Decision-making in human beings where comparisons are being made is largely based upon mental waypoints called anchors. Once an individual has established an anchor to compare related circumstances against, that anchor tends to remain set within the individual’s mind. This process of bias is called anchoring, and also the retail sales industry uses it to great advantage when dealing with consumers. The human brain will fall back on it if countermeasures aren’t prepared in advance. Foreknowledge of this natural tendency helps, particularly in places like the used automobile lot. Article source – Anchoring – A trick each auto dealership uses by Car Deal Expert.
Anchoring yourself with the dealer’s guidance
A prospective auto buyer who has never heard of anchoring – call her Marcy – walks onto a used auto lot. The old commuter works, but Marcy wants something new and exciting. Soon she sees it: a beautiful hybrid hatchback. Marcy kicks the tires, gives it a good look and begins to fall for this car. Yet the sticker price pulls her up from the umbra of her waking dream. That used hybrid car costs a whopping $ 24,998.
Enter used car salesman with reassuring grin. Salesman asks what she thinks, and Marcy shakes her head and says the price is out of range. Marcy loves the vehicle, but she hates the price. What the salesman says next catches Marcy pleasantly by surprise.
'No worries. That car’s on sale for $ 14,000!’
Ding dong. Without further thought, she hits the finance office, applies for an auto loan for bad credit and is eventually behind the wheel of her beloved new hybrid. As outlined by You Aren’t So Smart, nevertheless, Marcy has taken the bait for an anchoring con. As Marcy didn’t know what the automobile was really worth, the salesman could effortlessly use anchoring to play with her expectations. The markdown he offered seemed tremendous to Marcy, but the sad reality is the actual value of the car was $ 9,997. Out of control markup is what Marcy signed up for. That anchor was a killer, and the salesman didn’t have to do much. The deal was poor for Marcy and spectacular for the dealer.
Haggle, please
Typically, the price we’re willing to pay for an item has very little to do with the elements that would actually contribute toward the specific value of a purchase. What the dealer says and what the true value is could be wildly different. Dealers use anchoring to trap unsuspecting buyers.
A dealer given such room to play will part you from your cash. Haggle on the price and you 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. More experienced car dealers will always expect it.
Further reading
Wikipedia
en.wikipedia.org/wiki/Anchoring
You Aren’t So Smart
youarenotsosmart.com/2010/07/27/anchoring-effect/
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