Two years ago I wrote about the irrational pricing of butter at Safeway on Smith St and theorised that pricing is not simply about reflecting costs and profits but that it is also about misleading and manipulating consumers. I recently saw a new development in Safeway’s butter pricing that made me stop and think ‘how stupid do they think their customers are?’
A 250g pat of butter currently costs $1.29 (up from $0.99 in 2007). A 500g pat normally costs $2.49 (down from $2.75 in 2007) except when it has a big ticket covering the usual price with the new price of $2.79. There are two dishonest and misleading things about this ticket.
First, big tickets are usually used to draw shoppers’ attention to discounted items or items that are priced at the ‘everyday low price’. Using a ticket to encourage shoppers to buy an item that has had its price increased is disingenuous and misleading.
Second, with unit pricing now mandatory, the price tag of the 250g pat of butter notes that it costs $0.52 per 100g. The hidden $2.49 price notes that it costs $0.50 per 100g. The big ticket however is lacking the unit price (which would be $0.56 per 100g). I think the absence of the unit price on the big ticket is deliberate, and is another strategy by Safeway to manipulate people into buying the more expensive product.
Safeway probably have an office where economists sit around analysing consumer behaviour trends, setting up hypotheses and devising experiments like this one to test the accuracy of their prediction models. What percentage sales increase can we achieve with a big ticket? Can we get away with inflating the price? Can any of our customers add up? I don’t expect Coles or IGA to be any better, but I am planning to spend more time and money there finding out at Safeway’s expense.