Black Friday

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  • Topic: Christmas and holiday season, Black Friday, Pricing
  • Pages : 3 (1035 words )
  • Download(s) : 112
  • Published : April 24, 2013
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mrCASE ASSIGNMENT: Black Friday Sales Deal or No Deal? According to tradition, Black Friday—the day after Thanksgiving—is named as such because that’s the day when retailers are said to become profitable for the year, or their sales move into the “black.” Whether true or not, it does underscore how important that day, and the holiday shopping season in general, is to retailers. Holiday sales are estimated to make up as much as 40 percent of retailers’ annual revenues and 50 percent of their annual profits. It should be no surprise then that retailers will pull out every trick in the book to get shoppers out and buying during the holiday season. Retailers often must walk a fine line, however, in how they present their offers. Retailers often order their holiday inventories in the spring, and they must be careful to match sales with inventory levels so as to encourage customers to make more purchases but not in a way that destroys profitability. Increasingly, the pricing strategy is no longer just about Black Friday. Timing then plays a major role in how Black Friday and holiday pricing strategies are executed, with many Black Friday pricing strategies designed to create a sense of urgency among shoppers. “Door-buster” sales and “limitedtime offers” force consumers to make purchasing decisions faster, making it more difficult for them to comparison shop. For example, Gap Inc.’s Banana Republic offered 40 percent off certain sweaters between 11 a.m. and 2 p.m. These sorts of deals create a sense of exclusivity for shoppers. Driven by that sense of urgency, shoppers often aren’t as quick to consider exactly what kind of deal they are getting. Dan Ariely, professor of psychology and behavioral economics at Duke University, has done experiments testing buyer behavior. In one experiment, when offered a free $10 gift card or a $20 gift card for $7, most respondents chose the free one, though it was the less profitable alternative. When the $10 gift card was offered for...
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