J.C. Penney's Sales Just A Myth? Retailer Accused Of Hiking Prices Then Discounting Them - 2 views
www.huffingtonpost.com/...increase-prices_n_3390910.html
mk473 environment 2 legal regulatory ethical JCP
shared by Lina Goens on 18 Sep 13
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Lina Goens on 18 Sep 13This reminds me of the mystery shopping we will have to do! Just by investigating, they found out they were being tricked into buying more expensive clothing. We can look out for these types of tactics when we go shopping.
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JCP failed to convince customers to buy at "everyday prices" so they decided to bring sales back. To do this, they marked up prices then marked them down however people ended up paying more than the "everyday prices" and there is evidence that proves it.
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Great article Lina!! I am sure that this is a strategy commonly used by retailers, but it is NOT one that should be used by JCP. This company is already in a lot of hot water and financial trouble as it is, it would be a safer bet to play it safe than to have their tactics exposed and eliminate the already shrinking customer-base that J.C. Penny has.
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Of course, keep in mind, price anchoring has been standard practice in business for a long time. Not only do we see this in the retail industry, but also in other industries like healthcare, higher education, and auto sales. This is just the nature of capitalism; it;s a political economy that aims to maximize profits at minimal cost. The reasoning behind price anchoring is that original prices are the starting point for negotiations. Although this perspective is a useful tool for businesses trying to make an easy profit off of customers who think they're saving money, it is nonetheless insulting to those customers who have little to no leverage or agency to negotiate prices. The average consumer does not realize that this type of pricing occurs because most hold tight to the belief that businesses always have their best interest at heart; little do they know that businesses are interested in one thing and one thing only- the bottom line. So, although price anchoring may not be a GOOD strategy (because it not only insults the customer by taking advantage of them, but also strips them of their ability to make informed decisions) it is a strategy that works for all intended purposes. The reason it works is because everybody would like to hear that they have saved money. I see this anytime I go shopping with my mom; if there is a sale she's sure to be there because, to her at least, "any sale is a good sale."
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Very interesting article. It seems that JCP has changed their pricing strategy multiple times this year -- I think this strategy could possibly cause JCP to loose more customers. Marking up and down is a good strategy but not when existing customers know what specific items cost -- the worst is that JCP put higher price tags on top of low ones (as a customer I would just be offend and that alone would drive me to shop else where). I think JCP has driven customers to think they are getting ripped off rather than getting good prices and leading them to believe they are getting a bargain. I think it is a very common strategy used by retailers and I am not bothered by it but when I become fully aware of it -- that is a problem.
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It makes me sad to think that companies are "tricking" us to get our business. I understand from a "marketing mindset" and psychological perspective that companies get us to think we are getting such a great deal when prices are slashed. Just like the article also mentioned, Kohls may do this too. They always make a conscience effort to circle (in red pen) the amount of money you saved today on our shopping trip. But that number fluctuates so much based on when there is Kohl's cash, 15-20% off mobile coupons, etc. They always make you think you got an amazing deal, when next week it could be even better...or worse.