Price promises aren't usually worth the paper they're written on
The papers have been kicking John Lewis this week, as it has started to exclude items where it gives an additional year’s guarantee from its ‘never knowingly undersold’ price promise (see John Lewis price promise flaw news). While a little naughty, actually I have a much more fundamental issue with price promises.
While ‘never knowingly undersold’ or ‘we’ll refund the difference’ is great marketing, in reality it gives more protection to the store than consumers. The core problem is …
They offer reassurance that you’re getting the best price, but without delivering anything of the kind.
What it really means is, ‘if you’re one of the very few who bother to check the price AFTER you’ve bought something from us and catch us out by finding it cheaper elsewhere, we’ll reduce our profits down to those of our competitors’.
In effect it allows shops to charge higher prices, while persuading the consumer they’re still getting a good deal.
Any company that really thinks it’s cheap should put its money where its mouth is with a: ‘if you find it cheaper elsewhere, we’ll give you the difference plus 10%, 20% or even 50% back on top’ – that’d be a real promise.
This isn’t a new issue
The price promise myth is an incredibly powerful piece of marketing that has truly lasted the test of time, and people still get drawn into. Its been going on a long time, I first wrote about it eight years ago in the first incarnation of the ‘Money Diet’…
All it means is the price may be dropped, if you’re prepared to do the work. However, people allow themselves to feel it’s a good deal just because the store has a price promise and therefore don’t bother looking to beat the price. Price promises are worth nothing unless you put them to the test.
"Stores offering price promises can set prices at any level they choose, as they’ve security if they’re caught, the worst is they’ll just have to lower them to the same level as another shop. To put this in context I popped to Comet’s website.
"One of its main special offers was an all-in-one printer/scanner/copier for £69.99 including delivery. Flashing at the top of the web page was the price-promising phrase: ‘We always check others’ prices online, then we lower ours.’ Quickly I clicked across to the internet shopping robot ‘pricerunner’ … the same printer was available online for less at five other retailers. The cheapest was £54.99, £15 less.
"The worst I’ve ever seen was that supposed bastian of pro-consumerism ‘Nationwide’. It’s price promise was ‘get a car insurance quote cheaper elsewhere within two weeks of buying our policy and we’ll refund the difference’. How many people get more car insurance quotes just AFTER signing up for a policy."
The John Lewis deal.
The interesting thing about the John Lewis exclusion clause is it actually killed one of the times its price promise was truly consumer beneficial. The big advantage of buying electricals at the store is you get a free additional one year warranty on top of the manufacturers.
This was a real boon and as such many people found the cheapest price elsewhere, then got it price matched at John Lewis and thus got the best of both worlds. Now you could argue that John Lewis has rightly closed this loophole – and I’m sure some will. Alternatively, why should anyone now bother buying at John Lewis when, as is common, its more expensive – as that’s a bit like having to pay for the free warranty, you may as well just go and get the cheaper price in the first place.
Better still, pay the right way and you can still get the extra year’s warranty for free on some credit cards (see the best credit card perks article). But do always pay off in full at the end of the month so there’s no interest.
What’s your view on price promises?
PS. Read this comment
I found this comment, from Rebecca Ashton, on my Facebook page fascinating, "I bought an item in John Lewis which I later found for £20 cheaper (on a £50 item). Phoned John Lewis and they refunded me the £20 difference and then carried on selling the item at £50!! So their slogan ‘never knowingly undersold’ is a lie."
