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Report on Deceptive Pricing Strategies in Black Friday Sales

 

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1. Introduction

Black Friday, the day following Thanksgiving in the United States, has become a global retail phenomenon synonymous with deep discounts and doorbuster deals. However, a growing body of evidence from consumer experts, academic research, and regulatory bodies suggests that the perceived value of these sales is often an illusion. This report details the common deceptive strategies, the psychological principles they exploit, and the documented evidence supporting these claims, ultimately arguing that the Black Friday shopping environment is deliberately engineered to drive impulsive purchases rather than offer genuine savings.

2. Common Deceptive Pricing Strategies

2.1. Inflated Reference Pricing

The most prevalent tactic involves manipulating the “reference price”—the “original” or “manufacturer’s suggested retail price” (MSRP) against which the sale price is compared.

· The Practice: Retailers artificially inflate an item’s price for a period before Black Friday, only to “discount” it back to its normal or a marginally lower price for the sale event. This makes the discount appear more substantial than it is.
· Evidence: A comprehensive investigation by Consumer Reports (2021) tracked prices for a year and found that a majority of the so-called Black Friday deals were available at the same price or even lower at other times during the year. They concluded that the “reference prices” are often “fictional” and “inflated,” creating a “fake bargain” (Consumer Reports, 2021).
· Academic Support: Research in the Journal of Marketing has extensively studied the effects of reference pricing. One study found that consumers’ perceptions of value and their purchase intentions are significantly influenced by the provided reference price, even when they are internally skeptical of its validity (Compeau & Grewal, 1998). This “anchoring effect” is a cognitive bias where individuals rely too heavily on the first piece of information offered (the anchor) when making decisions.

2.2. The Illusion of Scarcity and Urgency

Retailers use high-pressure tactics to create a fear of missing out (FOMO), compelling shoppers to buy quickly without conducting proper research.

· The Practice: Marketing language such as “Limited Time Offer,” “While Supplies Last,” “Doorbuster Deal,” and countdown timers are employed to suggest that the opportunity and the inventory are fleeting.
· Psychological Principle: This tactic is a direct application of Robert Cialdini’s principle of Scarcity, one of the six key pillars of persuasion outlined in his seminal work, Influence: The Psychology of Persuasion. Cialdini’s research demonstrates that opportunities seem more valuable to us when their availability is limited (Cialdini, 1984). Retailers leverage this by creating artificial limitations on time and quantity.

2.3. Product Differentiation and Inferior Quality Goods

Some of the most heavily promoted doorbuster items, particularly electronics, are specifically manufactured for the Black Friday event.

· The Practice: Manufacturers produce slightly different model numbers with cheaper components to be sold exclusively at a low price on Black Friday. This makes direct price comparison with models sold during the rest of the year impossible.
· Evidence: An investigation by The Wall Street Journal found that many Black Friday TVs were “built with cheaper components,” differing from their seemingly identical counterparts sold at other times. This practice allows retailers to advertise a “$200 TV” that is, in fact, a $200 value, not a $500 TV being sold at a $300 discount (WSJ, 2015). CNN Business has published similar findings, warning consumers that the “deals are not always what they seem” due to these specially engineered products (CNN, 2019).

3. Consumer Protection and Legal Perspectives

Deceptive reference pricing is not just an ethical gray area; it can be a violation of consumer protection law.

· Federal Trade Commission (FTC) Guidelines: The FTC states that for a former price to be used as a reference, it must be a “bona fide” price. This means the item must have been sold at that price “regularly and recently” in the ordinary course of business. Inflating a price for a short period before a sale to establish a false reference point is considered deceptive (FTC, 1998).
· International Action: The U.K.’s Competition and Markets Authority (CMA) has been particularly active in this area. They have published clear guidance warning retailers that “was/now” pricing is misleading if the “was” price was not the genuine selling price for a meaningful period before the sale. The CMA has taken enforcement action against numerous retailers for such practices (CMA, 2021).

4. Conclusion and Recommendations for Consumers

The collective evidence from consumer watchdogs, academic research, and media investigations paints a clear picture: the Black Friday sales environment is a carefully constructed illusion designed to maximize retailer profits by exploiting well-documented cognitive biases.

The “deals” are often not the exceptional savings they are portrayed to be. While genuine discounts do exist, they are surrounded by a sea of misleading offers intended to trigger impulsive buying behavior.

Recommendations for Savvy Shopping:

1. Conduct Pre-Sale Research: Use price tracking tools and browser extensions (e.g., CamelCamelCamel, Honey, Keepa) to view the historical price data of an item. This reveals whether the current “deal” is genuinely a low point.
2. Ignore the “Original Price”: Focus on the actual sale price and determine if it represents good value based on your own research, not the retailer’s comparison.
3. Be Skeptical of Scarcity Cues: Recognize countdown timers and “low stock” warnings as the sales tactics they are. Take a moment to verify the deal is real before purchasing.
4. Research Model Numbers: For electronics, search online for the specific model number followed by “Black Friday” to see if experts have flagged it as a specially made, inferior product.

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5. References

· Cialdini, R. B. (1984). Influence: The Psychology of Persuasion. Harper Business.
· CNN Business. (2019, November 27). That cheap Black Friday TV may not be the deal you think it is.
· Compeau, L. D., & Grewal, D. (1998). Comparative Price Advertising: An Integrative Review. Journal of Public Policy & Marketing, 17(2), 257–273.
· Consumer Reports. (2021, November 18). The Truth About Black Friday Deals.
· Federal Trade Commission (FTC). (1998). Guide Against Deceptive Pricing.
· U.K. Competition and Markets Authority (CMA). (2021). Guidance on the CMA’s functions in relation to misleading pricing.
· The Wall Street Journal. (2015, November 25). The Black Friday TV Is Different.

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