I’m fascinated by the field of study that looks at why consumers act as they do — behavioral economics. I love the work of Duke Professor Dan Ariely, author of Predictably Irrational. Today I came across this fascinating story about JC Penney’s new marketing strategy of “fair and square” pricing of its products. Next time you shop, think about what entices you to buy.
Using a high-profile ad campaign that involves spokeswoman Ellen DeGeneres poking fun at coupons and markdown gimmicks throughout history, JCPenney has been leading the movement against “fake prices” in the world of retail. Instead of listing an item with a severely marked-up original price, and then almost always selling it at a major “discount” of 30%, 40% or 50% off, JCPenney recently knocked down all prices by about 40%. It also got rid of annoying prices ending in .99, and now lists shirts or belts at a flat $15 rather than $14.99.
The efforts are all part of JCPenney’s overarching new “fair and square” approach, which CEO (and former Apple executive) Ron Johnson introduced in January. Fair and square has been described as “sane” and a “breath of fresh air.” What it hasn’t been called is a success.
Could it be that for all the talk about wanting life to be “fair,” what people really want is to think they’ve gotten a great deal?
