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“Wow! 50% off the entire stock of suits, and then only $77 for a second suit and $57 for a third! What a deal.” Or is it? |
I’ve long been fascinated with the methodology behind the pricing and promotional scheme used by Joseph A. Bank clothiers. Well before my time in business school at Wake Forest, I was introduced to Jos-A-Bank by my father and immediately took notice of how they were different than the average retailer. It doesn’t take an MBA or a psychologist to see how their tactics are supposed to play in out in the customer’s mind.
It’s called anchoring, and as human beings we all do it to some degree or another. Let’s use my favorite Jos-A-Banks promotion as an example: The “Buy one & get two free suits” promotional special (hence the BOGT in the title). A regular "executive" suit at Joseph Banks retails for $595. The percepetion here is that you’re essentially getting each suit for $200. So then the deal, at its extreme, looks like this: I'll pay $595 for the three suits, but I will get a psychological return of $400 from the deal since it seems as if the one suit is now only $200 compared to the $595 retail price.
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BOGT (Buy One, Get Two FREE!) |
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| Another example: BOG6?!@#$% Anyone even remotely familiar with this retailer would never in their right mind buy at full retail. Simply wait it out for that BOGT or at least the current sales of buy one and get the next one or two for a minimal sum. The real question here is: What effect does this have on brand equity? Is Jos-A-Bank cheapening the brand with this pricing/promotional strategy? In my personal experience, I still view their products to be of high quality regardless of their heavily discounted nature. Is there something about this particular industry that makes this permissible more so than in others? To be quite honest, after being barraged with direct mail, emails, and television advertisements, I have pretty much made up in my mind that the average Jos-A-Banks suit is essentially worth $200 and not $600. It doesn’t matter what the price tag on the inside of the suit jacket reads, because I know that with only a little bit of patience, I can wait a maximum of three to four weeks and pay only 33-50% of that price. Even after being fully aware of the attempted trickery directed at me, I still consider this establishment my number one choice for men’s dress clothes. This is confusing, because I could probably get a suit of similar quality at a department store in the mall, but for some reason feel that I should pay triple and get the three suits. Why don’t I consider buying three $200 suits at Belk? Better yet, why don’t I spend only $200 on just one suit from Belk since I really only need one suit (not three)?! Ahaaa… Jos-A-Bank’s strategy seems to make me rationalize why I should extend myself and buy more. By making the customer feel as though they might be missing an awesome deal and leave money on the table, by and large they are likely to give in and purchase more than planned.  Above: Example from Belk.com of suit separates that could be pieced together for $160 I've only scratched the surface of this interesting topic and welcome input from others. What are some other examples of this type of pricing? In what other industries could this work in and which industries will it not work and why? Where else does anchoring play an important role in buyer behavior? - by T.J. Dennis - |
T.J.,
ReplyDeleteI found it disheartening last week when our presenter insisted on continually “dogging” on Joseph A. Banks the entire class. The whole time I could not stop thinking about how I have a Banks suit (one that I admit I got on a 50% off sale and also paid only $200 for) that I really enjoy. It is good quality material with a thinness that keeps it looking young and fresh (I don’t like suits with thick material; they seem like something my grandfather would wear). Now, I know that the presenter was really just attacking the method in which they bring in their customers: the shouting method (similar to the giant green blow up waving guy method you see outside the thrift store on University near Elizabeth’s).
I like your progression throughout your blog in which you pose a question and then come full circle in answering your own question. Genius approach whether deliberate or accidental.
Got the safety inspection done on the Duc today and we are good to go for another year.
Jon Wilson
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ReplyDeleteYou guys are spot on. I am a Jos. A. Bank frequenter, but never buy full price.
ReplyDeleteMy brother had a wedding last year and he had all the groomsmen buy suits from the store. He found the retail to be $400, and just waited for the "national" sale (some markets were off by a couple weeks). As soon as the sale hit, he emailed all groomsmen and told us to buy our suits that week. I was able to get mine for $125, or you could upgrade to "thicker" material for $165. I opted for the $125 and 3/4 of the wedding party did too. We all had to laugh because it made no sense why anyone would buy something at full price at the store.
I can't even stomach to pay full price at the store. A month after purchasing my suit, I received a $35 coupon valid on full price items only. I thought I would be able to drop $20 and get a nice shirt with the discount, but to my surprise, all the dress shirts were $90+. I ended up buying metal collar stays and french cuff knots, and paid $2 out of pocket. Now I need to figure out what to do with 25 metal collar stays!
--Andrew Akers
I have to admit that I’m a “deal shopper.” I hate paying full price for anything. I think that marketers are creating monster shoppers, a new species of x-saurus that feeds itself on ripping off retailers. This is kind of a shame because I also hope to see myself on the other side of the coin one day as the business owner. As far as Jos. A Banks, I’ve never purchased any piece of clothing there, mostly due to the same point that you brought up as you concluded your post. I feel that their proposition is misleading and unfair. I realized a few years ago that I shouldn’t yield to the enticing of retailers and that, instead of buying the three suits that I don’t necessarily like (and probably would not wear much anyways) just because they are a crazy good deal, I should buy what I really like when it is on sale in a store I can trust.
ReplyDeleteOther places where I have seen these same tactics include nutritional supplements (Puritan Pride) and online photo products (Snapfish and Flicker).
Luis
JOSEPH A. BANKS!!!
ReplyDeleteIf every there was a place that made men feel that they were getting a deal it is JAB. Given the casualization that our country has experienced over the past few decades and consumer's tendencies not to pay particular attention to certain categories (like dress apparel) until they are in need, is it sensible to think that JAB markets this way to make those less familiar dress clothing shoppers feel as though they are getting the deal of a life time? Better yet, are these type of tactics better suited for women who may drive or influence men's dress clothing purchase behaviors? Women are even less likely to be actively shopping for mens clothing until their significant other is in need and given JAB constant deal mentality, no matter the occasion, there is always a deal!
Personally, I cannot speak from experience when it comes to JAB as I am a pretty consistent Belk shopper (see last name, however, I can say that my exposure to JAB advertising has dimished the quality of the products in my mind. I have resisted even setting foot into a JAB store as I just picture in my mind a store full of cheaply made apparel. Is this method effective? It must be or they wouldn't keep doing it, but I can see both the pros and cons.
Brandon Belk