Yesterday night, a friend of mine asked me to accompany him to Express Avenue. I didn’t understand why he asked that specific shopping mall then, but the thing is that he needs to encash a gift voucher he got. It seems that he got a Rs 500 gift voucher for Wills from ICICI bank and wanted to encash it. We went there and after humming and hawing for long, he took a nice shirt. The story doesn’t end there.
There is nothing actually available in the store for Rs 500 which means to encash that voucher, he needs to spend something from his pocket. Does he really need a shirt now, does it count? Looking at the expenses, we can’t but wonder whether the money we spent justifies the importance we gave to the voucher –
Cost of Voucher – 500
Money spent on shirt – 1800
Well, that’s not the end. The complete trip was planned for this work. Adding the trip expenses –
Tickets – 150
Lunch – 1400
Cab – 100
Coffee – 450
Miscellaneous – 100
A total of around 4000 spent over a 500 rupee voucher – 8 times the value of the voucher – a clear and perfect example of the adage penny wise, pound foolish. To save 500 rupees, we spent 8 times the amount from our pocket. Is the shirt good? Absolutely. But, is it worth Rs 5500? Well,…
This sort of market tactics were always there where a person is given a gift and in order to claim the gift, the person is forced to shell a fortune(Does this not sound too familiar to the origin of the idion White Elephant?). This is generally aimed at the 1800 rupees he spent on the shirt in the shop as against the total 5000 rupees spent. Though a sort of bonding is shown between the person who is offering the gift voucher and the customer, the reality is that this paper voucher worth nothing (if the value of the paper it which is printed is not considered) is used as a tool to enhance the business of the entity which produced the gift voucher.
The bottom line is this – a person came and spent 1800 rupees in a store, giving the shop a decent profit margin. Note that even though the MRP of the shirt is 2300 rupees, the real profit against it will be no less than 1800 or 1900 rupees including everything – cost of manufacture, cost of purchase, supply chain costs, cost of maintenance on shop floor and even the commission to the one who ‘gifted’ the gift card making a real fool of the customer. How many understand this and throw their gift vouchers away, can we tell?