Showing posts with label unit pricing. Show all posts
Showing posts with label unit pricing. Show all posts

Thursday 17 March 2016

Unit-pricing: The 'missing' ingredient in price comparison

The latest Which? Report highlights the 'up to' 4x premium shoppers pay for the convenience of pre-sliced and pre-portioned foods. The price disadvantage of buying smaller sizes of other essentials is also highlighted.

Whilst retailers can obviously point out that in most cases the unit price is displayed on the price-label to facilitate like-with-like price comparison, the only problem can be the fact that many consumers do not understand the meaning of unit pricing, apart from the mental gymnastics required in breaking down 100g, kilos and volume-equivalents in the case of liquids.

In effect, the unit-price serves little useful purpose and may even add to the confusion of the shopper...and given that confusion leads to suspicion, it can be seen that the real casualty is trust in the retailer...

On-shelf education could be applied via a standardised category league-table of price per 100g comparisons, in very simple language...

Patronising? No way. We are not talking about degrees of intelligence, merely accepting that a busy, distracted shopper is only giving 10% of their attention to true comparison, based on a reasonable level of trust in the retailer...

Allowing the current confusion to continue can lose both trust and shopper...

Of course teaching consumer-shoppers to understand unit pricing makes the consumer better-informed and more difficult to mislead...

Welcome to the new world savvy consumer!

Professional NAMs already take that risk by helping the buyer to make valid like-with-like comparisons, thereby making them more demanding, but the current climate demands a fully informed supply chain.

Helping the 'buyer' to buy can help...

Sunday 20 October 2013

Second-guessing the Guesstimate: Getting the Unit-price Wrong at Tesco?

Following years persuading shoppers to attempt to compare like-with-like via the price-per-kilo addition to the shelf price, it would appear that a savvy shopper may also need to check the basic arithmetic of the multiplier...

According to an article in the Guardian, following the summer's 'strawberry court case', Tesco is once again allegedly getting its price-per-kilo labels on soft fruit wrong. Tesco's website apparently says its "Everyday Value" strawberries are £5.40 per kilo, but they are not. In reality they are a third more expensive at £7.14 per kilo.

The punnets are priced at £1.62 for 227g, with the label helpfully adding that the quantity of strawberries is equal to £5.40 per kilo. Now even those whose maths is pretty rusty can do a rough calculation – you get just over four 227g punnets in a kilo, so that is four times £1.62, which is rather more than £5.40
(i.e. £1.62/2.27 x 10 = £7.136).

The article lists several other instances, and quotes Tesco’s apparent replies to queries:
- “…as prices change all the time this figure is just meant to be a 'guide'."
- “…We'd like to reassure our online customers that no one has paid more for their berries than the listed price."

As often happens with corporate answers to consumer queries, answering the wrong question can be more damaging than correctly dealing with a genuine concern.

As most savvy customers increasingly familiar with price-comparison web-facilities will realise, a ‘per kilo’ conversion is a straight-forward arithmetical calculation that can presumably be locked to the SKU price in even the most basic computer systems i.e. there should be little scope for ‘human error’ once the new shelf-price is established…

Secondly, attempting to reassure the shopper that they have been charged the correct shelf-price is a reply more in keeping with the letter rather than the spirit of the law – a statement which is legally correct but misses the point that the shopper can be making a purchasing decision based upon the ‘per kilo’ comparison with other SKUs...

It might also be claimed that the ‘per kilo’ represents only pennies and should make little difference, except to a savvy consumer that has undergone years of persuasion that every little helps…

Thursday 29 August 2013

When less is not more: How small packs work out cheaper than bulk-buy deals

 Big pack
 Small pack
 Cathedral City Cheddar
 £6.98 (2x 350g)   
 £2.00 (350g)
 PG Tips tea bags
 £4.68 (160)
 £2.00 (80)
 Nescafe coffee
 £11.50 (500g)
 £5.00 (300g)
 Clover spread
 £3.70 (1kg)
 £1.00 (500g)
 Loyd Grossman Sauce
 £2.79 (660g)
 £1.00 (350g)
 Napolina Olive Oil
 £6.49 (1 ltr)
 £3.00 (500ml)   
 Mild cheddar
 £3.10 (400g)
 £2.05 (270g)
 Filippo Berio Olive Oil
 £7.59 (1 ltr)
 £5.49 (750ml)
 Absolut vodka
 £19.60 (700ml)
 £9.00 (350ml)
 Scottish Still Water
 79p (750ml)
 45p (500ml)
Source: Daily Mail survey

The mismatch tends to happen when supermarkets cut the price of small packs for a temporary promotion – or to match reductions at a rival. Whilst the mix-ups are understandable, the real issues are the impact on the savvy consumer-shopper and probable distortion of demand.

However, apart from an inevitable spike in small-pack sales for the duration of the price-cut, retailers need to monitor the effect of the resulting suspicion and lack of trust in terms of impact on shopping behaviour for the remainder of the shopping trip.

For suppliers, the issue is more about the extent to which the shopper blames the brand, rather than the store...

…and since you are probably picking up the promotion-tab, perhaps it is time to add multi-size analysis of unit prices to your promotional checklist in assessing the ROI on the initiative…? 

Wednesday 31 July 2013

On-shelf like-for-like price comparison – what’s the problem?

News that four retailers are moving to £/100g onshelf pricing is only surprising in terms of the apparent reluctance of other retailers to make no-brainer decisions…

Aldi, The Co-operative, Waitrose and Morrisons have made a quantum leap that will result in other retailers playing catch-up…

The savvy shopper
Consumer-shoppers are now better-informed than ever before…and they ‘walk’ when confused or suspicious. For anyone trying to sell them anything, this should be sufficient to encourage the seller to make the proposition and its comparison with available alternatives as easy as possible i.e. £/100g or £/100ml. The shopper is thus presented with a logical way of comparing Product, Price, Presentation and Place on a like-with-like basis, with emotion and other qualitative elements of the proposition playing their part in justifying any price premium vs. the competition.

Difficulties with multi-buys?
One excuse appears to be difficulties in expressing multi-buy offers on a £/100g basis…

When I buy a jar of my favourite coffee at the regular price, I occasionally check jar size for possible reductions i.e. ‘disguised’ price increases (people are counting pennies out there, can anyone still believe they are not checking value-for-money, 24/7, and are totally insensitive to pack-reduction 'short-changing'?).

At the same time, a quick check of the on-shelf price per 100g allows me to compare with other coffees. Incidentally, if there appears to be a uniform price increase across the category ‘to reflect ingredient cost-increases arising from a rainy night in Georgia, or Sao Paulo’, then I switch to tea-bags until the craving becomes unmanageable…

If I succumb to a 3-for-2 offer on a 200g jar that normally retails @ £5.80, I am getting three jars for the price of two 200g jars i.e. 600g for £11.60 = £1.93/100g, compared with the regular  rate of £2.90/100g, so I load up…

Simple, unless the retailer – or supplier – does not want me to make that comparison…
And if I even half suspect that this is the case, I am tempted to revert to tea-bags, at another retailer, along with the rest of my average £70/week basket…