Monday, August 27, 2012

Are you sick of the Kohls "sale" pricing strategy?

Isn't it remarkable how Kohls is always having a sale? My local Kohls store, for example, is always mailing out flyers advertising 50% off the entire stock of this or that. I'm not knocking it - there definitely seems to be some value in this strategy since Kohls has stuck with it for so long - but lets consider how the deals might not be as good as they appear. Kohls sale pricing strategy creates a remarkable sense of brand loyalty and the feeling of getting a good deal by exploiting the whole concept of a sale and some careful emotional marketing.

It's no secret that shoppers (specifically women shoppers) love sales. They get the feeling that their dollar goes farther (Walmart does a great job of marketing this to customers) and the sensation of getting a good deal is exhilarating and addictive. Plus people don't mind buying things when they're on sale. They automatically draw the conclusion that the item they are buying is less expensive at this point in time than it was previously or will be in the future. That's kind of the whole idea behind sales in the first place - some kind of tangible savings. For example, last week this product was $4.00, now it is $3.00. I should buy this product.

Kohls has done an amazing job of capitalizing on our automatic sale logic. I suggest that they price the majority of their items at an artificially high "original" price. Then they put the item on sale for a massive discount, say 40% off. Plus, they give customers who use their store card (a powerful loyalty device in and of itself, not to mention a pleasant profit booster) an additional coupon via direct mail to redeem for another 20% off. And then when they check out, we will tell them they saved a huge amount of money, circle it on their receipt, and send them on their way. It's a strategy designed to exploit our understanding of "sales." They tell you an item is on sale. They tell you you saved more than you spent. And by the time you leave, even you are convinced that you have just saved more than you spent, never mind that the same item is $20.00 cheaper at amazon or a comparable quality pillow is hitting a lower price point at Target. From at least one viewpoint, Kohls has just told you a little bit of a lie.

I'm sure you're wondering how this white lie of "you just saved x amount of dollars" is possible with all of today's advertising regulations. The fine print at Kohls appears on every mailing piece and on their website and has some very clear language disclosing what is going on - here's a direct quote from
“Sale” prices and percentage savings offered by Kohl’s are discounts from Kohl’s “Regular” or “Original” prices. The “Regular” or “Original” price of an item is the former or future offered price for the item or a comparable item by Kohl’s or another retailer. Actual sales may not have been made at the “Regular” or “Original” prices, and intermediate markdowns may have been taken. “Original” prices may not have been in effect during the past 90 days or in all trade areas.

What do you think of the Kohls pricing strategy? Would you agree with my suggestion that the whole thing is a little deceptive? Or do you like the feeling and enjoy aggressively shopping the multitude of sales to get what you agree is a great price? I would love to hear from you in the comments!

1 comment:

  1. I went in their looking for a few things and noticed that everything said 30 percent off and for example I just bought a brand new Remmington Razon at walmart for 29.99 the same razon on sale at Khols is 69.99 which is on sale for 40 percent off. The customer has to be smart and know if they are getting a good deal but honestly If I didnt buy the razor from walmart I would have thought the Remington razor at Khols was a good deal. They entire Philosophy is to confuse you so much that you don't know how much something costs and what something similar would cost at Jc Penneyes or another retailer its like telling senior citizens that the early bird special is only once a month and even though your charging them full price they somehow saved money. Games, Deception and false advertising = KHOLS Where everything is always on sale: when its not really: