Unit pricing is smart shopping practice, but do consumers care?

Prominent signage of unit pricing could help consumers make more informed choices about their grocery shopping. AAP

In the confusing world of brands, package sizes, advertising and price promotions, what can help consumers make informed choices? Unit pricing – the price per standardised unit of measure introduced in Australia in 2009 – might be the answer. But have the Australian consumers actually adopted this potentially useful information?

Professor Jordan Louviere from the Centre for the Study of Choice (University of Technology Sydney) and I conducted a simulated online supermarket shopping experiment to determine how presence or absence of unit pricing information on price signage influenced consumer choices of packaged grocery products. The results revealed that consumers largely ignored the unit pricing, instead using the main selling price to guide their choices.

Unit pricing

In 2009, Australia introduced the Unit Pricing Code that requires major grocery retailers to display information about price per a standardised unit measure (for instance, price per 100 grams) on every point-of-sale sign.

Unit prices often vary greatly, so the unit pricing information could be very useful to compare brands with different volume, to identify quantity surcharges when choosing different pack sizes of the same brand, or it can serve as a proxy for quality. (A higher unit price could signal higher quality.)

So, did Australian consumers actually adopt this smart shopping information? Or, did they continue to shop in the same “old” way, looking only at the most prominent number on the sign – the main selling price?

Experiment

To address this question, the researchers designed and implemented an online simulated supermarket choice experiment to test whether the presence of unit pricing information made a difference in consumer choices.

The simulated supermarket shopping experiment allowed the researchers to observe consumers’ choices without explicitly bringing their attention to the Unit Pricing information. A representative sample of 402 respondents over the age of 18 were recruited from an online panel provider. A between-subject experimental design randomly assigned each participant to one of two conditions: (1) price signs with unit pricing; or (2) the same price signs but without unit pricing information.

Each participant saw 16 choice sets (a simulated store shelf) consisting of three alternatives. (A screenshot from the experiment is in Figure 1.) In each set, participants had to choose the brand that they would be most likely to buy and the brand that they would be least likely to buy. They were also asked to indicate whether they would buy these brands in real life. Choice sets were constructed from photos of 12 real brands - including 2 retailer-owned brands - sold in Australia for two product categories: dry spaghetti and hand wash. Price signs were designed to replicate the signs used by one of the major Australian retailers.

Figure 1. A screenshot from the online simulated choice experiment

The simulated choice experiment. Svetlana Bogomolova

Results: the attitudes

At the first glance, participants displayed a surprisingly positive attitude to (and knowledge of) unit pricing. In particular, over 90% could correctly describe what the unit pricing information represents. Comparing unit prices of competing brands also was the second most commonly mentioned way to get the best value for money in grocery shopping. (The most common answer was “to buy on special”.) Buying private label brands and buying in bulk were the least popular ways to get value for money. Another 19% claimed they always used unit pricing in their usual shopping, and 32% said that they used it often (about 70-80% of time), with a further 21% claiming that they used it frequently (50-60% of times). Seems to be the good news for unit pricing so far - until we look at the choices made!

Consumer behaviour

The main finding from the simulated choice experiment was no difference between the group who saw the unit price information and the group who did not see it with the brand choices they made. (Figure 2 shows a very high correlation in the choices of the two groups.) This finding suggests that the group who saw the unit pricing information may have still largely relied on the main selling prices to guide their choices, not the unit prices.

Figure 2. Relationships between the choices in the UP and non-UP conditions

Consumer preferences for spaghetti. Svetlana Bogomolova
Consumer preferences for handwash Svetlana Bogomolova

The only difference between the two groups was slightly less consistency in the choices of the unit pricing group. This suggests either a) there was a small sub-group of customers who did use the unit pricing for some of their choices, or b) the unit pricing information caused inconsistency in some consumers’ choices.

But how could there be no difference in choice with and without the unit pricing? One answer lies in the disparity between what consumers actually do and what they think they do. 31% of the sample who were shown the unit pricing could not recall even seeing it. Perhaps more interesting is that 45% of participants who were not shown the unit pricing reported seeing it, and of those, 63% claimed that they used (the non-existent) unit price information in their choices.

Lessons learnt

The good news is that using unit pricing appears to be the benchmark of smart grocery shopping – a socially approved behaviour. Therefore, when one asks consumers if they use unit pricing in their grocery shopping, the answer will most likely be positive.

The bad news is that consumers largely overestimate how much they use the unit price information when making grocery choices. This is because of their generally poor ability to notice and recall their own behaviour, especially when the activity is as mundane as grocery shopping. This is a classic challenge of social marketing: positive attitudes do not necessary lead to a change of behaviours. This is particularly true because consumers do not realise that they use the unit pricing far less often than they think they do.

So, what stops consumers from getting more use of the unit pricing information? The non-prominent location of the unit pricing on price signage, coupled with a very small font could be some of the “show stoppers”. Indeed, the information presented with such a lack of prominence might look like a disclaimer to a novice or a busy consumer. So, addressing its prominence on the price signage could be the first starting point in encouraging the use of unit pricing as the useful tool for grocery shopping.