Confusing your customers can be good for business

What Avanza Supermarkets gives you on sale prices in the aisles, it takes away in the fine print at the register.

Fine print on circulars (see the top right corner below) and shelf price tags says “plus 10% at the register.” What does that mean? It’s perniciously vague.

The answer is at the register, where receipts show a “10% plus” line item that adds that money back onto your bill (see below).

A local news network reported that most people don’t notice the fine print or the mark-up on the receipt. Avanza defended itself, asserting that they fully disclose the plus-10% system to shoppers. And besides, other chains like Elrod’s in Texas use this pricing system too (see below).

The scheme is certainly built on two shopper insights: people are lured by low prices, and people don’t always read the fine print. But it smells like deceptive marketing aimed at low-income and Hispanic segments. Companies are always trying to find a way to tip the balance of power in their favor with customers. But is this going too far? I think it stinks.

Comments

[Jared]

I don't think anything within the bounds of the law is going too far. That being said, this is a weak short-term marketing scheme at best and not by any means a long-term brand builder.

Any time a brand seeks ways to trick its audience, they're just asking for trouble. People may not notice at the register, but they will eventually notice (if they're anything like me). That's what I call "one in the minus column".

Every time we interact with a brand there's either a "plus" or a "minus". When a brand attempts to deceive me, that's an example of a minus. When we (as the consumer) encounter enough minuses, other brands move into our consideration set... that's where good marketing comes into play. We want to be tops on the list of impending consideration set brands so we can pick up the pieces when the bad brand drop the ball.

[Adam Daugherty]

I would consider that strategy pretty despicable. Other words coming to mind are cheating, dishonest and just plain wrong.

I get a little fired up when I see stuff like this because it reminds me of someone that is too lazy to develop a good enough strategy to actually bring in customers the right way.

Great topic for a blog post Ethan. Things like this generate some good debates. I want to ask you why you think this strategy was taking advantage of the low income and Hispanic? Did they do this on certain types of products or the entire store? I am also not familiar with this chain, where are they positioned in the market?

[Lisa Brady]

What would be interesting to learn is how this tactic (which I don't personally like and consider deceptive) affects sales in the long term. Sometimes a deceptive direction like this results in short term sales, giving the appearance of success, but actually results in loss of loyalty and eventually a significant share of customers. It is difficult to measure these long term results as incremental to a specific promotion. But it is important to consider these long term affects on the customer.

[Jamie]

Shame on Avanza.
This reminds me of the CARD scheme that some grocery stores have incorporated. As you look at the prices on the shelf, a price is listed in large print but the "fine print" says: with card. My elderly mother, who has a vision issue, has been screwed by this tactic. Frankly - I can't believe a consumer investigative team hasn't called this out.