| |
|
 |
| |
One Price Selling?
Most people have an aversion to conflict and confrontation and, for some, negotiating the price of a house or a car raises the level of their unease.
Recently, a good friend of over 30 years called me looking for a price on a specific vehicle. I asked him if he wanted to spend time negotiating or whether he wanted to save time and let me give him my "best price". He opted for the "best price" approach, so I told him I could sell him the car for $25,100. How did he respond? He immediately gave me a counter-offer of $24,000!
Many surveys claim to accurately reflect the shopping behaviours and attitudes of car-buying consumers. But surveys can be unreliable; the results often favour the companies or groups that have paid for the surveys to be taken.
For instance, some surveys claim that the ratio of car-buying customers who want to negotiate, compared to those who do not, is actually about 2:1 in favour of negotiating.
Other surveys claim that consumers, regardless of age or income level, flat out don't want to negotiate. Admittedly, it would be significantly easier and more profitable for dealerships if purchasers just came in and paid our asking price. But, in reality, everyone haggles with dealerships over price.
Dealerships shouldn't be too critical about consumers wanting to engage in the negotiating process. After all, our industry has, over many decades, conditioned and encouraged would-be purchasers to make offers.
Purchasers always want to negotiate a better price than the first price offered (which is only human nature). Customers, even our personal friends, never believe the first price is the best price. How will first-time customers then ever believe that a one-price system does not contain some wiggle room?
Even if consumers could be persuaded to accept a one-price system, depending on market areas, 30% to 50% of all purchases include a trade-in. As a result, up to half of all vehicle purchases will require negotiation to determine what that trade-in vehicle is worth. I cannot imagine any customer accepting the first price a dealer offered on his/her trade-in.
In an attempt to simplify the car-buying process, to build trust and to avoid the negotiating process, a few automakers and dealerships have adopted, with some success, a one-price selling philosophy. If this strategy is so successful with purchasers, why hasn't it caught on with other automakers or been expanded with manufacturers that are currently using it? If consumers were rushing out to buy cars this way, you could bet that other manufacturers and dealers would eagerly jump on this bandwagon.
By its very nature, the act (or art) of negotiating is a somewhat adversarial process - sellers want to earn maximum profit by selling you a product or service; buyers want to pay the minimum price for those products and services. If a seller senses that you will pay any price, he/she will try to get the maximum amount of money. That's a seller's job, just as it's your job to negotiate the lowest price possible.
But, it's important for consumers (and dealers) to understand that negotiating with confidence and strength doesn't mean being rude, offensive or disrespectful towards the other party. Rather, it means that you understand how the buying process works. It also means that you're prepared to become fully engaged in a healthy, give-and-take transaction where both sides need to benefit. When you negotiate skillfully and effectively, you will earn the respect of the person you're negotiating with.
Today, the ability and impulse to negotiate is so strong that I cannot imagine it ever going away. Thanks to the Internet, consumers are now armed with more knowledge to negotiate than ever before.
Canada is a culturally diverse country, and it's becoming more so, all the time. Many, new Canadians originate from countries where negotiating is a common, everyday practice. These Canadians never expect to pay the asking price on any products and services - especially a large purchase item like a car. Not only new Canadians, but most long-time Canadian citizens as well, do not want to give up the freedom to negotiate their new car purchases.
Ken Shaw Jr. is President of the Toronto Automobile Dealers Association and is a new-car dealer in Toronto. E-mail comments to president@tada.ca
|
|
|
 |
|
|
| |
 |
|
Home Page
