Price is a powerful lever, but companies must be careful about the claims they make.
In tough times, buyers become ever more price sensitive, and it can be a temptation to promote hard on price. Of course, price does not necessarily equal value, and buyers should beware of other aspects when weighing up where to invest their promotional spend. Customer service, product compliance, innovation, and after sales support are all areas that matter to the overall perception of value.
However, it would be naïve to not consider the importance of price. It is such a powerful lever, which is why the claims that promoters can make about it are closely guarded.
This is the case as much for B2B markets like merchandise as it is for consumer products. The UK Code of Advertising (the CAP Code) offers guidance on how companies can use price in their communications.
Marketers must be able to back up claims that they offer the “lowest prices” and should be able to beat, not merely match, competitors’ prices.
Marketers should not claim that their prices are lower than those of their competitors for all products if they are lower only for selected products. If they claim they are generally lower, they should explain the basis of that comparison, and be able to demonstrate that it is a fair claim.
Lowest price claims must be verifiable on the basis of information given in the ad. Marketers should give a list of the selected products either in the ad or in material that consumers can easily locate. Dates of price monitoring should be stated and should be close to publication date.
If price changes are so frequent that lowest price claims are likely to become inaccurate, marketers should develop a price monitoring and adjustment policy to ensure that such claims can be supported. Marketers must also work to ensure that claims that appear in marketing materials with a long shelf life such as directories, are accurate.
Offering a price promise (for example, to beat a competitor’s cheaper price if informed of that price by a consumer) does not justify a“lowest price” claim in the absence of adequate monitoring or an adequate price monitoring and adjustment policy.
Any significant conditions attached to price promises should be stated clearly (for example, required proof of competitor’s lower prices, time limits, geographic restrictions, exclusivity of handling or delivery costs, whether the price promise applies only to advertised prices etc).
For more information, visit the Committee of Advertising Practice website, www.cap.org.uk