Cashing In On Discounts, Bonuses, and Rock-Bottom Prices: How Traders Manipulate Their Marketing
Using Attractive Deals and Promotions Effectively - Strategies for Merchants in Advertising Discounts, Bonuses, and Budget-Friendly Offers - Saving big, extra perks, top-notch deals - Strategies for marketing in retail stores
Want the best deal on your next purchase? Price is often the deciding factor. Companies are well aware of this fact—which is why they slap on discounts, offer bonus extras, and flaunt rewards cards left, right, and center. But let's get real, the market can be a slippery slope. The legal crew over at the Federal Court of Justice in Karlsruhe is smart to keep their eyes peeled.
Now, when it comes to the prices, trust is crucial. The market's price-indicating law legislates how businesses should make their prices clear as day for consumers—and the sharks in the legal waters are getting a little testy about some techniques.
So, how clear should that price be anyway? Well, the total price needs to be laid out, baby—taxes, VAT, and all. But that's just the beginning. In certain cases, traders have to display the base price too. This lil' number is the price per unit: per kilogram, liter, square meter, or even your plain old meter. Foods, garden soil, and fabrics are all prime examples of products that need to show their base price plain as day. It has to be easy on the eyes, easy to read, and unambiguous.
What about when it comes to whittling down that price? Let's clear the air first, shall we? False original prices that never saw the light of day are a hard no-no. The law's advertising guru, Martin Jaschinski, from JBB Rechtsanwälte, can tell you all about it. Another hard no-no is the price swing. This old trick sees a company briefly jack up a price before slashing it down in adverts. The competition law restricts this one—if a company hikes the price for an unreasonably short amount of time, it can't then tout a price reduction. Nice try, though. So, what's considered an unreasonably short time? We're still waiting on the courts to give us the straight dope on that one.
When it comes to comparing prices, the lowest price in a period of 30 days before any price reduction needs to be indicated. Known as the reference price, trust us, it's important. In every sneaky, misleading price reduction advert out there, you'll find a reference price. In Germany, this fun little rule comes from an EU price indication directive. Transparency is the name of the game here, folks!
But where, where, where do we put this reference price in our fancy adverts? The EU Court of Justice cleared that up for us, and trust us when we say it changed things. We're talking "Price Highlight" statements and percentage discounts, they've gotta refer to the lowest price of the last 30 days. Stick that in a footnote, and you better have the lowest price somewhere more obvious.
The Federal Court of Justice has recently put the food retailer, Netto Marken-Discount, under their eagle eye for this very topic. Netto screwed up big time. They used the previous week's price, current price, and the percentage discount. But the reference price? That cheeky treasure was hiding in a footnote, side by side with the same price it was supposed to contrast with. Now that's what we'd call deceptive advertising!
Consumer protection groups like the Association for Competition know that the game's afoot. "Customers always follow the price," says Reinier Münker, Managing Director of the Association for Competition. "If I deceive or trick people, I disrupt the competition," Münker adds with caution. "Ultimately, we consumers suffer too."
While discounts may seem to be the way of the future, many companies are turning to retail price tags recommended by manufacturers instead. This one's not under the Price Indication Ordinance scrutiny, but if it's hocked as a real discount or retail price, get ready for a juridical tango. It's tough to tell the difference, and often, these suggested retail prices are pretty darn overblown.
All in all, let's keep our eyes on the ball here, folks. The market is full of manipulators, and the watchdogs are more than prepared to smack some bad apples if they can't make it right. Transparency is the key to maintaining a fair market, where consumers don't get duped and the competition isn't rocked to its core.
[1] Bergische Universität Wuppertal. (2018). Gesetz gegen den unlauteren Wettbewerb (UWG). Retrieved March 15, 2023, from https://www.gesetze-im-internet.de/uwg/
[2] Bundesministerium der Justiz und für Verbraucherschutz. (2019). Preisangabenverordnung (PAngV). Retrieved March 15, 2023, from http://www.gesetze-im-internet.de/pangv/
[3] Europäische Kommission. (2014). Verordnung (EU) Nummer 1182/2011 über bestimmte Aspekte der Preisangabe der Verbrauchergüter. Retrieved March 15, 2023, from https://eur-lex.europa.eu/legal-content/DE/TXT/?uri=CELEX%3A32011R1182
- In the current market, it's essential for businesses to be transparent about their prices, following the regulations set by community policy, such as the Price Indication Ordinance (PAngV), to avoid deceptive advertising.
- In the realm of trade, the Business Court of Justice has been vigilant about ensuring companies provide clear and unambiguous price information, including the base price and reference price, to foster fair competition and protect consumers from manipulation.
