Posted in Marketing and Strategy Terms, Total Reads: 515
Definition: Bait & Switch Pricing
It is an illegal practise of bating the customers by offering low prices to grab their attention and bring them to the stores where the seller offers and tries to sell more expensive products by portraying that the advertised low priced products have run out of stock. It is a fraudeulent way of luring the customers.
They are made to ponder upon the fact that they wil pay less for something which otherwise would cost more. There are multiple real life examples. Likewise the upto X% discount or End of season sales. All these are typical modes of making the customers buy what is there in the stock and avoid piling of old stocks of products because the spillover effects increase the overall cost of the seller.
Sometimes this mode of pricing is also used for creating an initial sale to increase the awareness about the product in the targeted market. The offers in such cases are provided for a short span of time.
It is way to promote substitued products to the customers and force doen a satisfaction with the available stock of products.
There are certain legality issues with bait and switch pricing. Depending upon what the laws are different territories, customers can sue the businesses for offering false prices. In such a scenario, the remuneration which has to be provided is many folds.
Example: - it is widely used in airline and hotel industry. Customers are tempted by the promotional offers and various advertising campaigns but they end up paying a greater amount as against the discounts mwhich are marketed by making a base fare compulsory, adding various service taxes VAT, making some services non-complementary, etc.