Promotional savings claims


INSIGHT
Published
Apr 6th '23
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Savings claims are a common promotional tool. Marketers may wish to communicate the savings customers can make by using reference prices for individual products or services, such as “was £9.99”, or when promoting for a range,  such as “up to 50% off children’s clothing”.

 

Marketers claiming that customers can make a saving must ensure that they do not mislead by falsely claiming a price advantage.

 

Marketers should also consider the Chartered Trading Standards Institute (CTSI) Guidance For Traders on Pricing Practices when making saving claims.

 

  • Ensure the use of a reference price does not mislead

Marketers must ensure that any reference prices, such as ‘was’ prices, used to advertise the savings a consumer can make represent a genuine established usual selling price and do not mislead. When establishing whether a price is the usual selling price the ASA are likely to consider the following information:

 

  • The recency of the reference price
  • pricing history
  • sales data
  • sales and distribution channels

 

The sections below give advise on each of these factors.

 

  • Recency

Marketers must have evidence to demonstrate that a reference price is the genuine usual price. An ad for a necklace from Rosee Fine Jewellery was ruled as misleading because it stated that the product’s full price was £129.87, however,  product had not been sold for more than £25 within the 12 months leading up to the promotion (Rosee Fine Jewellery, 14 February 2018).

 

Prices used as a basis for comparison should generally have been the most recent price available, and the length of time for which a product was sold at the higher reference price will also affect the likelihood of an ad misleading consumers. Generally, the higher reference price should have been charged for a longer duration than the promotional price. The ASA ruled that a promotion on a laptop was misleading because the product was on sale for 32-days, which was significantly longer than the 21-day period during which the product was sold at the reference price (DSG Retail Ltd t/a Currys, 14 June 2017). See also Argos Ltd 06 June 2018.

 

  • Pricing history

The ASA are likely to take recent pricing history into account, considering the pricing history beyond the price charged immediately prior to the price reduction. Even if the product was sold at the reference price for longer than the advertised reduced price immediately before the promotion, if the pricing history indicates that the price had fluctuated regularly before the reference price was charged it may not be considered the usual selling price. If higher and lower prices are charged on rotation the higher price must be charged for a significantly longer period of time for this to be considered the established usual selling price.

 

If higher and lower prices are charged on rotation the higher price must be charged for a significantly longer period for this to be considered the established usual selling price. Ads for a mattress sale which stated, “HALF PRICE”, alongside a box with numbers counting down from £399 to £199 were ruled against by the ASA. Over the previous year, the mattress was shown at the higher price for 49.85% of the year, and at the lower price for 50.14%, and the price had alternated between the two each month. Because the promotional periods were essentially equivalent in length to the periods when the full price was charged, the ASA did not consider that higher price was the  established usual selling price (Dormeo UK Ltd, 13 October 2021).

 

Similarly, complaints were received about a sale for Simba mattresses.  The advertiser did not provide the ASA with any pricing history to demonstrate that the usual selling price was genuine, however, the complainant provided screenshots which demonstrated that the reference price of the product had fluctuated over a three-month period, and that the mattress had been on sale for 71% of the year. Therefore, the complaints were upheld (Simba Sleep Ltd, 21 September 2022). See also J Sainsbury plc, 06 June 2018.

 

Some promotions, especially where they involve products tailored to and priced for the individual specifications of the customer, have the potential to mislead. It is the marketer’s responsibility to ensure that the higher reference price they use to demonstrate a saving has been reasonably established. A promotion on bespoke window fitting was upheld by the ASA because, while in 2016 the products were sold at the higher price and the discounted price for roughly the equivalent length of time, the intervening periods between the promotions were not sufficient in length to establish that the higher prices were the usual prices (HPAS Ltd t/a Safestyle UK, 28 June 2017).

 

  • Sales data

The ASA may also consider the number of sales made at the reference price, and marketers should either be able to demonstrate that a significant number of sales were made at that price, or that the higher price was a realistic selling price.

 

When assessing ads for sales on multiple product ranges on Carpetright’s website, the ASA considered the CTSI Guidance For Traders on Pricing Practices, which stated, among other requirements, that whether significant sales were made at the higher price should be considered when determining whether the saving was genuine. Because certain product ranges in the sale had not sold any products at the undiscounted prices, the saving claims were considered misleading (Carpetright Ltd, 25 January 2023). See also HPAS Ltd t/a Safestyle UK, 28 June 2017.

 

  • Sales and distribution channels

The ASA will consider where an ad appeared and where the advertised product was sold at the higher reference price when assessing the likelihood of consumers being misled. Sometimes, prices for the same product or service can vary, depending on the sales channel, and prices in store can differ to those charged online. If a saving claim is made for purchases through one sales channel, the advertised reference price must be the usual selling price for purchases made through the same sales channel. For example, a reference price used online for a product previously only sold in stores is unlikely to be acceptable. A higher price which is only charged at a limited number of outlets is unlikely to be considered the usual selling price.

 

  • Making savings against RRP’s

Committee of Advertising Practice (CAP) Code Rule 3.40 states that quoted RRPs should not differ significantly from the price at which a product is generally sold. Advertisers should take care when using RRP’s to ensure that the price accurately reflects the price that consumers will generally pay for the product across the market. The fact that an RRP was recommended by the manufacturer is not in itself sufficient to demonstrate that this is the price that consumers will generally have to pay. See AOL on the use of RRP’s for more detailed guidance.

 

  • Ensure “up to” and “from” claims do not exaggerate potential savings

In the past the ASA has applied a rule of thumb that 10% of the products or services advertised should usually be available at the “from” or “up to” price based on the 2010 BIS Pricing Practices Guide. In 2016 the CTSI published updated Guidance For Traders on Pricing Practices. This guidance states that, when using “from” or “up to” to advertise a saving, advertisers must ensure that:

 

  • a significant proportion of sale items are discounted at the maximum saving
  • saving claims represent the true overall picture of the price promotion.

 

The CTSI guidance does not state what proportion will be considered a ‘significant proportion’, and the ASA will investigate this on a case-by-case basis. Less than 10% is unlikely to be considered a significant proportion by the ASA. An email for a sports supplement which stated “APRIL SALE UP TO 60% OFF PLUS EXTRA 10% OFF” was considered misleading because only 8% of the items available were discounted at 60% off, which was not considered a significant proportion (The Hut.com Ltd t/a My Protein, 11 October 2017).

 

When assessing whether an “up to” or “from” claim represents the true overall picture of a sale, the ASA is likely to consider the distribution of sale items across different price ranges. There should be a roughly even distribution of discounted products across all price ranges. Even if a significant proportion of sales items have the maximum saving, if these sale items are disproportionately in the lower price ranges, an “up to” or “from” claim is still likely to mislead. An ad for a January sale which stated “up to 70% off” was upheld by the ASA because the number of sale items which were discounted by 70% was 8.63%, which was not considered a significant proportion, and because the products in the sale were disproportionately from the lower price ranges of products sold by the advertiser (Better Bathrooms UK Ltd, 4 October 2017).

 

If an ad promotes a discount on products form multiple ranges or brands, the ASA are likely to expect that a significant proportion of product in all ranges or brands included in the same are available at the maximum discount stated.  The ASA investigated an ad which stated “Up to 40% Off” alongside images of multiple brands. Because the advertiser did not have the evidence to demonstrate that a significant proportion of the products were available with the full discount, and because no products for a featured brand were sold at 40% off, the claim was considered misleading (The Hut.com Ltd, 22 December 2021).

 

Marketers must have sufficient evidence to demonstrate that a significant proportion was discounted by the maximum amount claimed. An advertiser claiming that consumers could save “up to 40%” off cinema tickets had based the saving claim on an average price for each available type of ticket. Because it had used an average, it was unable to demonstrate that a significant proportion of individual tickets were reduced by 40%, or that there was roughly an even distribution of the maximum discount across different films, dates, times, and venues (Taste Marketing, 14 December 2022).

 

  • Do not artificially inflate prices

Marketers should be cautious when making a savings claim based on recent prices. The ASA upheld complaints about a supermarket ad offering a multi-buy offer on cereals. The product was priced at 97p per box between January 2015 and 5 July 2015, and at £1.38 from 6 July 2015. On 7 July 2015 the product was then included in a mix-and-match multi-buy offer of three packs for £3. The ASA considered the offer misleading because the £1.38 was not the usual selling price (Asda Stores Ltd, 4 May 2016).

 

  • Use the correct terms for introductory offers

If a marketer has not sold a product before and wishes to offer it at an introductory price which is lower than the intended standard price, they should make clear it is an introductory offer rather than discount. Using scored-out future pricing is likely to be considered misleading unless the ad makes it explicitly clear that the price is the intended future price, because this will imply that the crossed-out price is the established usual selling price. An ad which featured the crossed out “from” price of £1,728 was considered misleading by the ASA. Consumers would understand that the “from” price was the usual selling price, however, in reality, the product was new to the market, and the price promotion was an introductory offer (Emma Mattress, 16 March 2022).

 

Introductory offers must be clearly described as such. An Instagram story which stated, “IN THE STYLE BLACK FRIDAY” and “LIVE IN ONE HOUR WITH 50% OFF GET READY. YOU CAN’T MISS THIS” was considered misleading because it was not clear from the ad that this was an introductory offer (In the Style, 23 March 2022).

 

Marketers should state when the introductory offer will end. At the end of the introductory period, they should ensure the price is increased as indicated.

 

Source: CAP

 

Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.

 

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