26 July 2010

Fooling the people

Who was it that said you can't fool the people all the time? If the so-called "special offers" I see advertised are anything to go by, you can certainly make a fair stab at it.

There is a bathroom retailer (I won't mention its name because I think there is something fishy about the offer it is promoting), offering a half price sale plus an extra 20% off for a limited period.

Let's "do the math" as our American friends would say… A bathroom tap normally retails for £100. The half price sale reduces this to £50, and then a further 20% off reduces the sale price to £40.

Where's the retailer's margin in this? Come to think of it, where's the manufacturer's margin?

How much does it cost the manufacturer to make a tap of sufficient quality to "normally" sell for £100 and what sort of trade discount does it give to its retailer? Is it subsiding the sale price or does the "loss in revenue" all have to come out of the retailer's pocket?

And if the retailer can afford to slash the price by 60% and still make a profit, how can it justify its "normal" selling price?

I'd love a manufacturer or two - and a retailer or two come to that - to fill in a few of the blanks, but I won't be holding my breath for a response.

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