Are Pricing Strategies Being Played In New Zealand? New Research Suggests, Unfortunately, So…

At an increasingly expensive time for consumers, new research carried out by the fully impartial price and product comparison site, PriceSpy, suggests inflation may not be the only contributing factor towards the rising price of consumer goods, with findings from a new study revealing manufacturer pricing strategies may also be at play.

PriceSpy’s research looked at average price points across three popular shopping categories listed on the site* and explored pricing strategies across big manufacturers and competitors.

Here are the findings:

Mobile phones

• The average price across the shopping category of mobile phones rose +13 per cent this year*.
• The average price across Samsung mobile phones rose +7 per cent, whilst its key competitor, Apple, increased +12 per cent.

Vacuum cleaners

• The average price across the shopping category of vacuum cleaners rose +8 per cent this year.
• Whilst the average price of Dyson vacuum cleaners remained the same compared to last year, competitor products differed:
  • The average price of Miele vacuum cleaners rose five per cent, and for Samsung vacuum cleaners, prices increased a whopping +29 per cent.

Smartwatches

• The average price across the shopping category of smartwatches rose +16 per cent this year.
• Apple, once again lead the race, with the average price of its smartwatches increasing by +28 per cent this year. The price increase for Samsung’s smartwatches was far less, at just seven per cent.
• For FitBit smartwatches, average price points surprisingly decreased, dropping six per cent.

Carl Lindholm, Head of PR for PriceSpy New Zealand, says: "Our research suggests that inflation may not be the sole factor driving price points up, as we are increasingly seeing competing manufacturers up their prices at differing rates, not only to each other but in comparison to the rate of inflation.

"For instance, our insights show a +13 percent rise in average prices for the most-popular mobile phones this year. While one would expect similar cost increases among competing manufacturers within the same category, our pricing data tells a different story. The average price of a Samsung mobile phone rose by seven per cent, whereas for Apple, the increase was +12 per cent."

“Unsurprisingly, the discrepancies in price increases were not limited to mobile phones, but also extended to vacuum cleaners and smartwatches. Carl added, "The observed differences in price increases indicate the presence of varying strategies being played amongst manufacturers.”

Carl continues: “For example, brand equity may be a contributing factor impacting price differences between manufacturers. When consumers hold a high perception of a brand, it can effectively drive price points up. Even if a manufacturer offers a very similar product for a lower price, consumers often feel more compelled to pay a premium for the brand with the brand with the strongest equity.”

“Additionally, manufacturers selling products perceived as premium may also deliberately increase price points using prestige pricing strategies, to help grow their profit margins. Furthermore, some of the price increases may also be a result of manufacturers who had not raised prices before the inflation rate rises, now having more room for price adjustments.”

“But it’s not just the manufacturers that are doing this, says Carl. “It’s everyone in the supply chain, so shipping companies and retailers are updating their pricing strategies, too.”

“And when we compare the price increases found in our research to the current annual inflation rate, which stands at 6.7 percent as of March 2023**, it’s unsurprising that many of the price increases we are witnessing are considerably higher."

But, consumers are fighting back on the price increases…

“In light of the price increases happening around us, we are seeing changes in consumer purchase behaviours, with Kiwis increasingly looking to buy less expensive alternatives,” says Carl.

According to PriceSpy, the most-popular LEGO product Kiwis have been looking to buy so far in 2023, is the LEGO Bonsai Tree, which sold for as little as $78 dollars.

In comparison to last year however, the-most popular LEGO product Kiwis were looking to buy across the same period of time was a LEGO Star Wars Imperial Star Destroyer that cost up to $1054.

“Essentially, this year’s most-popular LEGO product is 93 per cent cheaper compared to last year’s most-popular model. Whilst this is quite an extreme example, it still highlights how people are adapting their purchase behaviours to adapt to these more-expensive times,” says Carl.

2002 vs 2023 - Most-popular products by year

Carl concludes: “For consumers that really need to make a purchase at the moment, our key piece of advice really is to conduct important price research using a free comparison site, like PriceSpy. Such platforms help consumers find the best place to buy price-wise and offer people the ability to check a product’s price history, so they can decide whether ‘now’ is actually the best time to buy.

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