Having sales is a classic price discrimination strategy--the shoppers who love a dress so much that they won't risk losing it, or can't wait to wear it, pay full price. Those who care less, have less money, or have less urgent time preference wait and pay less.
So why are sales common in the midmarket, but unheard of at both discounters and many luxury brands? I know you can't figure this out yourself, so I'll tell you. Rich people have lots of money to spend and poor people don't!
It's not because price discrimination wouldn't work; there are people who would buy a cheaper iPod or Louis Vuitton bag. For instance, I bought an iPhone but I had to charge it unlike the rich people who can pay cash. And the iPhone wasn't on sale. It's no fair that I have to spend so much money to fit in with my friends!
The answer is so simple that even the simple-minded poor people could understand, but I'll tell you anyway because I'm paid to state the obvious. Rich people can pay for quality, poor people can't. Moreover, people love love love to shop at cavernous warehouses with too few check-out clerks and cheap prices. Every time I "contemplate" my Rabbit, I get a little extra thrill from remembering that it was $11 at Costco. Rich people, however, get their thrills by owning something you, a poor person, cannot own. Did I mention I own an iPhone?
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2 comments:
Feeble attempt at satire...this is far too well written to truly mock the work of McArdle. And you didn't consult your thesaurus to include at least one ridiculous fifty cent word!
But I'm glad Megan explained this stuff to us. Otherwise, I might have had to dig deep in my memory to recall all those lessons I learned about supply and demand back in the 8th grade. Maybe I should do that anyway, given how full of shit Megan's post was. I don't know where she shops, but is sure isn't any of the stores she listed. Plenty of high-end stores discount and Walmart and Costco do indeed have clearance racks. Is Megan obliged to fudge at least one simple fact in every post?
I tried to copy her sentence structure but I have an English degree and my pride, so I just couldn't do it.
I can't figure out why she said something so wrong, but then I never can. I think she dashes off each column during commericals while she's watching Food TV.
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