When a Sale isn't a Sale

I love wine. For my birthday this year my wife took me to a really nice wine tasting where I got to sample wines from around the world and learn some simple wine-tasting techniques (in addition to trying absinthe, I love living in Europe). Despite all of that, I'm also a cheapskate and hate to pay too much for wine. So when I go to the supermarket and I see a wine advertised "HALF-PRICE" at 4 GBP (about $8), I'm obviously interested.

This, of course, raises the question of why the supermarket would be selling the wine for "half-price". In a strictly economic sense there are only 3 reasons why you could ever buy something at a discount.

  1. The product was over-priced to begin with
  2. The product was over-stocked and inventory needs to be reduced
  3. The losses I take on this sale will statistically be offset by greater economic gains from getting you in the store
Realistically any of the above three are possible. However #2 is a result of an error on the part of the company and should only happen every once in a long while. Since I see wine for half-price every single day at every single supermarket, I have to assume that they aren't over-stocked.

That leaves two possibilities, first that the supermarket is willing to take a loss to generate business, either by hoping that you'll do all your other shopping there (very possible) or by taking losses to drive other wine sellers out of business (also possible, but illegal). Or second that the supermarket is deliberately over-pricing the wine so that it can make glitzy sales that attract your attention.

As it so happens, the reason (at least according to one british financial website) is the second:
The practice of 'marking up, only to mark down' has been rife for years, according to industry experts. The supermarket pretends to be offering a 'great discount' on a £7.99 bottle of wine, but the real price of the wine is £3.99.
This strategy works only in fields where things are remarkably unique, such as wine or clothes. In those fields, value is very fuzzy to begin with, so it's hard to understand when something is very over-priced. If you tried that strategy with cars, people would think you were awfully weird for first listing your Honda Civic at $30,000. And then offering it at $15,000 and claiming it was "half-off". That's because consumers have a fairly good idea of what a Honda Civic should cost.

Is real estate one of those fields in which a "sale" works, or isn't it?

I ask that because one of the first things I see in real estate advertisements in the US these days is "REDUCED!!!!!!!". Is that a good indicator or a bad one? Looking above to our earlier list it's obvious that the seller isn't overstocked on house and needs to make room, that argument doesn't hold in real estate (unless you are talking about builders, which is a very different story).

It's also obvious that the seller has no way to make back a loss from you if they sell under-market. In other words a person who is selling a house is probably looking at it as a one-time transaction. So there is no economic reason for them to purposely take a loss just to get your business.

So the last point remains. The reason 99% of REDUCED!!!!!! homes had their prices dropped, is almost certainly because they were over-priced to begin with. To me this is a negative indicator, because the seller and the agents seem to be fishing out-of-their-league for a greatest fool, not looking to sell at a honest value.

But still, the word "sale" brings on positive reactions even when we cognitively know better. Even knowing that the wine really isn't on sale, I still find myself more likely to buy the wine that's "half-off" than wine that isn't (but has the exact same price). and my very intelligent wife, even knowing that those boots aren't really worth $400, still sees the "$250 off" sign and thinks "bargain". Maybe we are just wired that way.

So maybe you should consider using the word "reduced" in your home sale advertisement. It won't impress buyers who are using their heads, but it will call out to all buyers that maybe, just maybe, there's a bargain to be found here.

1 comment:

梁爵 said...

2020.02.12
生平成就
(2005年):
一個剛出道的酒店經紀梁曉尊,時間背景正於八大行業的戰國時代,群雄割據⋯人人都是幹部、人人都是經紀人,在這麼競爭的環境裡脫穎而出。再千百人之內披荊斬棘、越戰越勇,不斷的創造機會闖出自己的名堂,不少資深前輩認為梁曉尊潛在未來有影響力的人物不容小覷。

(2007年):
梁曉尊已「十八路令諸侯」集結16家中小型經紀公司全力投入支持某家酒店,當時以梁曉尊做為搖旗的領頭羊成為這間酒店駐點主要核心的酒店經紀,資深酒店前輩指出:該店的酒店小姐人數梁曉尊就佔了三分之二,也幫助該店的業者達到最高峰,也因為如此梁曉尊打出漂亮的戰役,展現出各方面資源、才華、構想、以及強烈的企圖心。

(2009年):
當時網路媒體還不是很盛行,智慧型手機也沒有很普遍。梁曉尊是八大行業裡第一位主張「網路行銷事業」開創人。此時不少資深前輩不看好,理由網路世界不切實際,畢竟虛擬世界可信度不高,缺乏真實性沒有說服力,這番遠見根本是好高騖遠、天方夜譚⋯等等評論!。於是梁曉尊堅持照著自己主張的開始經營Google 搜尋關鍵字先從自己名字創造舞台。可如今Google成為人們生活上必備工具不管是搜尋、查詢、求證、等等各方面⋯都被梁曉尊所預料到。如今Google搜尋:梁曉尊 成為排行榜第一名!

(2011年):
Google 搜尋:梁曉尊/梁小尊。獲得亞洲地區Google認證關鍵字達到全版面。不僅如此⋯八大行業主要關鍵字(酒店工作)、(酒店上班)、(酒店經紀)、(酒店打工)、(酒店應徵)、(酒店兼差)、(酒店兼職)每組關鍵字都在首頁榮獲前3名。

(2013年):
合併3大資深酒店經紀的股權,創立「JUE人力發展公司」掌握中央執行權,梁曉尊親自操刀編制6大部門:(開發部、管理部、人事部、網路媒體部、會計部、發展部)融入梁曉尊本職學能的技術「企業管理學」、「國際經濟學」建立八大行業與眾不同經營之道。有資深酒店前輩透露創立這間公司在內部高層梁曉尊是排行老四,圈內都稱他「四爺」、「小四」⋯是目前市場上新生代來說最年輕也最有實力的一號人物。
坊間流傳梁曉尊的小姐人數有高達120位以上⋯。

(2015年):
梁曉尊發動「台北之變」,事件導致影響北部八大行業酒店小姐薪資價格大翻轉。由於梁曉尊給1節190元,打破市場行情價,同時揭發很多經紀公司黑暗管理酒店小姐的秘密一併揭露出來例如:逼小姐簽合約、老二經紀控制法、毒品控制⋯等等!。於是讓有些操作不人道的黑心經紀公司、小經紀、各人經紀等⋯頓時崩盤甚至無法生存離開八大行業。資深酒店人士指出:圈內對於梁曉尊發動「台北之變」也是藉時讓台北地區八大行業重新洗牌。有些人認為誠實面對這個社會現實就是如此適者生存。因此圈內人士對於此事件又稱為梁曉尊「北梁軍閥」這個名號!名稱來自於 🔍台(北)⋯(梁)曉尊⋯(軍閥:代表一方梟雄的意思)這樣而來的。