the comments.

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pintxo
TLDR:

> Low prices make us feel like we're tightwad bastards (Scrooge McDuck style).
> But bargains make us feel special and smart. And they allow our brains to
> change the narrative, "I didn't spend $60, I saved $45".

~~~
wolfhumble
My TLDR ;-)

> People don't want low prices, they want bargains.

~~~
mjevans
They also want to feel superior and special. That they've 'won'.

~~~
agumonkey
After spending quite some time on craigslist like websites, here's how I feel
when buying or selling:

I want to reach parity. Most of the times these items were sitting in corners,
sometimes even some were things I found. But I wanted to make the dance with
the other person to find the middle ground where both of us would feel happy.
Sometimes even if I gave him more than I should, to me it felt alright. The
value is no more in the item, it's in making two people feel happy.

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xcavier
Wow. So much subjective.

They lost ~$1Billion in a year. The customer voted.

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codegladiator
Why people never bargain for branded products and mall shops ?

