Key Messages
The Allure of Discounts: How Bargain Shopping Takes Over Our Brains and Wallets
Bargain Fever reveals the secrets behind deductions and discounts, and explains exactly why consumers are so attracted to them.
It shows how stores survive when offering discounts on everything, and how to use the discount system in a smarter way by getting top-notch products at lower prices.
The book also delves into how Coca-Cola revolutionized couponing, and why this coupon system became a national obsession.
You can also find out about the cultural differences when it comes to bargaining, as well as secrets of the high fashion industry’s sales that only insiders know.
Additionally, you’ll gain insight on the consequences of living in an all-discount world – both good and bad.
By reading Bargain Fever, you’ll have access to invaluable knowledge that can help you get desirable items at budget-friendly prices.
Make sure to take advantage of these tips and tricks to become an expert at using discounts!
How Our Brains Respond to Discounts and Why Stressful Situations can Make Us Impulse Buyers
When bargain shopping, it’s not just our emotions that are involved – it’s also our brains.
When we spot a discount or special offer, it activates a flow of dopamine in the brain which is considered part of its reward system.
This dopamine is like a feel-good hormone, elevating our mood and exciting us over the prospect of receiving something at a discounted price.
It was actually demonstrated in an experiment using rats: when they found the small treat at the center of the maze for the first time, their brain released a massive amount of dopamine.
But once it became an expectation for them to find treats in the same place every time, their dopamine levels quickly fell to zero because there was no surprise element left.
In humans too, discounts need to exceed expectations and surprise us to trigger this rush of dopamine and get us excited about finding bargains.
Add too much stress on top of that and our brains are flooded with more dopamine than usual, reducing our control over our behavior and making us liable to give into impulsive purchases – even if we don’t particularly want or need what we’re buying!
The History of Discounts: How a Little Invention Changed the Way We Shop
The discount was invented 150 years ago, when fixed prices were first introduced in a French department store.
This happened at Le Bon Marché in Paris all the way back in 1850.
Their owner, Aristide Boucicaut, realized that he could appeal to more customers if he offered reduced prices as a promotion and so following this, the sale was born.
Word soon spread of this innovative marketing idea and other stores followed suit.
Harry Gordon Selfridge then took it one-step further by introducing certain discounts gimmicks which are still used today.
He realized that many people wanted to buy less expensive products than what his store on offer, so in 1885 created a the first “bargain basement” specifically designed for discounted items.
He also avoided using words like ‘cheap’ to describe discounted goods, opts instead for terminology which highlighted the value of these products – another technique which is still widely used today.
And similarly Coca-Cola attempted to boost sales through offering free coupons redeemable for a glass of Coca Cola – another discount strategy that has been hugely successful up until today.
The Ins and Outs of the Coupon System: Exploiting a Complicated Process
The coupon system can be exploited by both customers and stores, as demonstrated in Bargain Fever.
Customers engage in what is known as ‘extreme couponing.’ This involves using coupons to pay for as much of their shopping costs as possible and sometimes only paying ten percent of the total value of their shopping cart.
But even retailers can take advantage of the system – they often return unused coupons to the manufacturer to make some extra money.
One coupon manufacturer designed a coupon for a non-existent product in order to test for cheating among retailers.
If these coupons were redeemed, it would show that the retailers were taking advantage of the system.
Thanks to this measure, two and a half percent of all coupons were found to have been redeemed by stores rather than genuine customers.
The process of redeeming coupons is more complicated than one might think.
It takes four parties: first, there’s the store that collects all the coupons; second, there’s a sorting company which ensures they are directed to the right manufacturer; third there is another company employed by the manufacturer which determines whether or not they are valid; and finally, after being deemed valid, the manufacturer issues a check redeeming them.
The Rise of the Secret Sale: How Luxury Brands Widen Their Reach by Offering Discounts Through Resale Markets
High fashion brands have always strived to remain exclusive and carefully guard their image, so a traditional sales strategy won’t work for them.
To make sure that their products still get out to the public, luxury brands now employ secret sales as their discount strategy.
These are exclusive discounts only available to certain loyal customers.
But don’t worry – even if you’re not among this elite group of VIPs, you can still get your hands on discounted luxury items by buying them through resale.
Many people have taken to looking for premium merchandise like the latest “It Bag” on secondary or online stores at a much cheaper price.
This is usually due to customers who buy too many items in the secret sales, and then resell them elsewhere.
So, while high fashion brands use secretive discount strategies and hold special sales events, customers can still benefit from discounted items through resale – making it easier than ever before to own designer goods!
Bargaining and Discounts: Attitudinal Differences Around the Globe
Discounts can be a great way to save money, but different countries have different attitudes towards them.
In collectivistic cultures, like India, it’s more acceptable for different members of a group to pay different prices for the same product.
However in individualistic cultures, like the United States, people expect equality and would not accept one customer paying a discounted price while another pays full price.
Discounts were once regulated by law in many countries due to fear of being cheated.
However, with the rise of globalized markets, this is beginning to change – particularly in China.
The Chinese are becoming increasingly wealthy and individualistic and they prefer to purchase high-quality brands at full price than bargain for discounts.
This trend could indicate that these attitudinal differences between cultures around the world are diminishing as time goes on.
The Advantages of Banning Discounts: A Return to Relaxed Shopping
Discounts can have many disadvantages, both for people and companies.
Companies need to find ways to make up for the money they lose on discounts, or else they risk going out of business.
The travel industry is a great example – hotels have had to adjust their prices frequently in order to keep up with rival companies and satisfy customer expectations for discounts.
This means that hotels have been looking for other outlets from which to make money, like charging extra for access to Wi-Fi connection or offering expensive mini bars in each room.
At the same time, customers are often spending a lot of energy and time trying to keep an eye out for bargain-priced items everywhere, comparing prices among retailers.
Consequently, this has completely taken away the relaxing shopping experience that we used to enjoy, since we’re now always on high alert watching out for possible discounts.
This could mean getting frustrated when you learn that something you bought recently is now being sold at a different store with a 50 percent discount – and then wasting even more time just to return it so it can be purchased again at the discounted price.
Some retailers have become aware of this problem however, and they no longer offer discount coupons as part of their marketing strategy anymore in order to promote relaxed and worry-free shopping experiences.
The Advantage of Keeping Prices Consistent: How Companies Use Quality Perceptions to Stand Out From the Competition
Many companies are leveraging an alternative approach to the traditional discounting strategy: by keeping their prices stable and never offering discounts, they are able to stand out.
To do this, however, these companies must be very careful in controlling their production so they can maintain control over their prices.
Companies that have their own factories have a special advantage here, as they don’t have to rely on discounts to make up for products that aren’t selling well – they simply instruct their factories to stop production of those items immediately.
Moreover, people tend to perceive expensive products as being higher quality – this fact was confirmed by a study at Stanford University that asked participants to rate the taste of several wines with random prices ranging from $5-$90.
In this experiment, participants overwhelmingly thought that the most expensive bottle was far superior in taste than the other cheaper bottles – demonstrating how an expensive price tag can often signify high quality or luxury.
How Can Stores Combat the Widespread Problem of Showrooming?
Shopping online has made it more challenging for physical stores to survive, as customers often find better deals online after having gone to the store in person.
This is called showrooming, and stores are combating it by selling their own-brand items – so that customers can’t buy them at a cheaper price elsewhere.
In fact, fashion stores like Kohl’s and Macy’s get 40 percent of their income from the sale of these own brands.
In addition to selling their own brand items, or “own-brand” goods, retailers must also personalize discounts in order to thrive in an all discount world.
With online technologies available now, it’s become possible for stores to provide tailored discounts for individual consumers, making it more likely for them to purchase products.
For example, if a store knows its T-shirts don’t sell well in a certain color – e.g., green – they could offer an exclusive discount to those customers who added a different color shirt to their electronic shopping cart – on adding the item they would see a message offering them 30% off if they go with another color option.
Stores can successfully compete in an all discount world by utilizing both own-brand items, and personalized discounts; appealing directly to their customers’ needs is the key!
Wrap Up
The Bargain Fever book provides us with actionable advice on how to control impulsive purchases in this all-discount world.
It reminds us that our strong desire to buy when faced with an irresistible bargain is the result of a dopamine rush in the brain, and encourages us to think rationally about our purchases instead.
By heeding its advice, not only can we save money, but also make smarter decisions about what items we should actually be investing in.
This book is an important resource for ensuring that we stay on top of our finances and has armed us with the knowledge required to navigate chaotic stores.
