7 unethical ways companies dupe you
The great sale gimmick
All of us have encountered a ‘50% off sale’ sign in shopping malls. This trick is particularly useful in clothing brands. What is the trick behind this ? How can anyone offer you 50% off and still make money ?
You might think that they inflate the price of item by 50% and then give you 50% off. Right ? Wrong! The tricks have changed long back.
Customer awareness made them change their tricks. Now the discount is real and is on the old MRP. You can always test the price history now online by various tools. Here is how they do it.
- Discount on redundant items (Clothing stores) : They give hefty discounts on redundant items out there. Whenever you enter any shop (especially clothing brands), the discounted items are of fairly bad quality and are often old stock. Using the ‘foot in the door’ principle, the retailer has lured you into their shop. Now once you find out after spending considerable time in the store that nothing worthy of your money can be purchased, you try to make up for the time (dissonance principle) by purchasing their ‘real and costly’ items.
- Selective overpricing (Shoe and costly apparel brands): This new method is entirely different and is used by Woodland shoes more often than not. You can always find a 40% off on woodland stores. How do they do it ? Apart from old and useless stock, they also cleverly overprice their cheap items and put them in discount shelf for ever! You look at their cheap shoes and feel that you are getting 50% off on MRP but never wondered that they deliberately over priced it!
- Costly peripherals (Cinema hall mystery) : Sometimes the teapot costs more than the tea. Specially in cinema halls, the cost of the ticket is half the cost of the popcorn! They lure the customer by using cheap tickets but make it through other ‘extra toppings’ sold. I have never visited any cinema hall where the cost of ‘extras; has not summed up to double the cost of tickets bought.
- Forced scarcity (Diamonds): It is well known that diamonds are not that rare. It is through controlled production that their costs are artificially kept high. In the beginning, diamonds were priced at around one to two months of any one’s salary (average salary).Diamonds Are Bullshit. They have a more emotional value than monetary value. For an investor, it is much better to invest into the poor cousin of Diamond, that is graphite or coal!
- Services (Medical profession) : Services are often an overpriced affair. It is impossible to determine the cost of service rendered by, say, a medical professional or surgeon in a given time frame. Service industry thrives on the ‘need’ of the customer and how much they are willing to, and how capable they are to pay for the ‘services’. Differential pricing is applicable in the service sector. Depending on the customers pocket, prices can shoot to the sky. In medical profession, many testimonials can be easily found.
- Jewellery fraud : Jewellery is a high margin business. Jewellers are not goldsmiths but jewellers! They earn money on the emotional need of the customer.The production cost and final price is ultimately directly proportional to the customers ‘delight’. A piece of gold jewellery is an upfront loss of at least 30% (15% on purchase and same on sale). In jewellers circles, it is well known that if you purchase or even exchange your jewellery four times, it’s value is zero for you (That is if you pay double of the original metal value).
- Gym membership scam : Gyms thrive on customers who pay for a full year and never come back after two months! Gym specifically use ‘decoy effect’ and ‘hyperbolic discounting’ for their avail. For membership of facilities they always overprice monthly packages (sensing that no one comes to gym for one month) and reasonably price yearly packages. The costlier monthly price serves as a ‘decoy’ as well as an ‘anchor’ for lower yearly prices. Customers can compare in their mind without bothering to research the prices in the market. Higher monthly option also helps ‘priming’ the customers for yearly packages. For trainer relationships they often use ‘hyperbolic discounting’. Since no one is really going to choose a trainer for full year, they deliberately over price long term rates and subsidise short term rates in the disguise of ‘trial packages’.
Many other methods viz. for printers (costly ink tanks), eateries, hotels, fast food joints etc. have been already mentioned. The ever marketing trick thrives on one basic weakness of human mind, the shortcut to decision making. Whenever presented with conflicting information, our mind chooses the shortest path.
We are programmed and governed by our subconscious mind.
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