Friday, February 10, 2006

Always the Lowest Price. Always.

Always Lower Prices. Always. Notice the difference from the title? "Always the Lowest Price. Always" was the original Wal-Mart slogan. That was until the National Advertising Review Board found that Wal-Mart did NOT always have the lower price and ordered them to stop advertising such. Wal-Mart uses the 'opening price point' method of luring in customers and making them think everything is sold at the lowest possible price.

How does the number-one retailer maintain an image of low prices? First, by actually making sure its prices are lower than its competitors, at least on key items. These items are called "price-sensitive" items in the industry, and it is commonly believed that the average consumer knows the "going price" of fewer than 100 items. These tend to be commodities that are purchased frequently.

Read more here

1 comment:

Anonymous said...

A book by Fred Crawford and Ryan Mathews titled "The Myth Of Excellence" had this to say about
Wal-Marts low prices. "While most consumers believe that Wal-Mart always has the lowest prices, a market-basket comparison that we conducted proved otherwise. Our research, in which we compared the prices charged by Wal-Mart and its 3 major competitors in 18 U.S. markets on a list of common items showed that Wal-Mart was not always the lowest priced player. On average Wal-Mart prices were higher than those of its competitors on one-third of the items checked." (Crawford and Mathews page 47.)
Wal-mart gives the customer the PERCEPTION that they have the lowest price, but that is not always the case. Lower priced goods are in the front of the store. As you go further back, their prices rise. But do people notice? Apparently not. Perception here folks is everything.
But Wal-Marts low prices come at a cost. Employees get paid little, no health coverage is offered that they can afford, and suppliers get squeezed. One supplier who chose to remain annonymous said this about dealing with them. "Wal-Mart sucks." Some great low prices huh?