Black Friday started in 1966 when it appeared in an ad in a magazine. Since then Black Friday has become the most crowded shopping holiday. Stores offer extremely good deals to consumers and it brings in the crowds. Some of the deals are so cheap that some people wonder how stores can afford to sell their products at such a discounted cost.
In fact, many stores lose money on their products. What many people don't know is that many stores actually lose money on purpose. The economic concept is known as loss leaders. Loss leaders are products that companies lose money on. These products are meant to drive people into the door. Once consumers get into the doors they are likely to spend money on other products that will earn the store a profit. Also, to make sure stores do not loose enough too much money they have limits on the products and sell out. This means that many consumers will get there and will have to buy different products because the best deals will be gone.
Another economic concept that is used for Black Friday is price discrimination. This concept outlines that different consumers are willing to pay different prices for the same product. For example, if someone earning a lower salary wants to buy a microwave they want to pay the Black Friday price of 20 dollars. The person making a higher salary does not mind paying a higher price if it means he doesn't have to be up all night shopping in crowds. Stores this way can market their products to both types of consumers.
Since this market model is so successful many stores participate every year to take advantage of the increased profit. As a result of the sales stores and retailers are trying to come up with other holidays like Black Friday to attract crowds. But currently, Black Friday is the most dominate shopping holiday of the year.
Mayefsky, Eric. “What Are The Economics Behind The Black Friday Sales?” Forbes, Forbes Magazine, 27 Nov. 2013, www.forbes.com/sites/quora/2013/11/27/what-are-the-economics-behind-the-black-friday-sales/#5527aa457790.
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ReplyDeleteThe concept of Black Friday compels a lot of people to splurge and buy a lot of stuff. People have a higher tendency to buy something when it is seen as a "deal". When I go shopping, whenever there's a discount at a store or a "buy one get one half off" or something, I try to buy something just to get the deal, regardless of whether I need it or not.
ReplyDeleteBlack Friday is an American tradition. Even now, I know many people will save up and wait to shop, specifically for black friday. Agreeing with Carolyn, I think the main reason that Black Friday is so successful is because of the advertisement of deals. Having the whole store, by one get one 50% off, makes it seem as though you are saving tons of money. However, it then pushes you to buy more of one item, which technically does not "save" you money. I think it is also smart that Black Friday is placed around the Holiday Season. If Black Friday were placed in a month like March, it's success rate would not be so high because customers aren't on the eager search for supplies, christmas gifts, or even little gifts to themselves.
ReplyDeleteEven though companies lose money on certain products, overall Black Friday marks the time where they finally start making a profit on their products. They spend most of the year in the negative and Black Friday marks the start of holiday season where companies finally begin to make a profit.
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