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    What is the Main Strategy Behind Black Friday?
    By Sascha Vongehr | November 24th 2012 02:32 AM | 2 comments | Print | E-mail | Track Comments
    About Sascha

    Dr. Sascha Vongehr [风洒沙] studied phil/math/chem/phys in Germany, obtained a BSc in theoretical physics (electro-mag) & MSc (stringtheory)...

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    Can somebody explain "Black Friday" in scientifically satisfying ways (read: leave your party book out of it)?  What is this seemingly dramatic drop in prices that is adjusted so to endanger public safety rather than to ensure a more "rational" adjustment over longer times that perhaps "naive capitalistic" models predict to be more lucrative for all (consumer, seller, society that ensures the marketplace)?

    Is this all plainly exploitation and procreation of an irrational mass of consumers that otherwise may not buy what they would realize not to need or is there something more subtle that could be justification for exporting such culture to as yet not infected human populations?

    Is the core of it similar to apple/nike release dates, but without the brand specific aspects and other key differences, i.e. the irrational customer that needs to be manipulated to buy in impulsive ways?

    Comments

    Thor Russell
    Yes there is some rationality behind it, and it comes down to the roots of economics and supply and demand. If you produce a product for $200 then you have to decide what to sell it for. You may sell 10 copies for $400 and make $2000 total profit, or 15 copies for $300 and make $1000 total profit. That is because 5 people will pay $300, but not $400. Now you would ideally like to sell the product for $300 to those 5 people, but $400 to those 10 people. However of course in a free market that is not possible to do. How do you get away with selling the product at a cheaper price for those people who rationally should buy it at $300? 
    You have a sale, but make it difficult enough so that the people who will pay $400 still pay $400. (e.g. not common sales, crowded shop) By having sales every so often, you manage to improve profits, AND serve more people. In many cases it is not rational for someone who will pay $400 for the product to wait for a sale to pay $300 for it. (the product may be worth >$100 to them in the meantime) 

    By this logic, sales every so often make rational sense. People intuitively understand that, so they reasonably expect that they should purchase something in the sale that they wouldn't otherwise purchase. Then of course there is the irrationality that makes people stampede and not want to "miss out" and if someone gets in the shop and there is nothing worth buying they will just buy something and rationalize it being worth it instead of admitting they wasted their time queuing. Also this all gets exploited and distorted ...  as part of the "arms race" between seller and buyer, some shops have "sales" on all the time.

    Could this help the rest of the world? Perhaps, have staple foods that can keep go on sale irregularly so that poor people can make the effort to purchase them at a lower price and not starve. You expect to pay the same price for a grain of rice as perhaps the person next to you who is starving, however the best use for that grain of rice that you would pay for and waste is if the poor person paid half the price that you did, but eat it. 
    Thor Russell
    vongehr
    If prices are say 5% higher than they are now on Black Friday, they would still sell everything, while perhaps the people fighting would be reduced by, say, 10%.  I want a calculation, including perhaps some irrationality measure and its assumed/determined distribution in the population, that justifies such conscious triggering of partial breakdown of public order.