Are Your Prices Ethical?

Posted by Moira McCormick on May 30, 2017
Moira McCormick

Are your prices ethical

Sure, you want to tempt, persuade and influence your shoppers to make their purchases with you, increase those purchases and stay loyal to your company.  However, just how far are you prepared to go down the ethics route to entice your shoppers?

Of course, you want to increase your market share and profits but what might seem like ethical pricing tactics to one company could be interpreted as unethical by another, a step too far.  It could even be unlawful.

We all know that price is one of the key components of your shopper's purchasing decision.  Undoubtedly price is a very potent tool and you would be mad to ignore its significance on your customers' buying habits.  If you have not priced right then your customers will soon abandon your store.  


What is Pricing-as-a-Service (PraaS)?


Basically, what your shoppers want is what you should give them.  For example, if it's quality at a premium price then Waitrose will be their supermarket of choice; if it's every day low prices (EDLP) then it will be to Aldi and Lidl that shoppers will turn.  Whatever you are selling your role is to ensure your shoppers are getting the quality and experience they seek, at a price that is acceptable to them.

So, just how far are you prepared to go to achieve these aims?  Of course, you have to conduct your pricing within the parameters of the law of the country in which you are trading.  To be ethical, pricing should not be open to misinterpretation; it is unethical to deliberately mislead customers about price. 

However, according to WhichUK? there are still hundreds of misleading offers out there on UK retail shelves every day.  Some are merely "bending the rules" – others are downright unlawful. 

We have discussed in a previous blog the shrinking products, certainly post the Referendum on EU membership, but other misleading trends include "dodgy" promotions and confusing unit prices. 


Some Unlawful Pricing Practices

  • The product is sold at an inflated price for a limited period at low volume in just a few stores, then rolled out across all stores at the lower price - known as "yo-yo pricing".
  • The "discount" price period lasts much longer than the original higher price period, making the discount price really the normal selling price.
  • Charging one price in store A, a lower price in store B, then saying "was £x, now £y" when the higher price was never actually charged in store B.
  • Pretending that an offer is only available for a very limited time to pressurise customers into an immediate buying decision.
  • Saying a product price has been reduced without mentioning that this is only because the package size has shrunk.
  • Buy One Get One Free deals where the same volume of the same product can be bought more cheaply in a larger pack.
  • Deliberately introducing complexity to unit prices to make it difficult for shoppers to compare prices between similar products. If a competitor's product is measured one in per 100ml and yours is per 100g for example.
  • Increasing the price of products prior to the launch of a volume promotion. This is especially pertinent to multi-buy promotions.
  • Advertising where special offers are promoted to entice shoppers into your store when you do not really expect to be able to supply the products.
  • Claiming false accreditation – for example, claiming to be registered under an accreditation scheme when this is not really the case.
  • Predatory pricing – deliberately underpricing your product(s) to drive competitors out of business and/or discourage new competitors.


Common Pricing Errors


Can you really afford to let this happen?

WhichUK? wanted to bring an end to misleading supermarket pricing tactics that exaggerate discounts and manipulate shoppers. Using their super-complaint powers they called on the Competition and Markets Authority to take action against supermarkets' pricing tricks. 

It proved to be a winner. The Competition and Markets Authority agreed that action was needed and secured formal legal commitments to end dodgy pricing tactics.

It is both unlawful and unethical to mislead your customers and you should always be transparent about what they are getting for the price they pay.  A spokeswoman for the Department for Business said it was a criminal offence to mislead consumers on prices, including special offers:

"If consumers believe supermarkets are advertising misleading deals, they should raise their concerns with their local authority Trading Standards officer, who enforces the law," she said.

Unless you abide by the rules on prices then you are only going to open yourself up to more and more complaints from shoppers and if the incidents are not addressed immediately then you may face heavy penalties along with a loss of credibility and trust.  Can you really afford to let this happen?


Related Posts

Rising Prices and Your Shrinking Weekly Shop



Get the Price Right by Sahaj Kothari 2015

Supermarkets: Brexit and Your Shrinking Shop, Channel 4 Dispatches

Topics: Ethical pricing

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