Last week, we presented our 2021 holiday shopping tips. Including advice about deceptive pricing. With that in mind, we look at this topic. Shoppers must know what is really a sale. Be sure to read the issues to be tuned into in 2021.
Beware: Shoppers Must Know What Is a Really Sale
Background
As we noted in 2015 [and still currently valid], the Federal Trade Commission (FTC) sets standards for permissible pricing conduct by businesses:
- A firm may not claim or imply that a price is 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 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 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. Then, they are 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.
Be Alert in 2021
Despite the above FTC warnings, deceptive practices continue.
According to Nathan Burrow, reporting for the New York Times:
Often, it’s quite difficult to know whether an offering is an overhyped “sale” that doesn’t provide a meaningful discount. Or an actual deal. Typical “sale” promotions are awash in marketing language. As well as inflated “full” prices. In addition, they may be saddled with a list of exclusions or conditions. But an actual deal is a real, meaningful discount off the typical price.
When a retailer presents a product as discounted, shoppers usually trust that the discount as legitimate. And it alters their shopping behaviors. Some evidence: Major chain stores that offer perpetually discounted items or coupons (JC Penney, most notably) experimented with ending a “sale” by offering the same item at an everyday low price. Yet, purchase numbers fell. Even though the previously promoted “sale” price and the everyday low price were exactly the same. Discounts also create a sense of urgency, as shoppers experience anticipatory regret at the thought of missing a deal.
The ways that sellers present discounts also put shoppers at a disadvantage. Sale items under $100 get presented with a percentage off. While sale items over $100 get presented with a dollar amount off. Why? The answer deals with the framing, which makes discounts seem larger. As observed by Jonah Berger, marketing professor at the Wharton School. And author of Contagious: Why Things Catch On. In the world of sales and discounts, shoppers’ inability to understand the math get preyed upon near constantly. As buyers often respond more to promos like “buy one, get one 50% off” than to a 33% flat discount. Although the latter would save them more. Even the prices themselves become manipulated, both in-store and online, to end in 9, .99, or .95. Rather than a round number.
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