chapter  8
4 Pages

Reference prices in retailing: what is a fair comparison? FIONAHARRIS

When Jason fi nishes his dinner back home he digs out his marketing folders from his Master’s coursework and fl icks through to fi nd the relevant case and re-reads the material. In 2012 the UK’s Offi ce of Fair Trading (OFT) investigated whether six leading furniture and carpet retailers were using misleading reference pricing. Reference prices were described as being “used by retailers across their sector to advertise a bargain to shoppers, for example by comparing a lower current price against a higher price such as ‘Sale, Was £800, Now Half Price £400’.”2 The issue concerned whether retailers were exaggerating price reductions by using discounted prices against an unrepresentative reference price. Misleading reference prices may deceive consumers and persuade them to make purchases that they might otherwise not have made, disadvantaging not just consumers, but competitors.3 In an OFT press release,4 the OFT Director, Goods and Consumer Group, Gaucho Rasmussen was reported as saying: “Retailers advertise bargains and discounts by referring to a previous or future higher price. It’s a powerful marketing tool which, when used properly, provides a helpful and easy way to demonstrate to shoppers the value of discounts and savings.” The OFT defi ned a genuine reference price as “the price at which a retailer expected to, and usually did, sell a signifi cant number of products at.”5