After having read Jonathan Hu’s blog, I completely agree with his statements regarding Dollarama. The truth is that individuals are attracted to cheap goods, because not everyone can afford expensive products.

Dollarama is similar to The Dollar Store, as I have visited both. I believe their store names are deceiving as they’re implying their products are only a dollar, however, when I recently visited the store to look for a birthday card, I was surprised to see that the cheapest card was $1.99.  After noticing this, I looked through the rest of the store and found that there were very few products selling for a $1 or less.

Perhaps when Dollarama was first founded in 1992, products sold in the store were $1 or less, however, since the franchise has grown to be popular, this has definitely lead to an increase in demand, and since the demand rose, the company increased the price. I thought, if I put myself in the company’s position, I would do the exact same, why not raise the price if the customers keep purchasing? It would be a bad business decision not to raise the price. Making a larger profit is the goal of any firm, and as rivalry is extremely high in this type of market, they may as well take advantage of customers.

I believe both companies are taking advantage of marketing because they are inferring their products are only a dollar to attract customers. This being said, their marketing strategy is clearly working because individuals continue to purchase their products, even when the price increases.

Sources:

https://blogs.ubc.ca/jonathansanitizer/2012/10/08/wow-only-a-dollar/

(Jonathan Hu’s blog post on Dollarama)

http://money.ca.msn.com/small-business/gallery/gallery.aspx?cp-documentid=23132005&page=3