Advertising is an integral part of any retail business and has a huge impact on the daily life of consumers. Advertisements are everywhere we go; public transport, the cinema, newspapers, billboards, radio, television, social media, retail shops, cafes and museums to name only a few. Consumers are exposed to anywhere between 600-5,000 adverts a day depending on their location and lifestyle.
Ads are designed to inform consumers about goods and services and use a variety of tactics to target designated audiences. Advertising has evolved quite significantly with the increase in social media and online global marketplaces, allowing more advertising on more platforms, veering away from the traditional forms we are used to. Adverts are there not only to inform, but also to influence or persuade a consumer about a good or service. Methods of influencing as a form of advertising has especially increased in popularity in recent years.
Virtually every retailer is affected by the Advertising Standards Code and is responsible for ensuring the content of all ads meet the criteria set out by the ASA and the Commerce Commission. Navigating these waters can be a bit tricky, especially because different consumers can interpret the same ad in several different ways. No matter the content, context or purpose, it is especially important to produce clear and truthful advertising. As the Commerce Commission says: “If you can’t back it up, don’t say it!”.
Advertising and pricing should be clear, honest and accurate
Consumers complain the most to the Commerce Commission about pricing, which equates to nearly a quarter (22%) of the 7000 complaints that are received each year. Of those complaints, they are mostly regarding online sales. A few basic principles to be aware of when it comes to advertising and pricing include:
- The overall impression is important
- Adverts and pricing can mislead by omission
- In most cases, intention doesn’t matter
- No consumers have to be actually mislead
- An advert or price can be true but liable to mislead
- You cannot hide important information in the fine print
It is important to keep in mind that different adverts can be interpreted differently to a variety of consumers. For example, “50% off!” can be seen to mean 50% off everything. Alternately, “50% off!” could be targeted at something specific, but without more detail it is misleading and confusing to customers.
Another tricky pricing and advertising tactic is the “was/now” pricing method. “Was $1000, now $700. Save $300!”. This type of pricing is incredibly complicated because it requires the retailer to be able to prove that the usual selling price was really $1000. The time frame for “usual selling price” is non-descriptive and can be vague, so it’s best to avoid pricing method if you’re not sure you can back it up.
The same principles apply when advertising prices for a sale. You must be clear about what products or services are on sale, what the regular selling price is, if there is a limited time, and if there are any terms and conditions. Advertising containing the words “sale”, “clearance”, “end of line”, “special offer”, or “limited time” are just examples of words that can mislead consumers regardless of intention. That is why it is extremely important to be clear in your advertising, and clear in your placement of ads within store or online.
What if I am unsure if my advertising or pricing is misleading to my customers?
If it is unclear to you whether or not your pricing methods or advertising methods around sales, special promotions or originally selling pricings is misleading to a customer, we are here to help! Get in touch with Retail NZ’s advisors and they will assist you. You can also visit the Commerce Commission website, or the ASA for more information on the Fair Trading Act, pricing, and Advertising Standards Codes.
To get in touch with an advisor, send us an email at firstname.lastname@example.org, or call 0800 472 472 (1800 128 086 from Australia)