Monday, October 29, 2007

Lowest Price Guarantee Scam

How many times have you heard the phrase: "we'll beat anyone's advertised price, or your mattress is free!"? One of the local mattress store chains here in Northern California routinely uses this pitch in their radio and TV ads. There is only one problem, and it's a big one: advertised mattress prices are never their true prices. Much like the sticker price on a car in the used car lot, the price advertised on a mattress is completely meaningless. It's a point from which you start your negotiations.

Lowest price guarantees in that context are a way to give consumers the feeling that they are getting the best price possible, without actually giving them any real value whatsoever. On the other side of the equation, there are some price guarantees which actually provide considerable value. Some electronics chain stores guarantee that if you find a lower price anywhere within 30 or 60 days from your date of purchase, they would pay you the difference. This guarantee is a good one in an industry in which price erosion is a constant fixture. There is nothing I hate more than buying the latest gadget only to find that the price dropped substantially a couple of weeks later.

Many chains will also refund your money if a certain product you purchased at their store later goes on sale. There is nothing sweeter than showing up at a store with nothing but a receipt, and walking out with the same receipt and some cash in your pocket.

When is a price guarantee a real one, and when is it a marketing scam? To find out, ask and answer the following two questions: 1. In purchasing the product, will you be required to haggle for a price in order to get the best deal? If so, the price guarantee is meaningless; 2. Is the product you are buying a commodity? If so, the guarantee is more likely to mean something.

At the end of the day, the price guarantee is a way for marketers to get you to buy immediately rather than wait for a price decline, and to prevent you from doing extensive comparison shopping. Marketers know that once people make a purchase, the vast majority of us go home to enjoy their new toy, and tend to forget about the price that they paid. The vast majority of us will never walk back into the store to claim a refund based on a price guarantee. Regardless of whether they are intended as such, most price guarantees end up being a scam from the consumer's perspective, a way to get us to buy something, without offering us any real value.

1 comment:

trebomb said...

I have found that most retailers do not carry the exact make and model to avoid honoring the price comarison. I bought a reciever from Best Buy that has it's own model number just for that store, and the same unit is sold under two more model numbers. I had a similar experience shopping for appliances.