The holidays are right around the corner, and for many people that means a stressful search for the perfect gift at the right price.
And even with all of the choices and information available to shoppers today, many will still lose when it comes to getting the best price for their gifts, says University of Colorado at Boulder Leeds School of Business Professor Donald Lichtenstein.
"No matter what information is made available to shoppers, most people still engage in surprisingly little search behavior before making a purchase," Lichtenstein said. "They have the Internet at their fingertips, and yet they're just as likely to buy from the first merchant they go to."
Retailers are well aware of this behavior, and go to great lengths to get shoppers into their stores and to assure them that they are getting a good deal. The truth, Lichtenstein says, is that consumers need to shop around.
"There is such variance in price for identical goods across retailers, and they are getting quite savvy in doing things to limit price search," Lichtenstein said. "So there's just no substitute for consumers doing their homework."
While there are plenty of good deals to be had during the holiday shopping season, finding the real values takes some work, according to Lichtenstein. And shoppers must pay attention to the numerous pricing ploys that await them.
For example, consumers should be wary of stores that offer price match guarantees, Lichtenstein says, because market research has shown that retailers that offer money back guarantees often charge higher prices.
"You'll see a store that says 'if you find a lower price within 30 days, we'll give you 110 percent of the price difference,' " Lichtenstein said. "They do this in lieu of lowering their prices."
Instead, they rely on consumers buying into the fact that they have already received the lowest price, so they don't need to search further, he said.
"Given that consumers engage in so little pre-purchase search, the odds that they will search for lower prices after the purchase is practically nil," Lichtenstein said. "So the retailers are better off charging the higher price, and then reimbursing the one out of 10 customers who price search."
He also cautions shoppers about reference price advertising -- was $99.99 now $59.99. In many cases, he says, the prices are inflated or fictitious.
"However, they have a very powerful influence on consumers, so shoppers should be careful," Lichtenstein said. "It may turn out to be a good price, but without a comparison you really don't know."
Shoppers also should be aware of what's known as "brand variants," where retailers have manufacturers create a version of a common product that is unique to their store. So when people try to comparison shop, they can't compare the product to anything else, because it is "unique." While it may seem like they are comparing apples to oranges, they're really comparing apples to apples, according to Lichtenstein.
"It's not costless to do searches, but if you want to get the best price, you've got to put some time into it," he said.
At the same time, some people are willing to pay higher prices to shop locally or because they enjoy the experience of shopping at stores that offer exceptional service.
"I always caution people that higher prices don't necessarily mean higher quality," Lichtenstein said.
Most importantly, Lichtenstein said, when people head out shopping they should remember that their dollars are what makes the system work.
"In a market economy, consumers need to reward retailers that provide the highest quality-to-price ratio, so those who don't will be forced to change their behavior or exit the marketplace," he said.