Any retailer will tell you the rules and guidance that govern how we advertise products in this country can often be challenging. This is because the rules and guidance apply to so many different circumstances therefore it is impossible for rules to be prescriptive about every situation.
Therefore, when considering whether an advert is misleading you often find yourself considering, is the statement about my product a ‘reasonable’ assertion to make in the circumstances?
From our experience, the marketing message that causes a real headache for retailers is the comparison of their own previous price. The Advertising Standards Authority (ASA) have recently considered the question of price establishment i.e. the period of time the products were originally sold for before the price was discounted.
The Department for Business Innovation & Skills (BIS) Pricing Practices Guide provides that, as a rule of thumb, the previous, higher price should be the most recent price charged for 28 consecutive days. If not, then the basis of the comparison should be explicit i.e. if the previous higher price was charged for only 20 days, the advert should say so.
If the goods were not sold at the previous higher price for 28 consecutive days immediately before the promotion, it is necessary to consider whether the previous price can be considered a ‘genuine reference price’. The guidance states that the basis of the price comparison in terms of time should be reasonable, but what is reasonable will depend greatly on the circumstances. The guidance tells us that the following should be taken into consideration:
- Whether you could reasonably expect to sell a significant number of goods at that price
- The quantity of goods placed on sale at that price
- Whether goods were offered for sale at that price for a period of time that can be considered to be a genuine offer.
It is this final point that was considered by the ASA in a recent adjudication. The original higher price was offered for 14 days in one case and 7 days in two others. In each case it was clear that the original price had only been offered for sale for 14 and 7 days respectively. The ASA had to consider whether the comparison was appropriate.
The guidance provides that consideration should be given to whether there was sufficient time for knowledge of the availability to be acquired, whether a section of the public likely to be interested in purchasing the goods would have enough time to view the goods, make a decision as to whether to buy them, and then complete the purchase.
The ASA determined that the price which had been established for 14 consecutive days was considered to be a genuine reference price, however, in the case of the other advertisements, a period of 7 days was not sufficient to be a genuine price.
Although this ASA Adjudication does not create a precedent, it provides insight as to how the BIS Pricing Practices Guidance is being applied. Retailers that are faced with a similar situation would be well advised to take this adjudication into consideration when setting previous higher prices in their advertisements.