Sunday 23 November 2014

Books: Barter, Bargain, Save - never pay full price

Bargain Fever - How to Shop in a Discounted World, Mark Ellwood

Kyle Stock

Published 03/07/2014 | 02:30

Bargain Fever

Mark Ellwood, a journalist and former travel guide author, has a simple shopping mandate: Never pay full price. There's simply no need, a point Mr Ellwood illustrates at length in his new book, Bargain Fever: How to Shop in a Discounted World.

For the first time in more than a century, consumers can readily barter-in a sense-thanks to price-checking apps, discount clubs, and a raft of free-shipping offers. At the same time, Mr Ellwood says, there is a sheer glut of supply: more products, from more companies, in more flavours and shapes and colours and sizes than the world has seen before.

The flip side is retailers are more sophisticated than ever. Bargain Fever notes that an individual's willingness to spend-the economist's holy grail-has been largely uncovered by data mined from the depths of websites and credit-card transaction logs. Meanwhile, scientists have honed how to chemically make people more willing to buy by triggering dopamine and other feel-good hormones with surprise coupons, "friends and family" deals, and other spending cues.

Frankly, Mr Ellwood's book is equal parts frightening and empowering.

He says that consumers like choices, but too many choices put them off. Three seems to be the magic number. Three choices is also a handy way for retailers to steer a shopper to a particular product. The middle option is usually quite a bit cheaper than the product on the right and only slightly less good, while the product on the left is only slightly cheaper than the one in the middle. Ellwood calls it "Goldilocks" pricing because the choice in the middle feels "just right." His advice: Always buy the one on the left.

'Anchoring' is another tactic. A retailer may have two dresses for sale - one for €400 and another for €140. The retailer may not expect anyone to buy the expensive dress, but it makes the cheaper one seem much more affordable. Anchoring is used widely and effectively.

Mr Ellwood's top tip has nothing to do with pricing strategies or sales psychology. Right before pulling out the plastic, ask some derivation of the following: "Is that the best you can do?" Another version that works well: "I haven't checked my e-mail in ages-are you running any promotions or sales?" Every major retail company in the world is stocked with pricing consultants, behavioural economists, and executives trained at tweaking margins. None of those folks, however, is actually ringing up purchases. At least, not yet.

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