Anchoring - A trick each and every auto dealership uses
When people make decisions, they generally adjust their outlook based upon a set perception, or anchor. Once an individual has built a mental image for point of comparison, that anchor tends to remain in place. This process of mental landmarking is called anchoring, and it is a retail salesperson's greatest weapon. While there is no single tactic to resist the mind's natural inclination toward anchoring, it pays to know how auto dealers use it to make high prices seem palatable. Knowing may help consumers to step back and take a look at prices with greater clarity.
An anchor within the automobile aisles
Marcy, an unsuspecting consumer with no knowledge of anchoring, ambles onto a used automobile business. Her old Toyota is holding up, but Marcy wants something new and more environmentally friendly. After a couple of minutes of looking, she finds a lovely hybrid car. She checks it out from front to back, sits in it and wonders if she may have found her dream auto. But the sticker price shakes her. That used hybrid car costs a whopping $ 24,998.
Cue the used vehicle salesman with the mustache and also the plastered smile. He asks Marcy what she thinks, and our heroine's words - "It's out of my price range" - plummet like lead balloons. She loves how she feels when she sits within the hybrid, but cannot get around that ugly price. What the salesman says next catches Marcy pleasantly by surprise.
'Don't worry about that. It's on sale right now for $ 14,000!'
Ding dong. She jumps at the chance to buy with such a discount. Unfortunately, she has fallen prey to one of the oldest retail con jobs in the book, writes You Aren't So Intelligent. Marcy didn't know the true money value of the vehicle, so the salesperson used anchoring to his advantage. The markdown he offered seemed tremendous to Marcy, but the sad reality is how the actual value of the vehicle was $ 9,997. The markup is what was tremendous. That anchor was a killer, and the salesman didn't have to do much. It just wasn't the best anchor for Marcy; it was designed to conserve the auto dealer's spending budget, not hers.
Haggle your way to a better price
Typically, the price we're willing to pay for an item has very little to do with the elements that would really contribute toward the specific value of a purchase. What the dealer says and what the true value is could be wildly different. The dealer works with two prices in an anchoring exercise intended to ensure the buyer.
When you allow a dealer to play psychological games with you, you are purchasing into a notion as solid as vapor. Haggle on the price and you also gain more solid footing. Control the game, instead of allow yourself to be controlled by anchoring. Be prepared with research before you purchase a car and haggle for a lower price at every opportunity. Experienced dealers will play ball with such a smart consumer.