Thursday, May 12, 2016

Present bias - toilet paper

You can't take a freshman psychology course without learning about the decision process of waiting for a larger return or getting less now. This is often called present bias. There are tons of these studies, but they seem academic, not grounded in the real world.

However, according to TheAtlantic: "To see how often consumers at different income levels take advantage of discounts, Orhun and Palazzolo analyzed seven years’ worth of data on toilet-paper purchases made by over 100,000 American households. They picked toilet paper because it’s “tailor-made” for what they’re interested in studying: It’s often sold in bulk, it’s frequently on sale, and it’s non-perishable and easily storable."

Higher income people spend 6% less per sheet of toilet paper because they buy in bulk at stores like Costco. Lower income people tend to buy four packs at corner stores.

"The argument isn’t that they’re inherently less sharp, but that they become, as a result of their circumstances, more prone to making irrational, present-biased choices. On the other side, there is a body of evidence supporting the idea that those without much money are simply making the best possible decisions they can make, given their crummy circumstances."

Could be, in which case this is not perception management. So, let's look under the hood. The search string "purchase toilet paper" yields 1.4M results and the results are interesting, at least to me:

At the top of the page, both left and right are paid ads. So some companies believe that people buy toilet paper online. The ads on the left are for high end toilet paper. The ads on the right are for what I call airport toilet paper.

The ads bring up the issue of how do you market toilet paper, after all it kind of sells itself. But the paper companies want you to be a repeat customer. According to Slate: "The Scott Paper Company became the first to offer toilet paper on a roll in the 1890s, and its products were marketed under private labels that each had their own advertising scheme. Many used words and pictures to connote luxury, as in The Waldorf and The Statler, two brands named after fancy hotels. Some showed images of ladies in ball gowns or gentlemen riding in horse-drawn carriages."

However, more recently, instead of appealing to the rich, "The preponderance of bears on toilet-paper packaging—along with angels, babies, and puppies—derives from the dominance of the major players in the bath-tissue industry. Procter & Gamble, Georgia-Pacific and Kimberly-Clark together control about two-thirds of the market, and their brand icons—the Charmin bear, the Angel Soft baby, and the Cottonelle puppy—showed up in the United States over a 15-year span beginning in the late-1980s."

The top two organic searches for "Purchase toilet paper" are Overstocks and Amazon. They both carry a brand called "Angel Soft" 2-ply to make a snap comparison. Overstock has 60 rolls for 65.49 with free shipping, 1.09 a roll, Amazon has 60 rolls for 48.25, .80 per roll. Wal-Mart does not appear to stock 60 rolls, but 36 "double rolls" is 15.97 or $.44 a double roll.  The key point, if you buy in bulk you can get below the dollar a roll mark. I will try to walk into a few small stores, or a grocery store and see what they have.

5/24/16 Safeway in Lihue. With Club pricing, 12 double rolls is 9.99 or .83 roll.

At Big Save, 12 "double" rolls are 9.99 on sale, .83 per roll.

One last thing, when I did my search, one of the paid ads was Amazon. What price do they offer, surely the same as when I visited the page via organic search, right? Not hardly. You can purchase premium toilet paper for less than a dollar a roll, but not everyone does.

6/14/16 Home Depot 8.97 for 24 rolls, .37 per roll.  I had noticed the price of toilet paper at Home Depot seemed to be lower. 

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