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Every little helps? Not when you’re the pricing manager at Tesco

June 18, 2010
Watch the pennies and the pounds will look after themselves

Watch the pennies and the pounds will look look after themselves - open and honest pricing is better for the long term success of your business

 

To engender customer trust, pricing and positioning must be consistent, transparent and logical. At least, that’s what you might think but yet again, at UK supermarket Tesco, pricing is a dark art. Please bear with me as I take you through the labyrinthine thinking of Cheshunt’s finest price strategists… 

In a recent post at A Brand Day Out, we reported on how Tesco can sometimes not allow you to make proper comparisons during price offers. Our benchmark for this is the child’s favourite, the multi-pack of Mini-Cheddars, the cheese-flavoured biscuit snack. There are plenty of other examples to choose from, but this one makes interesting reading. 

In our recent post we discussed how a 7 pack multi-pack of these items was cheaper (per individual pack within the bigger pack) than if you bought a 12 pack multi-pack. This defies the logic of lower unit price per volume deemed by consumers to be fair. The price of this 7 pack was £1.00 – or £0.14 per individual pack. It was cheaper per pack to buy a multi-pack of 7 than a multi-pack of 12. Indeed, on that day, it was cheaper to buy two packs of 7 than one pack of 12… 

Yesterday, on undertaking our survey of pricing at a local branch of Tesco, we find that the 7 pack is now more expensive per individual pack than if you buy the 12 pack multi-pack. The 7 pack now costs £1.59 – or £0.23 per individual pack. The 12 pack was £2.54 – or £0.21 per individual pack. Ah, so a return to volume = lower unit price fairness? Great news! 

Well, not quite. Tesco, as everyone knows, trades on the line “every little helps” so, to help, they show you the individual pack price on the 12 pack (£0.21 per pack) but NOT on the 7 pack. However, if you were to check a seven-pack mixed flavour pack of Mini Cheddars (mixed flavours ?!?!? I know, it sounds vile) just next door in the aisle, then Tesco does show the individual pack price. But not on the standard flavour 7 pack offering. Why not? 

We believe that Tesco might not like to help you as much as it claims. There can surely be no justification for this singular aberration save this: cynical pricers lure consumers into buying a particular line and then, when they have got the customer hooked, they up the price and cream the profit. Perhaps I am being unjust but I cannot see another reason, can you? 

This would appear to be a practice of conditioning customers to behave in certain ways so that they can subsequently be taxed for their loyalty by a sharp increase in price (in this case by 59%). Who needs VAT on food when you can be taxed in this way? 

At A Brand Day Out, we disapprove of cynical pricing practices like this. We believe such practices abuse the trust of customers; in Tesco’s case, apparently exploiting a brand positioning of “trust” (“every little helps”) while actually creaming more profit from unsuspecting customers. Or, to be fair to them, maybe the price of ingredients suddenly went up this week for 7 pack multi-packs of Mini Cheddars and not the 12 pack? 

In business, customer loyalty is engendered by standards of behaviour which are honest, open and credible. Communicate properly with your customers, be open with them and help them make decisions and you will be rewarded. But attempt to confuse or even cynically abuse them and slowly but surely they will go somewhere else. 

The sad thing is that Tesco remains the UK’s largest supermarket – because clearly their brand technique works. No one can begrudge success but you can complain about the methodology. 

Have a good weekend shopping folks – but watch what you buy and see how much money you can really save this weekend. 

P.S. Do you have any particular supermarket pricing foible you want to report – then please comment on this item. We’d love to hear from you

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