Thursday, August 23, 2007

Bait & Switch, PETA, and the way it is...


A lot of people consider PETA protests against killing fish (because the fish feel pain) to be silly. It's not that there is a disagreement about whether fish feel pain, it's the fact that most people don't feel bad about it. I mean - we gotta eat. It's the way it is. So those who stand as advocates for the plight of fish are not taken seriously - especially by fisherman. It would be bad form on the part of fisherman or people who eat fish to publicly celebrate the pain they cause, so you don't see much of that.

In the retail auto business (also true for other products), there is no doubt that the most successful advertising tactic is "bait and switch". The dealer features a car at an extremely low price, often considerably less than the vehicle's wholesale cost. The number of vehicles available is much smaller (sometimes just one) than the demand. In addition, the "ad car" is handicapped in some other way - maybe it's a manual transmission (not disclosed), or maybe some other undesirable (also unexpected) quality. How about "you have to pay for it right now with a cashier's check - no financing and no deposits can be accepted." The most common theme is "the ad car is sold - sorry - but we have these others".

You get it... bait and switch. This is a nasty phrase because it suggests a deceitful practice. Consumer watchdogs, government agencies, advocates, and the consumers themselves (once they experience it - if they understand what has happened) consider this a no-no, and it is (if proven) against the law, but alas it's very difficult to prove. In the end the remedy (if pushed hard enough) is usually a settlement by the dealer. Dealers who are good at this will deny it. In some cases, they have actually convinced themselves that they are not deceiving the customers.

You go to buy the 42 inch plasma for $499 or the laptop for $299 - it's just not going to happen. You see; this is what is necessary to "drive traffic", the merchant will say. They know exactly what they're doing. It is the most successful tactic. Some of the most prolific producers in the country are adept practitioners. Yes - there are other strategies and some are effective, but clearly none as effective (with commitment) as this. Let me back up to PETA...

The merchants who apply these strategies see the argument against them in a similar way to how most people see the PETA protests. "I mean - we gotta eat. We have to drive traffic. It's the way it is. Nobody ends up getting less than they pay for. We don't force anyone to do anything. " So those who stand as advocates for the plight of consumers in this situation are not taken seriously by merchants. It's just the way it is out on the open sea.

Maybe you feel like this technique is "just wrong". Maybe you think you would be offended if you were massaged into a transaction by this approach. The fact remains, it is highly effective and will likely remain so. Some manufacturers (Honda for example) have taken steps to prevent it. Honda prohibits advertising of prices below invoice. On the surface, this seems like a noble effort, but in fact (unfortunately) the policy was poorly constructed and in many cases is viewed as PETA-like by the big retailers. Some of those who became wildly successful by using this tactic have gone as far as eating the financial and other penalties dolled out by the manufacturer for violating the policy. That's how important it is to drive traffic. No - it's not the only play, but it's a good one.

Does that make these aggressive, committed to the strategy, no-guilt feeling dealers bad people. I say it does not.

"If it's hanging there and it looks like a very tasty meal and in fact it looks much tastier than any others I've seen, and even though I know it seems too good to be true, and even though I vow to spit it out if it turns out to have a hook in it - I'll bite".

We can't blame the fisherman, can we?

Edmunds article

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