When Is a “Sale” a Sale?

30 Nov

Unfortunately, many retailers misuse the term “sale”. And shoppers are often persuaded that a product is on sale even when it isn’t. [For our holiday shopping tips, please click here.]

As noted in Evans and Berman’s Marketing in the 21st Century: Price advertising guidelines have been set by the FTC and trade associations such as the Better Business Bureau. The FTC’s guidelines set standards of permissible conduct in these categories:

  • A firm may not claim or imply that a price has been reduced from a former level unless the original price was offered to the public on a regular basis during a reasonable, recent period of time.
  • A firm may not claim its price is lower than that of competitors or the manufacturer’s list price without verifying, via price comparisons involving large quantities of merchandise, that an item’s price at other companies in the same trading area is in fact higher.
  • A suggested list price or pre-marked price can’t be advertised as a reference point for a sale or a comparison with other items unless the advertised item has really been sold at that price.
  • Bargain offers (“free,” “buy one, get one free,” and “half-price sale”) are deemed deceptive if terms are not disclosed at the beginning of a sales presentation or in an ad, the stated regular price of an item is inflated to create an impression of savings, or the quality or quantity of a product is lessened without informing consumers. A firm cannot continuously advertise the same item as being on sale.
  • Bait-and-switch advertising is an illegal practice whereby customers are lured to a seller that advertises items at very low prices and then told the items are out of stock or of poor quality. Salespeople try to switch shoppers to more expensive substitutes, and there is no intent to sell advertised items. Signs of bait-and-switch are refusals to demonstrate sale items, the belittling of sale items, inadequate quantities of sale items on hand, refusals to take orders, demonstrations of defective items, and the use of compensation plans encouraging salespeople to use the tactic.

As Suzanne Kapner reported last week for the Wall Street Journal:

“Building complexity into product prices benefits retailers. It helps to cloud the transparency of online pricing, making it harder for shoppers to compare prices across chains. “’The more prices become convoluted, the less retailers will have to match lower prices offered by their rivals,’ said Simeon Siegel, an analyst with Nomura Holdings Inc.”

“And price has become a moving target. Amazon changed prices 666 times on 180 popular products sold from Nov. 1 through Nov. 19, according to Market Track, a price-tracking firm. That is a 51% increase in price volatility compared with similar products sold during the same period a year earlier. Wal-Mart Stores Inc.’s prices changed 631 times and Best Buy Co. ’s prices changed 263 times on similar products sold during the same period this year.”

Take a look at four deceptive practices highlighted by the Wall Street Journal. Click the image to see a larger view of the chart.

https://t.co/PyezbfRSkk


 

19 Responses to “When Is a “Sale” a Sale?”

  1. justinempwo November 30, 2015 at 9:42 am #

    Ever since I started shopping for myself, I am always trying to looking for good deals on items that I buy. It is true that it is hard to tell when you are actually receiving a fairly discounted product. Usually when something I really need is on sale, I tend to not think twice about the math related to the “sale” being offered. However, if I am pondering on whether to buy something I do not really need, I’ll thoroughly analyze whether the offer is truly fair. I do agree that with the chart that it would make shopping a lot simpler for buyers if the dollar amount for percentage sales were added to the description. Doing so will make the decision process easier for shoppers, especially those who’s strong suit is not math.

  2. Yuan Wang November 30, 2015 at 2:29 pm #

    Usually when I shop I don’t really look at the sales or promotions because normally the “good stuff” are not likely to be in sales or discount. For example nobody is expecting an iPhone6s to be 10% off during the Black Friday or Cyber Monday. Because if Apple join the sales people will tend to believe that the products don’t worth the original price, which will create a bad image for the brand.

    • Evans on Marketing November 30, 2015 at 2:39 pm #

      Many “good” items go on sale at some point. That’s why the Internet is such a great resource.

  3. guohong yu November 30, 2015 at 6:46 pm #

    i think most companies just use the scarcity theory to appeal to customers, and customers always can’t control themselves to buy, buy and buy, although maybe they have known the bigger sales of Black Friday and Thanksgiving day are joke and cheating, they can stop to think that if we miss this time, how about next promotion. Therefore, i always choose to believe that it is a real sale.

  4. Christopher Mezzasalma December 2, 2015 at 11:15 am #

    These guidelines help make the average consumer more aware of the marketing schemes utilized by major retailers. Typically the word sale just brings in a bunch of consumers who are nosey and need to see if they need what they’re offering to the public as a good price. I use the scanner app on my phone to scan the barcode and see if this product being sold is truly a sale item. If i see i can get it elsewhere for a cheaper price then i normally go with that. But sometimes its not even about the sale and its more about the convenience of obtaining the product by not going too out of your way for it. Personally ive never shopped on black friday due to the hoards of people that will go and camp outside a certain store for that one item that is a really good price. Id rather go somewhere else and see if i can price match, which many retailers today utilize. Be smart this holiday season!

  5. Brianne December 3, 2015 at 4:18 pm #

    The holiday shopping season is upon us and many companies have extended their “Black Friday Deals” or “Black Friday Sales”. Seeing the sale extension has made me question if the Black Friday deal is even worth it? The article discusses the various types of price discounting problems and solutions. The solutions seem so simple, but if they are not forced upon companies, I don’t think many companies will actually make changes to their pricing strategies. As a consumer, I usually try to calculate the price of a sale item and compare it to the original price (if available) and determine if the sale makes the item worth buying. Very interesting article, relevant to the holiday season. I will definitely be paying attention to the so-called holiday sales.

    • Evans on Marketing December 3, 2015 at 4:41 pm #

      Good observations. Remember, “original price” may not be honest either. Some firms start out with higher prices, so they can try to convince us that the “discounted” price is a sale, which it really is not.

  6. Andy Zheng December 3, 2015 at 11:45 pm #

    It is very common to see sale after sale nowadays. Sometimes I unknowingly get signed up to their mailing list after a purchase, and then I get swarmed by their “discounts” and “deals” e-mails. It happens so often that I don’t get the same excitement anymore. Now that I learned about some of the marketing gimmicks that companies practice, I will be more selective with the so-called sales when deciding on a purchase.

  7. Anil Angad December 5, 2015 at 10:55 am #

    I think companies are definitely guilty of misusing the word “sale,” in order to intentionally deceive consumers. As the post mentions, there is a relatively strict definition for the term “sale.” I think companies just list a regular price for an item and put the word “sale” on it to peak consumer interest, as the words “sale” and “free” likely generate the most consumer appeal. In this way, the company can generate the revenue they would like for an item by convincing the consumer that the item was originally priced higher, which is completely unethical. The offers discussed in the figure are common misconceptions present in many sales promotions. I think the easiest one to avoid is the “Dollar off vs. percentage off.” Practically every phone has a calculator function on it. By simply using the calculator, a consumer can easily determine which option saves them the most money.

  8. jianxiang sun December 6, 2015 at 10:48 am #

    I think whether retailer using deceptive tactic or cheating price, there still have quite a few people are lured by this obvious pitfall. My own shopping experience during Black Friday I bought a Outerwaer through Tommy online shop, the discount was literal pretty deep, but after a week, I saw the original price changed from $299 to $249, the final price after discount even lower than Black Friday. So those guidelines above clearly explain most of companies pricing tactics. People usually just know there have fraud in the “Sales”, but do not know the specific operation. Good article letting consumers know the truth.

  9. Evans on Marketing December 6, 2015 at 11:18 am #

    Remember, a lot of retailers will do a price match up to 30 days AFTER a purchase. Check it out. If they won’t refund the difference. See if you do a return for a full refund. And then buy it at the lower price.

  10. Xavier Alvarez December 6, 2015 at 11:33 pm #

    Whenever I am going to buy something, I normally wait and look around for price alternatives. Once I decide where I want to buy from I will check to see if there are any discounts or coupons. Many times on websites they have that if you sign up for their emails they’ll send you a coupon for your first purchase and then thats when I choose to buy my items. I would rather wait to get it on sale then buy at full price if it is an expensive item.

  11. Phillip Bonanni December 8, 2015 at 6:11 pm #

    Marketing is one of the major important areas of business. This is because it makes people believe that they need something, even if they don’t. Along with that is the act of making people believe that a “sale” is something that they are benefiting more than they actually are. As shown in the articles, companies are changing the prices of their products all the time, an unless you know for a fact that you are saving a lot of money, it is very important to observe so called sales to make sure that you are truly getting the deal that you believe. Around holidays this is even more prominent than usual, and it is important for the customer to really know and understand the product they are buying.

  12. Lindsey Gutterson December 9, 2015 at 2:54 am #

    I remember learning about the stackable discounts in math when I was younger and being confused as to why they didn’t just add up. When I got older, I realized it was a way of tricking the customers into thinking they were saving more than they actually are. I realized more recently, this is a brilliant marketing idea because most people won’t bother returning the item once they find out that it is more than they thought it would be, and some don’t even notice when they’re being rung out by the cashier. It’s amazing how such a minor trick like that can really throw people off and actually help the company make more money.

  13. Evans on Marketing December 13, 2015 at 9:44 am #

    Reblogged this on Evans on Marketing and commented:

    As we get closer to Christmas, it is more important than ever to know if an item is REALLY on sale. Read this post to learn more. 🙂

  14. XUN GONG December 13, 2015 at 6:40 pm #

    Big sals and discount are the common marketing strategy for companies to use to get more sales revenue. When people buy some product from original price $200 to $120, it really makes them happy and have great intention to purchase. Therefore, some retailers tried to cheat on consumers. With my own shopping experience, I purchase Coach bags on Black Friday, the original price was $199, it has 70 percent off discount which really drove me to buy that. However, after purchasing the bag in one week, I went to same store and found out the price was changed to $119 and after discounted the price was even more cheaper than the day I purchased. You can’t not trust the promotion at all. Consumers should be more careful.

Trackbacks/Pingbacks

  1. When Is a "Sale" a Sale? | Ethics and... - November 30, 2015

    […] Unfortunately, many retailers misuse the term "sale". And shoppers are often persuaded that a product is on sale even when it isn't. [For our holiday shopping tips, please click here.] As noted in …  […]

  2. More Gamesmanship on Retail Prices — Even Online | Evans on Marketing - March 14, 2016

    […] As we wrote a short time ago, companies are not always transparent or honest when they say an item is ‘on sale’ when it really is not: “Unfortunately, many retailers misuse the term ‘sale.’ And shoppers are often persuaded that a product is on sale even when it isn’t. According to Evans and Berman’s Marketing in the 21st Century: Price advertising guidelines have been set by the FTC and trade associations such as the Better Business Bureau. The FTC’s guidelines set standards of permissible conduct in these categories.” […]

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