1. Making false claims to draw customers
As we all know, we advertise to attract customers to visit our websites, shops or try our products and services.
You can offer something at rock bottom price, in limited quantity or limited edition to draw customers. Quite simply, it's to have an irresistible offer that customers cannot say NO.
The greater your irresistible offer, the more buzz it will creates. The more buzz it creates, the more viral it will becomes and the more people you can attract. For example, McDonald's offering free 100,000 McMuffin or offering electric fan at $1.
Competition in business is fierce. It's either you get the person to give you his or her money or your competitors get it. Is this fear of losing the opportunity to make money from the next customer that causes companies to resort to doing everything to get customers to give them their monies?
After all, with no income, you cannot sustain your business.
While having cash flow coming in is important, we should not sacrifice our long term goal of building a reliable and reputable brand that customers trust.
2. Consumers Protection (Fair Trading) Act
I'm not sure about you, but I have no idea that if a price comparison is made between a reduced price and a higher price quoted for an item, then the higher price must have been charged for 28 consecutive days in the previous six months. How can I check that this is actually true? Unless I have bought the item 3 weeks ago and happens to see the same item selling for the same price but marked at reduced price. As a consumer, if I've not suffered any loss, I can't be bothered to report to the relevant authorities. And if I found out I've been cheated, at most I won't go back to the shop anymore. It's too troublesome to confront the shop and make a report.
I know that where a product is advertised to be sold at a discount, the discounted price must be lower than the usual and cannot be offered indefinitely. But how the hell do I know what is the usual price unless it's a regular item that I buy all the times.
Even with the Act, it's very difficult to check and monitor. Is the authority going to vet through the ads before approving for print? Are they going to implement a system to record each and every item a shop sells and monitor the pricing?
Perhaps some companies know of this loophole and so take advantage of it.
I remember a friend who commented that The Great Singapore Sale is not a sale. The retailers either bring out their old stocks to clear or they mark up the prices of items and then priced them to the original prices so that they look like a bargain.
P.S. Of course, there are retailers who are genuinely offering their goods at bargain.
For companies that resort to price fixing, they pray that their customers never find out. Otherwise, they will have problem explaining themselves and could find themselves telling one lie after another to cover up for their sin.
However, rather than be on tenterhook every day fearing the worse, isn't it better to be honest about your promotion?