Overview
Stores can use a wide range of pricing techniques to market their goods and services. This can include offering savings and special offers, running sales promotions, and making price comparisons with competitors. These are all common and legitimate techniques.
But businesses must take care that consumers aren’t misled or deceived. The Fair Trading Act covers all aspects of the promotion and sale of goods and services, and this includes pricing. Therefore, any claims made about price must be clear, accurate and unambiguous for consumers.
These pricing compliance guidelines are provided for TheMarket Merchants as a guide only.
Merchants should always refer to the Commerce Commission Fair Trading Act Pricing & Fact Sheet on The Fair Trading Act - Pricing directly.
Correct Use of Terms
Definitions
- Established Price, Everyday Price, Usual Price, Was Price, Normal Price: All mean the same thing – they are a reference to the price at which a good or service is usually sold, or the price at which the good or service was offered before it was marked down.
- Discounts: Businesses often discount goods and services and advertise the savings you can make by buying at the discounted price. A common technique is to compare the discounted price with the non-sale price of the good or service (often using "usual", "was", "normal" or "everyday" prices) to highlight the bargain.
- Recommended retail price: A recommended retail price (RRP) is the price a manufacturer suggests a retailer sells a product. However, a retailer is under no legal obligation to sell a good at the RRP and will often sell below the RRP. It may be misleading for a retailer to make a comparison with an RRP unless it is a genuine manufacturer's RRP and reflects a price at which the item is readily available.
- Comparisons with competitors: If a business compares its prices with a competitor's (for example, "Elsewhere $X, our price $Y"), the goods or services compared should be exactly the same, not just similar. The business should also be able to substantiate the comparison by identifying where its customers can purchase those goods or services at that price.
- Sales: In the mind of the consumer, the word "sale" means an opportunity to buy goods at reduced prices for a limited time. There are many different types of sales. All sales, however, imply that a lower price than usual is being charged and you should expect that any goods or services a business promotes as part of a sale are priced below normal levels. If a sale does not include stock already on sale or discounted, then this must be clearly disclosed. Likewise, a business should make it clear if a sale is limited to certain products.
- Special offers: Businesses advertising "special offers“ or "specials" must be offering something genuinely special – such as lower prices, add-on or additional features – or they risk misleading consumers. Businesses may also mislead you if they advertise a special offer widely but only a few people are able to take it up. A business must clearly state any limitations or qualifications to a special offer, such as if there are limits on the number of items per customer or if there is limited stock available.
- TheMarket Club, Subscription: Buyers/customers who subscribe to the Subscription Programme (TheMarket Club) are entitled to have free shipping on all orders that meet the requirements (e.g. minimum spend) set by TheMarket.
Criteria for using advertising terms
- Now Only $30, Hot Deal, Sale, Promo, Deal, Special Offer, Specials, Was/Now: All imply a temporary saving. More detail around price establishment in next slides
- Hot Price, Only $30, Our Price, Offer, Our Offer: Do not imply a saving. These terms can be used at all times to portray a price preceptor or what we think is everyday value. No discount, sale or special offer is required to use these terms.
- Clearance: For use when the line is to be cleared, so this is not a temporary saving on the establish price and the intent is that the price will not go back up again.
- Why Pay, Elsewhere: Only use if the required comparative price checks have been done.
Criteria for advertising an offer
Claims made about price should never mislead the customer. Therefore, a fair and reasonable amount of product should be included when advertising an offer such as a deal, promo, special offer or sale.
For Example:
- When advertising a deal, the majority of products included in the advertised bucket should have some sort of special price applied. If this is not the case, we should advertise the promo as ‘selected lines’
- If using an “up to” message (like “up to 50% off selected Clothing”) then at least 10% of the lines on SALE should be 50% off. In addition, there should be a reasonable volume at other discounts
Note a group of products with WHY PAY / ELSEWHERE prices is not a “Deal” as no discount is applied, just comparative pricing. Functionally to display comparative pricing is not currently available.
Price Establishment
What is price establishment and when can a saving be claimed?
- An established price is the everyday retail price an item is available to the customer for more than 50% of the time.
- It takes 28 days to establish new products ‘everyday retail price’ before a claimed saving / discount is advertised.
- After advertising a saving or discount, the item then needs to be sold at its ‘everyday retail price’ for at least the same length of time to re-establish, before another saving or discount can be advertised.
- The maximum length of time a saving or discount can be advertised for is 28 days.
- If the merchant has already been selling an item in New Zealand for 28 days prior to the item coming on TheMarket the price has already been established. If an item is NOT already available in NZ the Merchant needs to price establish their products for the first 28 Days.
Examples:
What types of savings and discounts price establish?
Saving or discount examples that will price establish:
- Strike through (example 1)
- Having a "Was $10.00" / "Now $9.50"
- Note: on TheMarket we do not display the words Was/Now on Product Display or Product Detail Pages, maybe used in banners
- Showing a % off in cart (example 2)
(These will all establish after being on offer 28 days)
What types of savings and discounts do not price establish?
Conditional offers where the customer needs to meet certain criteria before qualifying for the discount, such as:
- Minimum spend criteria where the single unit price for an individual item never changes.
- Bundle deals where the single unit price for an individual item never changes.
Example: The merchant has not displayed a was/now or strike through, but they have advertised a SAVING in the product description. This is OK provided the items are available for individual sale.
Intro offers
An Introductory offer is when you introduce a new product at a lower price than what the everyday retail price will become.
Criteria for advertising an Intro Offer:
- State when the Intro offer ends
- State what the price after the Intro offer ends will be (After sale price)
- Cannot use the words “Save”, “% off” or “Was / Now” as has not yet traded at the higher price
- After the introductory period you must then trade the line at the higher price (the ‘After Sale’ or ‘Everyday retail’ price) for at least 28 days to ‘establish’ it as the normal everyday retail price
- The quantity purchased should be in a volume that it is not expected to sell out before the introductory offer period has finished.
Example:
Misleading Examples
A business that makes a discount claim it might mislead consumers if:
- it does not charge the "usual" price
- the 'usual' price is made up only for comparison purposes
- the claimed usual price is one of many prices at which the business commonly sells the good or service
- the claimed usual price is out of date
If a business routinely sells products at a promotional price, then the promotional price becomes the usual selling price. It would be misleading for a business to keep claiming it was discounting a price when the discounted price had become the usual selling price.
Clearance & Permanent Mark Down
- Current state on TheMarket is no identification for clearance products e.g. tag, filtering, navigation. This is currently being reviewed for future state.
- A merchant should only advertise a product as ‘Clearance’ if they are genuinely clearing the product. e.g. would be misleading if they advertised a product as ‘Clearance’ but were still ordering the product from their vendor with the intent to keep selling long term.
- Once an item has moved to Clearance it should never go back up in price. It can continue to get further Mark Downs if needed for sell through purposes. You can still run a temporary promotion on Clearance, the same price establishment rules apply. For example, further 10% of clearance price for X days.
- ONLY show the now Clearance price after it has been at Clearance for 28 days, and no longer show the original or was retail price.