Marketing and the supermarket ‘price war’

You’ll be well aware that this Christmas the supermarkets are trying hard to lure customers with bargain prices. Pricing is of course a vital component of the marketing mix, perhaps especially so in the current economic climate. Investigative journalists on the BBC show Panorama have been digging deeper; to see if the supermarket offers are all they seem…

The programme reveals findings such as:

• At Asda, the well-publicised “Wow” deals are meant to mean that products were cheaper than they would normally be. But a check of the price histories of some of the Wow items found that 11 had been for sale at the same price for at least six months - so no savings there - and four items were actually more expensive than they used to be.
• Advertising on the shelves that announces Two for £2, but fails to highlight that there is no saving there - the item’s price is £1 each.
• Price establishing in another trick: a retailer sells a product at a certain price for a long period of time, but then suddenly raises it. Later, the price is dropped back to where it was in the first place and the supermarket tells us that it has “slashed the price”. Tesco’s Big Price Drop seemed to do this with its medium whole fresh chickens, which rose from £4 up to £5 for a little over two months before the Big Price Drop saw it drop back down to the original price of £4.
• A label with a price that says Now £2 but fails to mention what the older “then” price was. At Morrisons, fabric conditioner was labelled as “Now £2 - Offer Ends Sunday”, but neglected to mentioned that two weeks earlier it had cost only £1.65.
• When “bigger pack, better value” in fact means, bigger pack, costs more. At Asda, a 1kg tub of Clover spread was £3.20, 20p more than buying two 500g tubs of the same.
• While loose fruit and veg seem to be priced per kilo, some packaged items are often only priced per pack, with no weight listed. At Sainsbury’s, a pack of five bananas cost £1. Bought loose, the same number cost just 42p.

You can read more about the investigation here (there’s also a great little video clip if you haven’t got time for the whole programme), and also pick up on similar coverage from last year.