Japan Daily Life

Consumers divided on ‘discount’ claims (survey)

The rise of the 'strategic consumer' exposes companies' pricing policies

Consumers love a bargain. In fact, 91% of Canadians say they receive “great happiness or pleasure” from a good sale or discount, according to a recent survey from Queen’s Business School.

However, they’re divided on whether they’re actually getting a deal. Half of Canadian consumers (49%) believe they are saving money when a product is discounted, yet 45% believe stores inflate the regular price in order to discount a product.

While most consumers are drawn to sales, the internet has created a “new strategic consumer” that companies must be aware of, said Yuri Levin, Queen’s School of Business professor and expert in dynamic pricing and revenue management.

Social networking, for example, allows customers to share information and figure out pricing patterns. And consumers can price match on various retailers’ websites.

With customers easily sharing information about pricing, “there is big pressure for companies to be transparent,” said Levin.

That’s especially important today, as more companies are using dynamic pricing, which is about “charging the right price to the right customer at the right time,” said Levin. The practice started in airlines but has now spread to other industries such as retail, hospitality and telco.

“Retailers are trying to put in place pretty sophisticated technologies that use advanced data analytics to scientifically adjust prices based on the actual consumer response,” said Levin. “What’s really important for the consumers to understand is that their behaviour in the store and their behaviour online matters when it comes to companies to setting prices and adjusting prices.”

While research has shown that different customers will pay different amounts for the same or similar products, consumers “can resent differential pricing and regardless of their desire for achieving a good deal, the influence of the discount will be lost if consumers feel deceived in the process,” said Levin.

Hidden Costs

The survey also found that Canadians feel certain goods and services end up costing more than advertised due to confusing pricing or hidden charges. Nearly two-thirds (63%) of respondents believe that mobile phone plans end up costing more than the discounted price quoted. Approximately half of Canadians feel the same way about airline tickets, automobiles, TV packages, and long distance/roaming phone charges.

But those who feel they did get a good deal will spread the word. Eighty-nine percent of shoppers who receive a good sale or discount say they positively communicate it to other people.

The survey also found that deal seekers are no longer focused solely on occasional big-ticket items, such as televisions and furniture, but are regularly comparison-shopping on day-to-day items like groceries and household supplies (82%).

The online survey of more than 1,500 Canadians was conducted by Leger in April.

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