Penny Wise And Dollar Foolish-Part 1


Did you ever buy a gallon of milk strictly on price? You are in a grocery store trying to save a little money and you’re looking for a gallon of 2% or skim milk and you buy the most inexpensive item. It that always the best value?

Sometimes, I have chosen the least expensive gallon of milk (Brand X) that doesn’t always work out.  For example, I’ve purchased a brand and saved 25 cents on a gallon of milk with an expiration date of 10 days from the purchase date. Thinking, that will get me through for at least one week except sometimes the milk begins to sour 3 or 4 days before the expiration date. What do most people do with milk that taste sour? It’s no longer edible…

After going through that experience a number of times, I begin to look for alternatives. Therefore, I’m inclined to choose another brand that costs a little more with an accurate expiration date. Those negative experiences with Brand X has prompted me to look for alternatives on their other perishable items such as milk, yogurt, or sour cream. If their milk can’t last until the expiration date, who’s to say their sour cream or cottage cheese has a long shelf life. Experience has taught me to not look solely at the price — value really comes into play if you want to avoid being penny wise and dollar foolish.

Penny Wise and Dollar Foolish from Schwarm Images

I have a friend who is in the retail landscaping business and he sometimes experiences the myopic perspective of some customers. For example, many customers will be inclined to want to save money on bricks (pavers) choose the inexpensive ones from a big box hardware supplier without giving much thought to quality. And why not? If you can save $70 on your pavers for your backyard patio area, why not buy from a big box retailer.

You drive home happy at how much money you saved but were you penny wise and dollar foolish? In other words, how long will those pavers last and what’s the real value of the pavers you purchased? How long will it take before you begin to see you purchased an inferior product where the quality, texture and color will decline? If you start to see the inferior nature of these pavers, will your perspective change about only shopping on price?

If you’re a manager of a specialty retailer who handles high quality pavers, how do you make your value proposition? Do you show pictures of “going cheap” and the long term effect? Do you have a display inside the store explaining the difference between the pavers from a specialty retailer versus the big box paver? Maybe outline the additional care done in the manufacturing process to pavers sold at certain speciality retailers?

What’s the best approach to convince consumers they may be penny wise and dollar foolish if they purchase inexpensive (or cheap) pavers.

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