RULE # 4: Be aware of marketing strategies and common portrayals

 

Just because it’s on sale doesn’t mean you have to have to buy it. Sales are tricky and most of us are sucked in by product marketing. Do demonstrate this, I will provide a brief list of product pricing and marketing strategies that get us every time.

99 cent pricing

Product pricing is not just arbitrarily putting a cost and value on a particular item; instead it is more of a psychologically proven activity. Some strategies simply work for getting us to purchase things, and .99 cent pricing  is a good example. When companies are competing for customer purchases, many businesses earn higher revenue from putting .99 in the right hand digits of pricing figures. The example Mark Stiving uses in his article “Why 99 is the magic number for product pricing,” demonstrates two companies selling bicycle tires at a similar price point.  One company sold its tires at $4.94 per unit, and the other $4.99. The company who charged five cents more sold significantly more tires and earned a higher profit.

Be aware to this type of marketing - it might help you save some money. Buy products based on its performance, durability and longevity rather than its price.

One, Two, Three-for-One, Two, Three

Many companies employ the buy one get one, buy two get one, buy one get two, buy three get one, strategy to trick us into buying more. We’ve all been a victim to this one! We end up spending sometimes three times more than what we initially wanted, or intended to spend because we think we are saving money. 

To prevent being sucked in by these strategies, do a little checklist: do I need this? was I in the market for this product? am I saving? or am I just buying more?

Seeing isn’t Always Believing

Businesses pay big bucks for their products to show up in magazines, newspapers, TV, radio and online. Products that are commonly advertised on mainstream media outlets generally depict just one opinion, which usually shines the product in a positive light. If we were shown all of the negative opinions of the product in question, we would probably be less likely to want to buy them. That is- instead of a company selecting only positive testimonials, they would demonstrate positive and negative reviews of a product; then customers would probably be less likely to buy them.

So next time you see an ad, be aware that the reviews have been carefully selected to reflect only one, usually positive, opinion.

RULE # 3: Don’t buy something you don’t need

When a new product comes out, we often think that our lives are incomplete without. We become entranced with new products, and then we start to think “how could I function without this smartphone?” “how could I travel without my GPS?” or “I just wouldn’t have felt myself if I wore that dingy old thing one more time. I’m glad I bought this new one.”

Annie Leonard, author of The Story of Stuff, suggests that we are all (by "all," I mean North Americans) victims of a phenomenon called “perceived obsolescence.” Perceived obsolescence is when we think we need something to be in sync with the crowd, but it is really just falling for the latest trend. Perceived obsolescence is the addition of that new, shiny, chrome button on your blouse when last season’s in-style metal for buttons was gold, and we “gotta have it”. It is the difference in shoe length for men - yes, the longer and pointier shoe - because we all know that makes their feet look bigger, and men just want their feet to look bigger!  But are their feet really bigger?  I think we all know the answer to that.

Many of us believe we will be better humans for succumbing to the pressures of magazine ads and human-mannequins that flaunt the latest fashions. It is subconsciously drilled into our brains that those who do succumb to this pressure become “more than human” because their newest technology allows them to do things no other human could. As a culture, it is pretty common to shudder with disgust at the prospect of “old” in preference for “new.” But this mentality does not benefit us as consumers, it drains our pockets! Perceived obsolescence is really a mentality that renders us all slaves to the market, instead of becoming free agents of our own lives.

Really, I know it seems simple, but again, I reiterate: don’t buy something you just don’t need. I mean, do you really need it? or do you just think you do?

RULE # 2: Think about hours earned vs. hours spent

We all have different schedules; many of us earn different amounts of money, but we all have to think about the same thing: when we want to purchase something, we have to think about how many hours it took us to pay for the product we want to buy. 

Thinking about your purchase in terms of how many hours it took you to earn your money is a good way to prevent impulsive purchases. I’m not a mathematician by any means, but when I go to the store and I want a new purse or pair of shoes, I do a simple calculation. The shoes are $80.00 plus 13% HST (in Ontario, Canada), so the total cost will come to about $90.00. But how long did I have to work to pay for those? 

Hypothetically, if I was making minimum wage ($10.25 per hour in Ontario), which is a typical wage for students, it would take me over a day to pay for those shoes.

Here’s a detailed breakdown: 

Hours worked: 9.75 @ $ 10.25	$    99.93
Income tax (9.9%)	- $      9.89
CPP (4.95%)	-$      4.94
EI (1.88%)	-$      1.87
Total:	$    83.23

Based on annual incomes ranging from $20,000 - $40,000. Deduction rates have been acquired from the government of Canada website, http://www.cra-arc.gc.ca. This chart is illustrative and is not intended to replace professional advice.

As a student, each and every day counts. We are busy people and often have many expenses including tuition, rent and a long list of other bills. So think long and hard, and ask yourself some important questions: is this purchase worth it? will it set me behind on my payment schedule? or have I already saved enough for this expense? 

If you have been a diligent saver, then go ahead – treat yourself and don’t delay any longer. But if you have been struggling to keep up with your obligations and you’ve been living paycheque to paycheque - just save a little more, wait for the product to go on sale and then make your purchase then. Patience, as they say, is a virtue.