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Catalogue Shoppers May Fail at 'Price Testing'

December 06, 1994|JUDITH SCHOOLMAN | REUTERS

NEW YORK — Not long ago, a catalogue shopper contacted a local New York television station, complaining that prices for the same item differed in two otherwise identical catalogues from the same mail-order company.

An investigation showed that, indeed, the same item appeared in three versions of the Victoria's Secret catalogue, each with a different price.

The "Shame on You" segment on the recent WCBS-TV news program found the identical silk suit was $149, $169 and $189, depending on the version of the catalogue.

Victoria's Secret, which sells lingerie, sportswear and dresses, told Reuters the price differences were a result of price testing, a practice it said is common in retailing.

A spokesman for Limited Inc., parent of Victoria's Secret, had "no comment on low set prices."

But the spokesman, Jonathan Basken, did take issue with "Shame on You."

"The local New York television program grossly misrepresented our price testing policy. No customer has or ever will pay a test price higher than our standard price," he said.

Price testing in Victoria's Secret catalogues involved "a small randomly selected group," he said.

How common is Victoria's Secret "price testing"? Catalogue experts say the practice, contrary to the contention of the Columbus, Ohio-based company, is rare.

"We've randomly spoken to eight or nine people, core to some catalogue businesses, and all do different things . . . price testing, maybe not, but maybe incentives to prospects," said Connie Heatley, senior vice president of the Direct Marketing Assn., a trade group for catalogues.

"Catalogue marketing is relationship marketing. You may have a sale or clearance catalogue and may not send it out to all customers, only send to a certain number because of (product) availability," she said.

While many catalogues are loath to call it "price testing," Heatley said, many will call price reductions on certain items "an incentive."

"If, for example, (a catalogue) is doing poorly in an area, they might put a price on products lower to encourage the sale and protect jobs and sales in an area," she said.

According to the "Shame on You" segment, the purchase of seven items from one Victoria's Secret catalogue cost $623. From another, the identical items cost $503.

An investigation of several of the company's catalogues showed a bra at $14 in one catalogue, and at $13.99 in another. Not a big price difference, but just enough of a psychological edge perhaps to entice a sale.

At Lands' End, the sportswear and outerwear mail-order company, "all pricing is the same in all our catalogues," said Charlotte Lacomb, manager of investor relations.

Law enforcement agencies take allegations of duplicate pricing seriously. While price testing to determine what consumers will pay for an item is not illegal, the practice of charging more for certain customers, such as those who are more affluent, is a different story.

The New York state attorney general's office "is reviewing this matter. . . . It's in very early stages of review," said Jeff Macklin, spokesman for Atty. Gen. G. Oliver Koppel.

He said the office is "determining the illegality regarding dual pricing. . . . I can't comment if any laws were broken with respect to pricing products and the like."

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