Harford Draft- Organization of Paragraphs

Towards the middle of my essay when I start discussing how Harford’s concepts relate to my question about Wegman’s tomato pasta sauce, I try to bring up the concept of price-sensitivity several times in different paragraphs. This relates to the first strategy, Repeat key Words or Phrases. Because I feel like price-sensitivity is relevant to explaining my question, I connect it several times throughout my explanation of Harford and how it relates to Wegman’s sauce.

    “So how exactly does Wegman’s relate to the ways of the economy? In Tim Harford’s book, The Undercover Economist, Harford explains several key economic terms like price targeting, leaks, and price-sensitivity using familiar businesses strategies. Harford provides an example of Starbucks coffee and the various locations Starbucks chooses to place itself at. Starbucks are typically located in areas where there are many people who need a convenient coffee fix. These consumers, many of whom are in a rush on their way to work, are looking for any cup of coffee that is located where they are headed. If a Starbucks is positioned in a place where consumers are price-blind, or ignore how much an item costs, then they will make a great deal of money. In addition, Starbucks products all cost around the same price to make, but it uses different methods to target their customers who are price-insensitive.  Offering a variety of alternatives to customers, such as various drink sizes or adding whipped cream and different syrups to your drink allows Starbucks to have customers self-incriminate, thus showing if they really care about price or not.
    How exactly does Wegman’s target it’s price-sensitive and insensitive customers though? There are many different brands of pasta sauce that it would seem to be a challenge to get people to buy their organic brands first. As Harford explains with his Starbucks analogy, stores cannot force people to pay prices that they don’t wish to pay. Providing customers an area like an organic section allows Wegman’s to determine who is actually price-sensitive and who isn’t. The prices of classic pasta sauce, while not extraordinarily expensive, still vary tremendously from costing around $1.50 up to around $7.00. So Wegman’s offers a variety of cheap to expensive sauces, but making it easier to fool customers into choosing the more expensive options by altering the location and look of their products.
    Harford also discusses leaks, or potential holes that could negatively impact a company’s marketing schemes. There are several leaks to what Wegman’s does when marketing it’s tomato sauce. As Harford explains, it can be very challenging to get price-insensitive people to avoid buying a cheaper option, specifically when it comes substantial buying decisions. However, Harford expands on this idea further on when he states that supermarkets in particular have specific strategies from avoiding even the most price-insensitive customers from thinking about buying a cheaper option which Harford claims happens often. Supermarkets focus on certain customers who unknowingly self-target by making their value products more unattractive than their more expensive options. As Harford states, “...the packaging is carefully designed to put off customers who are willing to pay more. Even customers who would be willing to pay five times as much for a bottle of lemonade will buy the bargain product unless the supermarket makes some effort to discourage them.” (p.Harford, 51) This is what Wegman’s does when it created it’s cheap, non-organic value pasta sauce. The design as I explained earlier, looked cheaper and less attractive. Their organic sauce however looked clean and fresh- it looked like a product people would actually want to buy.”

I think to fix this section I could possibly incorporate more ideas and terms because I am lacking in that area. If I added more, I would be able to connect these terms to more material. I also think I need to be more specific in my detailing of the prices of the products and by doing so, I could mention these differences throughout my other paragraphs to emphasize my point.


The seventh strategy is to define a concept for the reader. I attempt to do this in various sections of my paper when explaining Tim Harford’s ideas. This can be seen in my paragraphs about price targeting and sensitivity as well as leaks, all of which are terms I think are essential to explaining my research question. In the first paragraph I use Harford’s Starbucks example to to describe how consumers can be price-blind, which I give a definition of, but notied that I do not explain price-insensitivity or self-incrimination. Although it may be easier to understand what they mean because I provided context clues, I never really explain them which is very problematic. I think the details in this paragraph are important because my research is about determining how Legman’s persuades it’s consumers to purchase more expensive organic options, so if I want to have an effective research paper, I need toe explain my terms better so I can convey my point correctly. I also, think these concepts should be explained earlier on in my essay because these definitions do not come until about halfway through after I have described my evidence I collected.

    “So how exactly does Wegman’s relate to the ways of the economy? In Tim Harford’s book, The Undercover Economist, Harford explains several key economic terms like price targeting, leaks, and price-sensitivity using familiar businesses strategies. Harford provides an example of Starbucks coffee and the various locations Starbucks chooses to place itself at. Starbucks are typically located in areas where there are many people who need a convenient coffee fix. These consumers, many of whom are in a rush on their way to work, are looking for any cup of coffee that is located where they are headed. If a Starbucks is positioned in a place where consumers are price-blind, or ignore how much an item costs, then they will make a great deal of money. In addition, Starbucks products all cost around the same price to make, but it uses different methods to target their customers who are price-insensitive.  Offering a variety of alternatives to customers, such as various drink sizes or adding whipped cream and different syrups to your drink allows Starbucks to have customers self-incriminate, thus showing if they really care about price or not.”
   
I do a better job in defining concepts in my paragraph about leaks because I make sure that I provided a clear definition and related it back to my research. I included quotes from Harford himself to support my ideas so the concept is better understood by people who read the paper. Again, this idea could be introduced earlier on in my essay, and perhaps another example of a leak that doesn’t relate to my research could help effectively explain my research.


“Harford also discusses leaks, or potential holes that could negatively impact a company’s marketing schemes. There are several leaks to what Wegman’s does when marketing it’s tomato sauce. As Harford explains, it can be very challenging to get price-insensitive people to avoid buying a cheaper option, specifically when it comes substantial buying decisions. However, Harford expands on this idea further on when he states that supermarkets in particular have specific strategies from avoiding even the most price-insensitive customers from thinking about buying a cheaper option which Harford claims happens often. Supermarkets focus on certain customers who unknowingly self-target by making their value products more unattractive than their more expensive options. As Harford states, “...the packaging is carefully designed to put off customers who are willing to pay more. Even customers who would be willing to pay five times as much for a bottle of lemonade will buy the bargain product unless the supermarket makes some effort to discourage them.” (p.Harford, 51) This is what Wegman’s does when it created it’s cheap, non-organic value pasta sauce. The design as I explained earlier, looked cheaper and less attractive. Their organic sauce however looked clean and fresh- it looked like a product people would actually want to buy.”



I also employ strategy 13 or Spatial Patterns in my essay when describing the layout of Wegman’s. Spatial patterns are used to describe a space you’re discussing in detail. 

    “I decided to do my observations while I did my own shopping so I could get the feel of how a shopper would interpret the area better. On your way inside, Wegman’s effortlessly pushes you to the right side of the store. Most people who go to Wegman’s for their weekly grocery shopping would go this way because produce, meat, and baked goods are all on this side. Once leaving these sections, there is a dairy aisle that leads the consumer into the larger section of the store. The first thing you see as you enter this section is the organic food aisle making it almost impossible to miss. Although it is in plain sight, many people could just walk past it, so how does it differentiate from the rest of the store? Wegman’s already does a great job of leading people to the section, and does an even better job of making it a place the consumer wants to be. Surrounding this area are all enticing things such as fancy teas and yoga mats, and even the labels on the foods are beautiful and eye-catching. This section feels calmer than the rest of the store.”

As you can see I try to utilize this in my third paragraph of my essay when explaining the importance of the organic section in Wegman’s. I try to set up the paragraph as vividly as possible so if someone who had never been to the Ithaca Wegman’s before could visualize the store. I start off by describing walking into the store and how the consumer is encouraged to go to the right because that is where all of the essentials to cooking, such as produce, dairy, and meat, are located. By going this way, the consumer has to eventually pass by the organic section which is right past the dairy section and is very hard to miss because it is a distinctive area. I think this paragraph does a lot what I want it to- it sets up the area where my research will be taking place, and allows the reader to create a strong mental image. However, in the there is a way I could use this strategy could be used more.It was recommended in my feedback on my essay that I should discuss the context of the products and how they communicate quality. I could discuss the types of things this section has and how they look because I do not do that in this section at all.

The Believing Game Summary

In Peter Elbow’s 2008 paper, The Believing Game- Methodological Believing, Elbow discusses the differences and importance of both believing and doubting information. Elbow defines what he calls the doubting game as “…the disciplined practice of trying to be as skeptical and analytic is often called critical thinking and is used to discover weaknesses in ideas, especially ones that appear to be truthful or attract people. Elbow defines the believing game as the practice of attempting to be as welcoming or accepting as possible to ideas we hear. With this method there is no attempt to argue the ideas but an effort to strongly believe them on order to find hidden virtues. Elbow says from early on in life we start out believing everything we hear because our trust in others is strong. As adults, people believe the obvious things, what people they trust say, and what culture tells them to do. This is jeopardized when people are betrayed, which leads to doubt. Elbow mentions Methodological doubting which he believes is central to the definition of the scientific method and is used to try and disprove hypotheses. Elbow further emphasizes however that believing is a tool we also need to use but is seen as tainted with many problems. He claims that the believing game helps people find flaws in their own thinking, choose among positions, and achieve goals that the doubting game neglects. The believing game fills in the gaps that the doubting games misses, and allows people to dwell in an idea in order to understand it better.

IC Bookstore Blog Post

In the IC bookstore, things are positioned very thoughtfully throughout the store. Things are grouped in certain ways that I have never noticed before, but have definitely fallen for. In the back right of the store there are baby clothes with cute phrases and the IC logo. Positioned on the shelf right next to these are stuffed animals wearing the IC logo. Naturally, the store is trying to get into the mind of a consumer who is buying a gift for a baby, and feels that if they're buying clothes, they might also want to buy the baby a toy. Because this is the only section of the store with baby clothes and products, customers cannot price match, so they will automatically buy these things there. There were also things like tattoos and hats for big Ithaca sports events that are placed right near the checkout counter, so if someone sees this and knows there is  big game coming up, especially Cortaca, they'll immediately grab these and buy them. Another example I noticed were these very nice sweaters right in the front of the store on their own separate table with a 25% off sign in the front. These sweaters were very nice, and since it had a discount, people would most likely buy them because the price is reduced, even without checking the prices of other sweaters. The funny thing about these sweaters though, were that there was no price tag attached to them. I think the store believes that since college students love sales, they will automatically purchase the sweaters without thinking twice. When you get to the middle of the store there are some nice Nike and Under Armour products that are extremely expensive. However, these are well known brands that appear to have high quality products, so students will go for them. The sweatshirts are strategically placed near the shorts, leggings, and T-shirts. These items were in the price range of $50-70 which is extremely pricey. The sweatshirts and shorts in the back of the store however were much cheaper (around $30). For people who are price-insensitive won't spend time going to the back of the store to buy the cheaper sweatshirts/shorts/t-shirts. Possible leaks for this is that students will typically be at school for 4 years, so they will eventually explore the entire store and notice the hidden sales racks and cheaper options.

Terms and Definitions of Harford Ch. 2

Terms and Definitions of Harford Chapter 2

Term	Price Sensitive & Insensitive	Unique Target Strategy	Group Target Strategy	Self-incrimination Strategy	Leaks
Definition	Price Sensitive: Someone who is always aware of prices and is frugal Price Insensitive: someone who is not as concerned about price and is willing to spend money for nicer things	Evaluating each customer as an individual and charge them what you think they are willing to pay	Places offer different prices to different groups of people	A strategy companies use that force people into admitting they are not sensitive to price, companies do this by selling things slightly different form one another or putting things in different locations	Holes on marketing schemes that have two potential problems: persuading price-insensitive customers from buying cheaper options, and products leaking from one group to the other if using group targeting
Example from Chapter	Starbucks products basically cost the same, but they are able to add frills and quantities to some items, which makes the price rise, thus finding out who their price-insensitive customers are.	Amazon tailors prices of certain things based on the customers past purchases. This causes prices to rise if they know a customer will definitely buy something.	Walt Disney World offers discounted prices on tickets to locals so that they come more often. They keep the prices for visitors high though because they know that chances are visitors will come only once even if the ticket prices were low.	Starbucks offering things like fair-trade coffee and whipped cream to customers shows who is really price sensitive	Stores have their own "value" options that they provide, but intentionally make them look cheap and undesirable, designed to make people buy the more expensive option
Your Own Example?	I am very much a price-sensitive shopper. It takes lot to persuade me to buy more expensive options at places like a food store. I tend to buy only Wegman's brand for a majority of things, but I am willing to pay a little extra money on things like the bakery area of Wegman's because I know I'm getting quality food from friendly, helpful people.	When my family and I were in the process of making our own personal home gym, we went to get all of the materials we needed at Dick's. The salesman there asked us a lot of questions regarding what we like to do and what our goals are, and kept providing us with more and more items to buy because he was trying to persuade us into thinking that without certain items, we couldn't get a good workout	Cinemopolis offers student discounts for every movie they have, so it encourages students to come more frequently tot heir theater than to Regal which is almost $5 more expensive per movie	At Panera they often ask customrs after they place their order if they would like to spend $1 to buy a freshly baked cookie or brownie. Since $1 doesn't seem that much, I say yes most of the time.	My friends and I don't have HBO (we're not willing to pay a lot of money since we're college students), so we find our favorite HBO shows that have been leaked online so we can watch them for free.

Ch. 2 of The Undercover Economist

In Chapter Two of The Undercover Economist, author Tim Harford explains the mindset behind the way products are priced in stores. Hartford states that businesses that have scarcity power do not have unlimited power because they can’t charge as much money as they want to customers for lack of potential sales. The goal of many businesses is to provide prices that are cheaper for people are thrifty, but also higher prices for those who do not care or focus on how much they spend. Using certain strategies like offering fair trade products, adding frills to typically cheap drinks, and editing location of precepts in a store, can all affect how much customers will pay, claims Harford. This allows for businesses to see who will pay, and how much people will pay, for certain products. There are three strategies to finding what customers will pay for certain products. They are the first degree price discrimination strategy, which focuses on the individual and sensing how much they are willing to pay. The second is offering different prices to members of distinct groups, such as reducing prices for the elderly or children. The last, Harford explains, is the self-incriminating strategy where customers unintentionally reveal how much they would be willing to pay based on the products they purchase. Harford explains that price-targeting is often turned into an art by a variety of companies, and makes it clear that there are hidden price strategies to everything businesses do.





In the second chapter of Tim Hartford’s book, The Undercover Economist, Harford explains that businesses that have scarcity power, do not necessarily have limitless power. Although supply and demand may be a reason why stores can charge high prices and people will pay them, it is not the only reason why people pay high prices. Stores often try to offer less expensive and more expensive options to their customers so that they can appeal to frugal consumers, and those who do not pay attention to price as much. Their goal is to see how much they can charge a customer and still have successful profits. Stores will often offer things like fair trade coffee, which is naturally more expensive, or use fancy wording for products that are basically the same. For example, Harford mentions how almost all of Starbucks products cost the exact same amount to make, but by adding fancier names and more frills, Starbucks is able to charge different prices for their products and “smoke out customers who are less sensitive to price.” (pg. 35) People may also be unaware that there are things that are offered at a cheaper price in a store. Harford mentions that quite often organic foods are placed next to non-organic food that is different. For example, organic bananas may be placed next to non-organic cucumbers, so if you’re in a hurry, and the bananas are the first thing you see, you’re going to pay a higher price for those bananas than you would for non-organic bananas somewhere else in the store. Harford also discusses why certain things that aren’t scarce have such high prices. An example of this I have experienced are sports bras at Victoria’s Secret.The price of a typical sports bra at a store like Target ranges between $10 and $25. But at Victoria’s Secret, bras are around $50 or more. People can get sports bras anywhere, yet Victoria’s Secret seems to be one of the most popular places to purchase one, even though their prices are extreme., because the store is often associated with beauty and style. Another example is Wegman’s. Compared to places like Tops or Walmart, Wegman’s is quite expensive. They don’t offer anything that is particularly scarce or unique at Wegman’s, but what they do offer is a huge variety of options and a enjoyable, comfortable shopping experience. In addition, retailers target certain people in different ways in order to determine who is price sensitive or not. For example, whenever I go shopping, it is clear to retailers that I am young, probably don’t have a ton of money to spend because I am a college student who hasn’t really entered the workforce yet, so I may be hesitant to spend a lot of money at a store. Quite often when I go clothes shopping, people working in sales will explain to me several sales they have going on, and the try their hardest to persuade me to get certain clothing items because they’re good deals. If I was older and looked like I had a wealthier lifestyle, they make push more expensive items on me.
   

Summary and Response of Ch.1 of The Undercover Economist

In the book, The Undercover Economist, author Tim Harford thoughtfully explains the practices and patterns of the economy. Harford first asks the reader to think about why big businesses, such as Starbucks, whose product is relatively simple, can profit so heavily. The main reason for this, states Harford, is the location of said businesses. By placing themselves in busy settings with commuters who are in a time crunch, it allows Starbucks to earn a considerable profit. Harford brings up an economic model published in 1817 by a British economist, David Ricardo, whose goal was to understand what had happened to Britain’s economy during the Napoleonic wars. Hartford uses an example from Ricardo’s book about a wild frontier which has plenty of fertile land available to grow crops, and only a few settlers. Because there are so few settlers, landlords cannot charge a price too high. However, when more and more aspiring farmers start coming to settle on the land, landlords can drive up the price. Once there is almost no land left, the price can skyrocket because settlers are willing to pay whatever they want to get a piece of land. This is an example of bargaining strength and scarcity. Hartford uses this example throughout the entire chapter when describing big businesses and the current economy because this model, although older, still applies today. Economists, according to Harford, see hidden historical patterns that are only obvious when focusing on underlying processes. Harford also addresses people being ripped off by big businesses, and the topic of of competition, two things that are very much present and somewhat inevitable in today’s economy. 

Tim Harford explains thoroughly in his book, The Undercover Economist, that bargaining strength comes through scarcity. Bargaining shifts when relative scarcity shifts from one person to another. The example Harford uses is one from David Ricardo economics book, published in 1817. He explains that as more aspiring farmers come for meadowland, the amount of available meadowland decreases. Due to the fact that the meadowland is the only land that is extremely good for farming, aspiring farmers are willing to pay any price to have a current farmer evicted so they can take their land. But the current farmers want the land too, so they are willing to pay anything to stay on their land. This gives the bargaining power to the landlords because there are so many farmers available, and so little meadowland available. Harford transfers this idea back to current times where businesses want their stores to be in the best possible locations in order to make a high profit. Hartford uses the example of coffee shops. There are so many coffee shops available, and not enough profitable locations, that people are willing to pay a high price to get a location that will benefit them the most. This is how scarcity power works. In addition, many places have a high rent because the best land produces more when compared to the marginal land. The marginal land is the margin between being cultivated and not being cultivated, as Harford explains. Everything is always compared to the marginal land. There are many factors that can drive up prices of land. Harford states that if a product a company is selling is expensive, then the land that product is being sold on will also be expensive. Green belts drive up the prices of land because green belts are broad areas of land around a city that are illegal to develop property on. The rent determined in the city is set by the difference between how productive the city is, and how productive the marginal land is. If you make it illegal to live somewhere, then the price of the places you can live and work will rise because it is the only choice people have. Scarcity power is also related to the current job market. Harford explains that if the country is low on people who have certain skills, or degrees, then they will be paid rightly so for their scarcity value. This is why people with high degrees are paid good money for the degrees and skills they have. It provides you with scarcity power.