Pricing strategies and tactics under investigation

The Office of Fair Trading (OFT) is to undertake a detailed investigation into methods of advertising and pricing goods and services online. This should prove to be a really interesting report when it is published in the summer of 2010, making it essential reading for anyone wanting to understand the variety of advertising pricing tactics and strategies being developed online.

The Times, along with all the other quality dailies, reports on the impending OFT investigation.

Actually there will be two investigations:

The first, into online targeting of advertising and prices will cover behavioural advertising and customised pricing, where prices are individually tailored using information collected about a consumer’s internet use.

The second, into advertising of prices, will consider various pricing practices which may potentially mislead consumers. The study will look in particular, but not exclusively, at how these practices are used online. It will examine practices including:

- drip’ pricing, where price increments ‘drip’ through during the buying process

- ‘baiting sales’, where only some products are available at the discount price and consumers may ultimately purchase a full priced product

- ‘reference prices’, where there is a relatively high reference price compared to sale price, for example ‘was £50, now £20’, or ‘50% off’

- time-limited offers, such as sales which finish at the end of the month or special prices which are available for one day only

- complex pricing, where it is difficult for consumers to assess an individual price, for example ‘three-for-two’ or ‘non-inclusive’ prices, and

- price comparison sites which may use some of the practices described above.