Lots of correct answers here, and they all together play into Kohl's marketing strategy:
1. They sell moderately cheap merchandise in the first place, so it isn't costing them much. Add in the fact that they're a large retailer, able to buy in huge bulk -- something the small business owner can't match.
2. They mark the prices up beyond what's reasonable. Does anyone believe a sweater is really worth $50-100? A pair of jeans $50-80? People don't complain about this because everything's always "marked down", and it gives the uninformed shopper the idea that they've "saved" X amount, when they've probably paid an average or slightly higher price. Shoppers who compare Kohl's prices elsewhere will find that their sale prices aren't really all that great.
Similarly, when something's marked down, people tend to think, "I've gotta buy now. It'll be full price again next week." So a sale creates an urgency to buy. Also, people will buy two of something when it's on sale, whereas they would've only bought one at full price.
3. People love thier Kohl's cash marketing scheme, but the shopper tends to "give the store credit twice" for that cash: Today the shopper buys $60 worth of stuff and gets a $10 certificate -- mentally, the shopper says, "I really only spent $50." But then the shopper goes in the next week and buys $40 worth of goods and uses the $10 coupon, making it $30. Shoppers like to think they've found bargains, so they bend the truth to themselves, making it seem like the $10 counted on both orders.
And if the shopper loses the coupon or fails to use it, the store profits -- but the shopper still mentally "gives them credit" for being a good company who offers good deals. The shopper doesn't hold the store accountable for her own mistake in not using the coupon.
4. Finally,there's the biggie: The credit card. I read an article in a money magazine (sorry, it's been years, and I can't remember the magazine or the date), and it discussed this store-credit-card scheme, referencing Kohl's as the granddaddy of them all. Essentially the store exists just to support the credit card. For every dollar spent in the store, the credit card earns $4-5 in interest. Most people spend more when they use plastic, and most people don't pay off their balance every month. It's free money for the company.
1. They sell moderately cheap merchandise in the first place, so it isn't costing them much. Add in the fact that they're a large retailer, able to buy in huge bulk -- something the small business owner can't match.
2. They mark the prices up beyond what's reasonable. Does anyone believe a sweater is really worth $50-100? A pair of jeans $50-80? People don't complain about this because everything's always "marked down", and it gives the uninformed shopper the idea that they've "saved" X amount, when they've probably paid an average or slightly higher price. Shoppers who compare Kohl's prices elsewhere will find that their sale prices aren't really all that great.
Similarly, when something's marked down, people tend to think, "I've gotta buy now. It'll be full price again next week." So a sale creates an urgency to buy. Also, people will buy two of something when it's on sale, whereas they would've only bought one at full price.
3. People love thier Kohl's cash marketing scheme, but the shopper tends to "give the store credit twice" for that cash: Today the shopper buys $60 worth of stuff and gets a $10 certificate -- mentally, the shopper says, "I really only spent $50." But then the shopper goes in the next week and buys $40 worth of goods and uses the $10 coupon, making it $30. Shoppers like to think they've found bargains, so they bend the truth to themselves, making it seem like the $10 counted on both orders.
And if the shopper loses the coupon or fails to use it, the store profits -- but the shopper still mentally "gives them credit" for being a good company who offers good deals. The shopper doesn't hold the store accountable for her own mistake in not using the coupon.
4. Finally,there's the biggie: The credit card. I read an article in a money magazine (sorry, it's been years, and I can't remember the magazine or the date), and it discussed this store-credit-card scheme, referencing Kohl's as the granddaddy of them all. Essentially the store exists just to support the credit card. For every dollar spent in the store, the credit card earns $4-5 in interest. Most people spend more when they use plastic, and most people don't pay off their balance every month. It's free money for the company.
