This is a guest post from Heather McIngVale of www.heathershints.com
Heather's Hints is a coupon and frugal living website dedicated to educating those who wish to save. Heather's Hints is written and ran by Heather H. McIngvale of Huntsville, AL. Heather is a former tax accountant who is now a stay at home mother of two.
HER TITLE:
They say strength is the capacity to break a chocolate bar into four pieces with your bare hands - and then eat just one of the pieces. My will power is sometimes so weak that I am lucky if a second candy bar doesn't get broken! And this is how I used to feel every time I went into a store. I would get pulled into what I "thought" were good deals and I would blow my budget almost every time. After starting to coupon more effectively I began to clearly see that sales were cyclical. I also began to study the pricing strategies of my favorite stores. What I found was a cleverly hidden set of marketing strategies designed to suck you in and/or bring you back to the store. Half the battle in learning to shop smart is to know the strategies and policies of the stores where you shop. If you know what pitfalls to avoid, you are most likely to get out under budget.
Have you noticed that items tend to go on sale in cycles? This cycle is anywhere from 8 to 16 weeks depending on the item. This amount of time is sometimes determined by whether or not the product is a "loss leader." A loss leader is a good or service offered at a deep discount (generally below cost) in order to attract new customers to a store. The intent of this marketing strategy is to not only have the customer buy the loss leader item, but other products as well. Stores use loss leader pricing when they want to move overstock, give brand awareness, or increase traffic at their stores. Take advantage of this by knowing it's a ploy and only buy the loss leader and of course use a coupon to sweeten the deal! A great example of the loss leader strategy on a smaller scale is razors. Gillette will essentially give you the razor for free with a coupon offer hoping you will buy the cartridges at a higher price. This is why at my house each shave is with a new razor.
Items on sale that are not loss leaders are usually not discounted by much but are part of pricing strategies. A few of those are: vendor pricing (aka MSRP), competitive pricing or price matching, multiple pricing like10 for $10, and psychological pricing. Psychologically prices that end in 5, 7, or 9 are more likely to sell than those that are in whole numbers. I find it fascinating that we will buy something priced at $9.99 with no problem and the minute it says $10.00 we think twice. This is why I always round up.
Another pricing strategy that is popular with couponers is discount pricing. Do you know the difference between a sale, close out, clearance, and a markdown? It could make a big difference as to whether to use your coupon with a sale now or wait and use it on a clearance. A sale is when a store will reduce the prices of selected items only; the prices are likely to go back up after the sale is over. A markdown is when a store decides to adjust the price of an item temporarily, sometimes permanently, to help move inventory. A clearance item is at a deeper discount than a sale item and is usually an attempt by the store to reduce stock it no longer wants. A close out is when a store wants to get rid of stock it no longer intends to carry. I have found that some stores use close out when it really should be called a clearance. Does this mean a sale isn't as good as a close out? Not really. It all depends on your stockpile price. Just because an item is on sale and there is an available coupon doesn't mean it is a good deal.
Now you know what to look for when you are shopping or are preparing to purchase an item. Hopefully with this information you will have some strategies of your own to save BIG!