As it appeared in the daily nation of May 12th 2015
Various studies have shown that customers are willing to pay a little more for a better experience, for better product quality and for convenience. It is no wonder that when we buy basic items such as water from a convenient store we pay more without complaining about it. We also pay more when we have a meal at a finer hotel, pay more for VIP tickets and pay more for genuine products. However, I often wonder is the price we pay always right? Do we always get value for our money? What is the possibility that we might find the exact product at a similar store for less?
When we travel by air it is likely that the people sitting next to us paid half the price or even double the price. This does not often concern anyone because the pricing model for airlines is just too complicated to comprehend. The same cannot be said of other good whose pricing models may be quite straight forward. For frequently purchased products such as milk, bread, detergents etc our expectation is that retail stores use the recommended retail price. We may often not recall the price or even have time to compare. How genuine are retailers in their pricing model? Are the prices fixed or flexible and are the consumers aware of this?
I have come across retail stores that are willing to sell to you an item for a lower price if the same item is available elsewhere at the said price. As Kenyan consumers do we have this luxury? A few days ago, I decided to test if this would work. I went to a stationery shop at one of the malls; the quoted price for a toner at one store was Ksh 5,700. I sought to find out from the staff if they were aware how much a different store a few meters away was selling the toner. They did not know and seemed not interested. After all they were not responsible for pricing and their prices are fixed. I decided to counter check at the other store. To my surprise, the toner had no price label and the sales staff quoted the price at ksh 6,000. After mentioning the price at the other store, the sales person immediately offered the toner at ksh 5,000. I did not expect the offer, in fact, I felt cheated because in the past I have not bothered to compare prices or even ask for a discount. I wondered how such a huge instant discount (17%) was possible. Was the item overpriced in the first place?
Overpricing may be commonplace. I recall one evening having a conversation with a vendor at Maasai market who excitedly told me that he had just sold a T-shirt for Ksh2,500. I paid him Ksh 800 for the same T-shirt. Off course this was after some bargaining characteristic of Maasai market. I however often wish they could just price the items right. A few days ago, a major retailer had a mega sale. On the flier was the caveat that the items on sale were sold “as is” with no right to return or exchange. Again I wondered was the 50% price right if consumers had no right of return?
Lucy Kiruthu is a Management Consultant and Trainer and can be reached on email@example.com/old or via twitter @kiruthulucy