Consumers are always pricing sensitive when buying products or services. Price is the ultimate factor for consumers when choosing a vendor or retailer. Price management is an essential strategy that increases productivity, generates higher returns on investments (ROIs), and boosts customer loyalty.
Price shapes customers’ perceptions and attitudes toward different brands. Large retail companies like Target and Walmart have implemented low-pricing models, allowing customers to visit their stores frequently and purchase products at the most affordable prices. On the other hand, small businesses crumble due to intense competition and the inability to implement price matching policies.
What is Price Matching?
Price matching refers to matching a lower product price from a store in the competitive market. For example, a retail store that sells you the same product for a lower price. Companies use this strategy to save time and money because customers get the lower price available without visiting another store or shop.
It is also an integral part of e-commerce pricing. Retailers use this strategy to offer the best price to their customers. The purpose is to improve customer loyalty, leading to increased brand trust and higher ROIs. Bear in mind that this strategy is based on varying policies. Some stores match the lower price, while others make efforts to beat it.
When thinking about a price match policy, it is crucial to distinguish between two purchasing forms. The first one focuses on a free-standing action, such as purchasing a newspaper, a pint of milk, or a cooker that consumers buy repeatedly, and each involves an individual transaction.
The second one focuses on the purchasing decision and is about an ongoing supply of products or services, such as newspaper subscriptions and mobile phone services based on a contract. The former type is a “noncontract purchase,” and the latter is “contract purchase.”
Companies differ in their price match policies. Therefore, we recommend visiting their official websites to get all the necessary details before visiting their stores. Stores use different ways to implement price match strategies, such as:
Standard Price Match
Standard price match refers to setting the same price for the product as the competitors. However, companies implement this strategy when their competitors offer a lower price on products or services.
Price beat is another way to sell your products for a lower price. It means selling your products cheaper than your competitor. You can use a fixed amount, difference, or percentage margins for your price beat strategy.
Already Purchased Item
You can price match an already purchased product. For instance, customers can get refunds based on the difference between the amount you paid and what other companies offer.
Price protection is another way to implement a price match policy or strategy. It allows a retailer to match its own price. For example, if the store reduces the price in a specific period after you have purchased the product, the store will refund the difference when you request the staff.
Companies use price match policies to improve their business operations and attract more customers. Price match policy is an excellent way to increase brand loyalty. It focuses on matching the price of the same product to your competitors.
For example, if your competitor has a low price on a specific product, you will lower the price or at least offer the same price. Here are the benefits of implementing this type of strategy. Continue reading!
Higher Success Rates
When you implement a price match strategy, you can grow your business. The results of a price match strategy are evident after a short time. It is crucial to assess the long-term implications, requiring business owners to understand the trend and their position in the retail industry.
You can make informed business decisions when you get more information and improve your knowledge about your industry and competitors. As a result, you can increase your success chances in the market.
Increased Consumer Confidence
A price match policy can increase consumers’ trust in your brand because they believe your company has the best interest in their favor. Customers are savvy today, meaning they make informed decisions based on different prices, such as a company’s reputation, honesty, and fair pricing. Therefore, it is essential to implement a price-match policy if it is profitable for your company and your customers.
A price match strategy can benefit shoppers at the detriment of your retail store, leading to an excellent faith initiative. Although you have listed higher prices for your products, you will lose out on a few dollars to attract shoppers and instill a sense of trust in their minds.
That way, your customers will have the confidence that your company looks out for them, increasing the chances of repeat visits to your store or website in the future. So, a price match policy is directly proportional to creating loyal customers.
The increased sales figure is one of the primary benefits of using a price-match strategy. If your goal is to increase sales and generate higher ROIs, we recommend implementing a price match policy to achieve your goal.
Successful retail businesses always think about a price match policy from the shoppers’ perspectives. For example, a shopper wants products from your company but finds out that your competitor offers them for the same or lower price.
That’s why the shopper will prefer a company or store that offers a much better price. It is a straightforward concept that you need to understand if you want to increase your sales. On the other hand, if you don’t offer the same price, your customer will walk away and purchase the product from your competitor.
So, a price match policy plays a crucial role in increasing or decreasing your sales because it depends on how smartly you interact with your customers and offer them better products for a lower price.
Although a price match policy has many benefits, it also comes with various downsides. For instance, Amazon is the biggest online company that does not offer price matching. On the other hand, it focuses on aggressive repricing to stay competitive in the market. Anyway, here are some of the downsides of a price match policy.
Margins are an essential factor that plays a crucial role in your entire business. A price match policy can lead to margin degradation and cause financial problems for your company. For instance, when you price your products competitively and set a large enough margin, you can cover operating costs and generate profits.
However, when a consumer visits your store and tells you that your competitor offers the same product for a lower price, you will match that price. However, this will significantly decrease your margin, leading to declined profitability. So, this is not beneficial for your business operations and financial stability.
Remember, different retailers have different operating expenses, meaning if one company benefits from a price match policy, the other may not take advantage of it due to high operating costs.
Moreover, it is crucial to protect your margins through price control without matching them to your competitor’s pricing. The purpose is to improve your margins and create a balance, leading to stable profits.
Risk of Price Wars
A growing body of research evidence shows that a price match policy can cause a massive price war between companies. Price war occurs when companies struggle to set the lowest price. For instance, when you match your competitor’s price, your competitor will further lower the price. That way, you will make efforts to match the price again, and the cycle continues.
So, this continued cycle can hurt your margins and profitability. For example, if you sell a product for $20 and your competitor sells it for $15, you will match the price and lose $5. Likewise, when you sell the same product for $15 and your competitor sells it for $10, you will further lower the price. It means you are cutting your profits and destabilizing your financial position.
Probability of Losing Customers
Besides price wars, another disadvantage of a price match policy is losing customers to competitors if you fail to implement or carry out the policy adequately. Sometimes, it encourages your customers to visit your competitor’s store and buy the same product.
A price match policy allows your customers to visit and check your competitor’s prices. For example, when you don’t want to lower your prices further to maintain your margins, but your competitor does this, you will lose your customers. Therefore, a price match policy can pose risks to your business.
Moreover, a price match policy is beneficial for larger retailers like Walmart because it has a larger market share than its competitors. However, if you run a small business, this kind of policy may not benefit your business operations.
Price Matching Examples
Large corporations and companies, such as Walmart and Target, have implemented price matching policies to attract more customers. It is an excellent way to save money and time on grocery shopping for consumers.
For instance, consumers can get the best price at a store instead of running around the town for discounts, promotions, and deals. Here are a few examples of why the market’s most prominent players have implemented a price match policy. Keep reading!
Walmart is one of the most popular and biggest retailers that benefit from a price match policy. It is an integral component of the company’s price management strategy. However, recently, the company has started matching prices from its own websites.
Reports show that customers that shop at Walmart still get the best price but on a limited number of stores. Walmart changes its price management strategies from time to time, leading to improved business operations and higher profitability.
At the same time, the company focuses on its customers, allowing them to purchase its products for a reasonable price. A price match policy has benefited Walmart and its customers for many years, and the company makes efforts to maintain customer loyalty.
Unlike Walmart, the price match policy at Target is more generous, providing in-store price matches for over twenty-five competitors, including online retailers like Sears, Kohls.com, and Amazon. Customers call the company’s guest services for price matching.
Moreover, Target matches prices on products customers have already purchased within the past fourteen days. For instance, if you have bought a pair of blue light glasses for $100 on Monday, but on Thursday, you come to know that the company’s competitor sells the same product for $65, you can contact Target for a price adjustment. Thus, Target will refund you the extra $35.
Unlike many other large companies in the market, Home Depot has a simple price match policy. For example, if a customer finds a lower price on a Home Depot product, the company will guarantee to match the lower price.
Likewise, if you shop at this company, Home Depot promises to match the price on its competitor’s website, including the cost of shipping. Remember, this deal applies to products available on the competitor’s website.
On the other hand, Home Depot focuses on price management policies and makes changes from time to time, allowing it to set the best price possible. The company limits its price policy in different ways than other stores do.
For example, it does not offer a price match on open-box, used, and reconditioned products. It also does not include rebates, freebies, financing, and bundles in the company’s price match policy.
Staples is another popular business that focuses on implementing a generous and sophisticated price matching policy. It is a famous retailer that values its customers and makes efforts to implement customer-friendly price match policies from time to time.
Staples goes one step beyond its price match policy. For example, it offers a 110% price match guarantee, meaning if a customer finds a lower price, the company will refund and provide a 10% discount on the same product.
For example, if you buy a product for $50 at staples, and you find it on sale for $30 at another store, Staples will give you a discount of 10% and sell you the product for $27. So, this saves you $3.
Furthermore, Staples makes efforts to match prices for many businesses with retail stores and an online store under the same name. However, it also matches prices from Amazon, even though the company does not have a chain of physical stores.
Price Matching Ideas for Consumers
Price matching is when a retail store sells products for the same price as its competitors. Here are a few ideas for consumers.
- Make your list of items with flyers and phone applications close by
- Go through the flyers found in the community news
- Circle the products and write down the retail store name next to the item on the list
- Know the retailer’s policy and bring it with you
- Bring your flyers and save the items on your smartphone or tablet application
- Inform the cashier about price matching and coupons
- Ask the store’s staff how they will like you to sort or organize the items for easy checkouts
- Buy the correct product or item and ensure you read the fine print to match the exact same product, size, model number, or flavor
- Although finding coupons for fresh items is a challenging task, you can price vegetables and fruits
- Do your prep work in advance to ensure your shopping trip is easy and quick, leading to successful checkout and saving a lot of money
Moreover, if a competitor offers a lower price on a specific product that a company carries in its store, show it a receipt or ad, and the company will sell you that product at the same price. The store will match the competitor’s price during the effective date of the ad or within seven or fourteen days of the date of the receipt.
Remember, this is just an example because each company has its own price match policy. Some stores require consumers that the item must be identical, such as the same brand, size, shape, or attributes. Some companies even reserve the right to determine comparable items for produce, bakery items, and meat.
Price management is an essential practice for retailers that offer the same products to their customers. However, it may or may not work for some companies. Large retailers match prices to offer their customers purchasing confidence, increasing their brand loyalty.
Today, it is a common practice for shoppers to compare prices before purchasing products or services. It is wise to establish a sophisticated price match policy and consider the profit margins before implementing it. Otherwise, you will experience price wars cycles that lead to decreased profits and ROIs.
On the other hand, consumers must ensure the identical product is in stock at your competitor’s store and present sufficient information of your competitor’s price using different channels, such as flyers, printouts, photos, or websites. That way, they can benefit from a company price matching strategy or policy.pricing strategies