Whack Price-Beating Policies

Consumer behavior research identifies payoffs for retailers in advertising price-match guarantees. “Find a better price on the same item, and we’ll honor that difference,” the store promises, and shoppers’ purchase intentions increase. This is because consumers interpret the promise to mean the store has low prices, so the shoppers’ motivation to search elsewhere fades.
     But does this mean you’ll increase revenues even more by advertising a price-beating policy? “If you purchase an item from us and then find the identical item at another store or online for less, we’ll give you double the difference in store credit.”
     Notice how the conditions of such a price-beating promise tilt in favor of the retailer. The consumer needs to purchase the item from the store in order to take advantage of the offer, and the refund is in credit, not cash, meaning that the consumer will need to spend the refund at the store.
     Even with this, though, researchers at Ghent University and University of Cambridge find that a price-beating guarantee is inferior to a price-match guarantee at increasing profits. One reason is that shoppers are less likely to trust the overall pricing policies of retailers who offer price-beating claims. Another reason is that compared to price-match claims, the price-beating claims attract a higher percentage of bargain hunters with little store loyalty. They’ll always be looking for even better offers and have little hesitation in switching suppliers.
     Price-beating also can come back to bite the retailer. The researchers recount the tale of a 2011 Tesco offer to double the difference if customers found purchased items at a lower price at an Asda store. One shopper took up Tesco on the deal by carefully selecting items which cost £38.46 at Tesco and £17.48 at Asda. Keeping the promise, Tesco issued a voucher equivalent to £41.96 to the customer, who walked away with free products plus also a little extra to spend.
     Sometimes the price matching itself might be unnecessary. When asked if you can meet a competitor’s price or the internet price, avoid saying no. That word irritates shoppers. Instead, say “Here is what I can do.” Then talk about items like:

• Discounts for quantity purchases or purchase as part of a combo pack 
• Delivery at times demand is slow for you 
• Extras you offer, such as gift wrapping, training, or installation 
• A discount on subsequent purchases, such as through a loyalty program 

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

Click below for more: 
Let the Internet Set Your Price
Protect Customers Against Price Decreases
Guarantee with Care
Meter Your Customer Service