Tool Box
Issue No. 35 - June/July 2007
Price matching guarantees: do they work?
by Dr David Corkindale and Dr David Corkindale
We are all familiar with the claim in many retail advertisements that are long the lines of “if you find a product at a lower price we will beat it by 10%” or “ we will beat any competitive offer by 10%.”
Do these affect shoppers in any way? Do they bring in more potential customers? Do they purchase more?
What if we made the offer 15% or higher - would that have a better effect? Would we get the same effect if it were only 5%?
These questions have been the subject of quite a lot of research. The general findings are that:
•consumers interpret the presence of a price matching policy to mean that the store has low prices
•consumers also look for other signs or cues that the store really is likely to have low prices
•they are only likely to visit the store and explore the low prices if the ease of getting to it is high.
This is as would be expected but what about the effect of the size of the potential refund and the length of time that it applies for? Does it affect all types of consumers?
One study found that some of those who had already purchased from a store did a post purchase price check of competitors and used the presence of the refund policy at their store to enhance their sense of value from their purchase. In other words, it was a reassurance factor.
In this case, just having any price refunding policy would achieve this outcome for a store.
The experiment
To explore in more detail how different types of customers may respond to different types of refund offers a study was conducted recently1.
To accomplish this the study examined the responses from two categories of consumers: those who were more and those who were less price conscious.
Three levels of price refund were examined along with different lengths of offer and the scope of offer.
An experiment was conducted on more than 400 people who shopped for things like a DVD player or a TV and ...
