# AnalyticBridge

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# Macy's thinks that their customers are innumerate

Or maybe they use faulty calculator: 30% + 10% off of \$500 results in a new price of \$300, not \$315 as advertised by Macy's (see ad below). Can we trust the other numbers being advertised by Macy's, in particular the Ct (carat) weight, or is it also inflated?

Did their marketing statisticians find that lying to clients increase sales? Maybe it does, in countries where people are afraid by mathematics. But in one of these analytic-poor countries (USA), we have law against false advertising. In China (an analytic-rich country), there's no such law but then everybody would immediately notice the lie.

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### Replies to This Discussion

Actually, their math is correct. 30% + 10% works like this....You take 30% off the original price which is \$350 in this case. Then you take 10% which makes it \$315. Unfortunately, 30% + 10% is listed this way for that reason and not as 40%.

30% + 10% = 40%. Their discount is 37%. Why do they say 30% + 10%, when they could just simply say 37% and avoid being perceived as dishonest?

At the end of the day, this is all about optimizing revenue through marketing analytics. If they could say that 30% + 10% off on \$500 is \$325, and if it works well, they would do it - as long as they get the green light from their legal department. Sure 1% of prospects won't buy, but the vast majority won't check the computation and will pay more. And Macy could always argue that the \$325 discounted price (when most would expect \$315 and some expect \$300) is the result of "discount fees" that must be added back into the final price.

Even easier, they could claim that the original price is \$600, and the discounted price \$325. This is what we call pricing optimization.

Even better: they should advertise 15% + 15% + 10%, now the discounted price climbs from \$315 to \$325, even though it still looks like a 40% discount. Or 1% + 1% + 1% + ... + 1% (40 times), which corresponds to a discount from \$500 to \$334.48. Indeed, the best they could ever get with this scheme (out of all mathematical combinations), by tricking people into believing that it's still a 40% discount, is a discount from \$500 to \$335.16 = exp(-40%) * \$500.

I'm afraid... but Macy's maths is definitely correct, as Sharon Rivera said. There is no lie in their ads.

First you apply a 30% discount and then a 10% off on the discounted price.

I can't see the point of this post... It's the same principle applied when you calculate taxes on a discounted item.

If you buy a 1000\$ item, with 30% discount and then you need to apply 10% taxes, how do you calculate your final spend?

1000\$ - 30% discount = 700\$

700\$ + 10% taxes = 770\$

Or do you want to pay 800\$ in such a case?     :D

This is a discussion about whether 3+1=4, or not. Some agree, some disagree. I guess it depends where you learned arithmetic.

I believe everybody agrees that 3+1=4, regardless of where you learned arithmetic... Funny... I thought this discussion started from Macy's ads, and was not about basic arithmetics.  :D

Anyway, it's interesting to see how the same ads can be interpreted by different people. For me it's clear that the final price should be 315\$, for other people it's misleading. Maybe because I'm an engineer? And now you are allowed to say whatever you want on engineers... :D

To chime in along with other's here- I disagree with your premise. Applying a 30% discount, and then a further 10% off, is not the same as applying a flat 40% discount. It seems like the numbers are kept seperate to help make that clear.

I don't really think it's right to ascribe malice to Macy's motives. They're running two separate promotions- one for 30% off, and a separate promotion of 10%. Their system doesn't combine all the promotions into one because that would result in cumulative effects that aren't accounted for in the budgeting of either promotion.

Plus they gave you 37% off!