This interesting article about data mining shows just how devious they can be. For example, a casino:
The system collects data each time a gambler uses their casino loyalty card – be it for gambling, purchasing food in the restaurant or paying for snacks from their room minibar – to create a pattern of their behaviour.
The system can see, for example, that the last few times Gambler X visited the casino, they stayed for two days and lost between $200 and $300, then promptly left the gaming floor, spent no more money and went home the next day.
”As a casino operator you don’t want that, you want to make people happy and spend more money,” Quinn says.
Enter Tibco’s event processing software. When the system detects the customer is falling into a particular pattern, such as the consistent losing streak that caused them to leave during their last visit, it sends an automatic note to a gaming floor attendant to offer the person a free meal, or ticket to a show.
The idea is to distract the gambler long enough that they’ll come back later and continue to play and lose money, albeit in more palatable amounts.
Ingenious. For the cost of a meal (and installing the computer tracking in the first place) the Casino gets heaps more money. No wonder gamblers get sucked into losing lots of money.
They apparently want this so much that last week they sent me two cards “to the householder” even though I’ve never been a member — and I hear I’m not the only one.
I do have a Woolworths loyalty card, because I more often shop there. It earns me Frequent Flyer points which sometime in the next couple of decades might add up to enough to take a flight somewhere (or more likely will earn me a small discount using Points+Pay… or a thing such as the barbecue I got via the Qantas FF shop a few years ago).
But I happen to know that you don’t earn any points for transactions less than $30, so I deliberately don’t present the card for those, ‘cos really, they don’t need to know too much about my spending patterns.
You can call me paranoid if you wish, but note the comments in this article the other day:
But analysts said that the programs took from customers as much as they “gave back”, in terms of valuable information on their shopping habits. “This is essentially just a new form of marketing,” Citigroup equities analyst Craig Woolford said. “There are two globally perceived benefits – one is retaining your customer, and the other is developing insights into your customers’ shopping behaviours.”
Oh, I also love this quote from someone at Coles:
“Australian customers tell us they want discounts on the products they buy the most,” Coles finance director Tony Buffin told BusinessDay.
Since Woolworths introduced gold coin deposits for trolleys at Bentleigh, you almost never see their trolleys abandoned in the streets. The same can’t be said for Coles Bentleigh, who appear to have some trolleys requiring a coin, and some not — I don’t understand the logic of this. On a walk last night, we passed three (non-deposit) Coles trolleys in quick succession on a single block of Jasper Road.
It seems pretty clear that (like the drink container deposits used in some states), coin deposits reduce the problem. I wonder why Coles don’t go ahead and implement it fully, especially in suburbs like Bentleigh where their major competitor already uses it.
The supermarket war of Coles versus Safeway/Woolworths has heated up, with roast chicken.
First, Coles went to $10.
…then Safeway/Woolworths struck back with… $9.88.
These posters were prominently displayed en masse around the Bentleigh Woolworths last night.
“Why pay $10″ “Only $9.88″?
TWELVE CENTS DIFFERENCE?
Or to put it in percentage terms, Woolies are 1.2% cheaper.
And if you pay cash for just the chicken, the price will be rounded up to $9.90, so you’re only saving ten cents.
Did Woolworths design the poster before they knew what their price would be or something? It’s one thing to advertise your product — it’s quite another to highlight that the saving compared to your competition is a measly twelve cents.
If you are tempted by this extra special offer, don’t spend it all at once.
I’ve mentioned it before, but Joel Spolsky wrote a great article a few years ago about pricing, and noted that companies would ideally like everybody to pay as much as they are willing to for their products.
In economist jargon, capitalists want to capture the consumer surplus.
Let’s do this. Instead of charging $220, let’s ask each of our customers if they are rich or if they are poor. If they say they’re rich, we’ll charge them $349. If they say they’re poor, we’ll charge them $220.
Seriously, it’s a great article, and well worth a read, to learn about how pricing is done, even if you’re not particularly interested in economics.
One method for this type of pricing in the USA is for supermarkets and other stores to publish coupons in the newspapers and catalogues. If the time-rich (eg poor) people have the time to go find the coupons and cut them out and remember to take them shopping, they’ll earn an extra discount. Others won’t bother.
Recently Coles has been trying it here. The catalogue has some coupons with a barcode on it, and if you snip it out and take it along, you got an extra discount.
I wonder if anybody bothers?
Costco at Docklands in Melbourne opens today at 8am. I’ll be very interested to hear how it goes, but I’m not going to be rushing in to cough up my $60 to join up and start doing my shopping there.
For one thing I’ve realised that if one is prepared to be brand-agnostic, keep an eye on the specials, and (moderately) stock up when possible, it would appear that there’s no real reason to ever pay retail price on many groceries. Perhaps it’s due to the newish competition from Aldi, but it seems like brand names of most staples are heavily discounted at either Coles or Safeway most weeks of the year.
Take, for example, bread of the Helga’s, Noble Rise and Aldi’s Baker’s Taste range. In my book, all acceptable for lunches, toast, jaffles etc. The Aldi product sells for $2.99, so let’s assume for the sake of argument that $3 is a reasonable amount to pay.
Helga’s and Noble Rise retail for about $4.50 per loaf, but regularly on special for about $3 (or often $6 for two — chuck one in the freezer) at Coles or Safeway. This week that deal is on offer at Coles for Helga’s.
So while one could go and pay $4.50 for a loaf of nice-ish bread, with a little forward planning and watching the specials, it doesn’t seem like you’d need to pay more than $3 — 33% cheaper than the “regular” retail price.
Mind you, most of the online catalogues don’t appear until the week they’re valid, whereas the paper ones seem to get distributed a few days earlier, which would help with forward planning.
It’ll be interesting to see how the prices at Costco stack up.
- This Melburnian checked out Costco membership and blogged about it.
- Lifehacker last week had an article on 5 things you should never pay full price for.
- My previous post on milk prices
- Update Tuesday: My shopping experience at Costco Melbourne @ Docklands — from the blogger above