Two-Price Comparison Advertising

June 4, 2013

 

“The petty man is eager to make boasts, yet desires that others should believe in him. He enthusiastically engages in deception, yet wants others to have  affection for him. He conducts himself like an animal, yet wants others to think  well of him.” Xun Zi,- Chinese philosopher

FROM THE AUSTRALIAN  COMPETITION AND CONSUMER COMMISSION (ACCC):

Price comparisons that contrast a higher previous price to a lower current or sale price will breach the Australian Consumer Law (ACL) if any represented savings are not real.

 Businesses often make comparisons between product prices being charged or promoted as part of a sale and:

  • the company’s own previous pricing (including by ‘was/now’ or ‘strike-through’ pricing or by specifying a particular dollar amount or percentage saving)
  • the ‘cost’ or wholesale price
  • a competitor’s price
  • the recommended retail price (RRP).

 Statements such as ‘Was $150/Now $100’ or ‘$150 Now $100’ are likely to be misleading if the specified, ‘Was’ or ‘strike-through’ prices are inflated beyond what those goods would have been purchased for during a reasonable period immediately before the commencement of the sale.

How long this reasonable period is may depend on factors such as:

  • the type of product or market involved and
  • the usual frequency of price changes.

 Similar considerations apply to the specification of dollar amount or percentage savings.

 Misleading comparisons

 Comparisons between ‘cost’ and ‘sale’ prices can be misleading if the specified ‘cost’ price is greater than what the business paid for the goods. Consumers may be more likely to purchase goods if the gap between the wholesale and retail price is perceived to be smaller than what it actually is.

 Conduct may also be misleading where, for example, price comparisons are made with a competitor’s price for identical goods, but the stated price is taken from a different market or geographical location.

 Advertisements or promotions of ‘savings’ or ‘discounts’ in comparison to the RRP of goods and services may convey to potential customers they are getting a good deal because the prices are less than the RRP. If the product has never been previously sold at the RRP, or the RRP does not reflect a current market price, then advertisements using this form of comparison may, depending on the circumstances, misrepresent the amount of savings.      

 Tips for displaying two-price advertising      

 It is good business practice and fair trading risk management to keep records substantiating any two-price claim.

 It is also important to remember that a ‘sale’ or ‘discounted’ price should only be available for a limited period. This is because if a reasonable amount of time has elapsed and an item is still ‘on sale’, the discounted price effectively becomes the new selling price, so it may be misleading or deceptive to continue to call it a ‘discount’ or ‘sale’ price.       

 

To your abundant success,

Leon Skaliotis – Founder, Retail Fundamentals.

leon 2Successfully helping retail owners in Melbourne Australia apply the most effective principles ever discovered, to create highly profitable businesses.

Take the next step… If you want to know how to attract more customers to buy from you, get on board my individually tailored retail programs. If you want to build a  retail business with more loyal customers, now is the time to build momentum and make this year your best ever. You will be ecstatic at how easy it can be to attract and keep more customers. The fast working principles from my exclusive programs, My Retail Success and The Outside In Method come with a 100%  SATISFACTION GUARANTEE! Discover quickly and easily how to :

  • Attract and Keep more Customers
  • Substantially increase your Profit
  • Increase the Value of your business
  • Free more of your Time

To receive your complimentary copy of “Retail Secrets Every Owner Should Know” click: www.retailfundamentals.com.au

You can contact me direct on (+61) 0425 83 3344  or email: leon@retailfundamentals.com.au

 

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