Ever wonder why you are always spending more than you plan to at the end of your shopping day? There could be an explanation for it.
There are many tactics retailers and businesses are using to attract Consumers into buying more than they really need. More than often, we as consumers think we know better when it comes to spotting a good deal, but it might be a good time to think again.
If you look closely at your own expenses, there are so many times that you are rationalise the things you buy due to the great amount of ‘savings’ or ‘value’ you get from buying more. Yet, at the end of the day, these illusions are just the outcome of the Marketing Strategies for one single goal: to get you to spend more.
Here are the top five common gimmicks in Malaysia:
1. Huge Price Markdown (Discount)
This is one of the most common marketing gimmicks we see in the retail and online stores today, where retailers tend to attract consumers with large banners or Social Media Ads that say ‘up to 80% discount’ or ‘selling at RM39.90 instead of RM79.90’.
By preying on the rising costs of living, this strategy is actually a smart move by making their products seem more ‘affordable’ after a price cut.
Here is the truth – most of these deals are not as good as they may seem. Retailers would often mark up the price to a higher level, sometimes even higher than market price, so the reduced price at a high percentage (like 80% discount) or the cheaper price at RM39.90, isn’t actually that much ‘cheaper’.
After adjustments, the prices of many products are the same as market price or even before it underwent ‘price markdown’.
Interestingly, the difference of profit margin remains insignificant to the retailers but by drawing crowds to the promotions, they can register a higher volume of sales.
2. Decoy Pricing
The idea of decoy pricing is simple. Say a fast food restaurant offers three set meals at RM10.50, RM12.00 and RM13.50 respectively for different sets of lunch deals. For the RM10.50, you will get a chicken burger with a soft drink whereas the set meal of RM12.00 offers two pieces of fried chicken with salad, fries and a soft drink.
To make you choose the most expensive set, they add another piece of fried chicken for the set meal of RM13.50. With just about RM1.50 difference, the fast food chain operator offers you more foods in one set and this goes the same for the next upgrade.
At the end of the day, many consumers fall into pricing gimmick of getting the most expensive deal because they get more out at a smaller price increase.
Similar to Starbucks, when you know you just want a regular cup of coffee, they tempt you to upgrade to a venti for only RM1 extra. Sounds like a bargain, but is that really what you wanted?
3. Free Gifts
Malaysian has this obsession for free stuff and it has led most of us to impulse buy just to get these ‘free gift’ which is less worthy in the first place. The real winner will always be the retailers, who can boost their sales by using these ‘gifts’ as bait.
For instance, Jusco always has this member-week event on the first week of every month by offering RM5 or RM10 to their members when they spend RM100 or RM150 and above. Despite not needing to spend RM100 or RM150 above, many consumers are still falling for this just to get the vouchers. But what can you buy with RM5 or RM10? It’s essentially the same as shopping at a 5% or 10% discount.
It is fine to go after this voucher if you are already making your mind to purchase certain products to add value to your spending. But to spend a significant amount of money just to get these ‘free gifts’ is too irrational and it may cause you to lose more than you think you have earned.
4. Purchase with Purchase (PWP) Marketing
PWP is another common marketing trend we see especially in pharmacy and health & beauty chain stores. This strategy creates an illusion of giving exclusivity to consumers to buy certain products at a cheaper price if they spend more than a certain amount of money in the store. For example, when you purchase RM50 and above, there is a list of items that are sold at cheaper price for consumers that achieve the ‘requirement’.
While there are still little signs that Malaysians would rush themselves into this kind of deals and spend recklessly, this does not mean they are safe from the pull. With the cheaper price tag for these PWP products, consumers may feel rewarded to purchase them for being a ‘qualified’ spender.
5. ‘Last Day’ Agitation
The Last Day tagline is one of the more common ones we have seen on banners, TV commercials, and social media ads these days. Retailers especially luxury or branded products sellers, like to use this strategy to attract consumers by creating a sense of urgency among them.
Playing with the concept of scarcity, we (consumers) will tend to think that the offer is too good to miss and that it may never come again. The truth is, they always come back and consumers still fall into the same cycle of overspending in these campaigns.
Given the enticing retail stores available in the market and not forgetting rising e-commerce sites, learn to see the truth behind these marketing strategies and be a smarter consumer yourself! If you have more similar knowledge or experience, please share them with us in the comment below!
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