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Different Promotional Pricing Tactics Small Businesses Should Avoid 🃏


 

It’s a tough time for small businesses. Costs are climbing, customers are price-sensitive, and the pressure to drive sales can lead to desperate measures. The problem is that some popular promotional pricing tactics may increase short-term sales, yet can ultimately damage customer trust. For small businesses, trust is a lifeline; break it, and it’s nearly impossible to repair. Let’s explore the five pricing tricks that might seem clever but could end up costing your business much more than they’re worth. 

 


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Phantom Brands and the Illusion of Choice

 

Supermarkets have mastered the art of creating “phantom brands” to fill their shelves. These are private labels designed to look like independent brands, adding the appearance of variety while actually reducing true competition. 

 

For small businesses, attempting a similar trick with repackaged or slightly modified products under different brand names can backfire. Imagine a small specialty food store offering two “brands” of olive oil, both their own, but with different labels and slightly different prices. Customers eventually notice, and the sense of betrayal lingers. This tactic doesn’t create real value—it just limits choice, and customers are quick to catch on.

 

When people realise they’ve been “tricked” into buying from the same brand without an actual difference in quality or value, they feel deceived. This erodes trust and sends them looking for a business that’s upfront about its offerings.

 

Seasonal Promotional Pricing Discount Tactics That Aren’t Really a Bargain

 

Everyone loves a good sale, especially during holiday seasons. But here’s where the danger lies: seasonal discounts that aren’t truly beneficial can harm your business. Supermarkets often throw out flashy sales signs during holidays or at certain times of the year, but the items aren’t always better priced than before. 

 

Small businesses that rely on this tactic—promoting a “seasonal” sale without genuine discounts—risk disappointing their customers. If they compare prices and find little to no change, they may feel deceived and question the business’s integrity.

 

Imagine a small boutique advertising a “massive holiday sale” on their winter collection, only for customers to discover that the original prices haven’t actually changed. The lost credibility could be hard to recover. In pricing, honesty truly is the best policy.

 

Hidden Unit Pricing Strategy that Makes Price Comparisons Tough

 

Many supermarkets play with unit pricing to make it challenging for customers to know what they’re paying. By displaying prices per gram or per ounce instead of for the total amount, they make it harder for shoppers to compare and make informed choices. 

 

For small businesses, using hidden or unclear unit pricing can be just as damaging. Say a small coffee roaster displays prices by ounce for some blends and by bag for others—customers may feel that understanding the actual cost is a hassle, which might make them lose interest.

 

Clear, upfront pricing demonstrates respect for your customers’ intelligence and their need to know what they’re paying for. Small businesses often rely on regulars and word of mouth, so if prices are confusing, customers may assume there’s something to hide.

 

Shrinkflation that Offers Less Product for the Same Price

 

Shrinkflation is when a business reduces the size or quantity of a product while keeping the price the same. This tactic has made waves in recent years, with products becoming smaller, packaging getting deceivingly larger, and customers feeling left out of the loop. For instance, Australian supermarkets have reduced package sizes for various items without lowering prices, drawing criticism for their lack of transparency.

 

Now, consider a small bakery that has a loyal following for its generously sized muffins. One day, regulars notice the muffins are smaller but priced the same. Not only do they feel short-changed, but they also may lose trust in the bakery’s commitment to quality and consistency. 

 

Customers crave consistency. They expect the same—or better—value with every purchase. Shrinkflation, even when subtle, breaks that silent agreement and can drive loyal customers away.

 

Promotional Pricing Tactics that Trigger Impulse Buying 

 

Supermarkets know that forcing customers to walk past high-margin products on the way to essentials (like bread or milk) increases impulse purchases. But in small businesses, such tactics can feel more personal—and more manipulative. A local store’s charm often lies in its ease of access and personal connection, and customers value that straightforward shopping experience.

 

Picture a small neighbourhood bookstore that suddenly moves the popular titles to the back and places high-priced, niche books at the front. The regulars, who usually come for a quick browse, may feel the change is calculated to pressure them into buying higher-margin items.

 


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The Real Cost of These Mistakes in Promotional Pricing Tactics

 

Using these tactics might bring a short-term boost, but the damage to long-term customer loyalty is often not worth the trade-off. Small businesses thrive on relationships and trust, not just transactions. 

 

When customers feel misled, they’re likely to look elsewhere. They may also share their disappointment, affecting your business’s reputation in the community. With the digital age amplifying word of mouth, it’s riskier than ever to rely on tactics that aren’t transparent.

 

If you’re a small business owner feeling the pressure to boost sales without compromising customer trust, we’re here to help. Let’s talk about how you can create fair, transparent pricing that builds loyalty and drives growth.

 


For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.

 

Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 8607 7001.

You can also email us at team@valueculture.com if you have any further questions.

 

 

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