Anchoring: So Powerful It's Worth Risking Lawsuits

Nov 24, 2015

 

Anchoring is so powerful that retailers continue to risk bad press and class action lawsuits by using phoney anchor prices to motivate buyers.

 

Anchor pricing, the practice of using a high price to create a frame of reference that makes a lower price seem like a great deal, is a powerful pricing technique used by many retailers. Most commonly it is used on the price tags of sale items, where the standard (non-sale) price is used to make the discounted sale price seem almost irresistible.

It works very well. So well that some retailers started using fake anchor prices in the form of MSRPs that weren't real (the product was never intended to sell at that price) to make discounted sale prices more attractive.

Some of them got caught – companies that included Saks Off Fifth, J.Crew, Michael Kors and T.J. Maxx.

That might have sent a message to other retailers but now Kate Spade is being sued over “illusory” discounts in its outlet stores – the company has been hit with a proposed class action in California federal. It alleges that the retailer advertised discounts from original prices that never existed.

 

The suit follows a flurry of others filed over the past year against a wide range of retailers, accusing the companies of violating consumer protection laws by using price tags that list a “discount” price on items in their outlet stores...

 

Anchoring works, so much so that it's tempting (but ill-advised) to abuse it. But, used honestly, it remains a powerful technique for retailers.



Tags:
Category: Examples

Sponsored by FloristWare – Flower Shop Software

Beyond Cost Plus is sponsored by FloristWare: Fully-featured flower shop software that saves you time and money while increasing sales – without costing you an arm and leg or tying you to a wire service.

FloristWare – flower shop software/POS system.

Related Material

3 Valentine's Day Pricing Tips For Florists

Three quick pricing tips retail florists can use to increase sales and profits at Valentine's Day.

Pricing in the Retail Flower Business at the 2018 GLFEE

Sessions on better (more sales, bigger profits) in the retail flower business is scheduled for the 2018 Great Lakes Floral & Event Expo.

Are You Selling Yourself Short?

Introducing and accounting for pricing strategies that will increase sales and profits in the retail flower business.

Be Careful What You Ask For (When You Ask For Too Little)

If you want your customers to spend more on floral arrangements you have to offer them more expensive floral arrangements.

One Size Does Not Fit All: Pricing Gas/Car Washes

No one size fits all when it comes to pricing/discounting. Different approaches appeal to different customers. The car wash gets this, florists should too.

Category List


Tag List


Tag Cloud



Archive

2018

2017

2016