Do you Hate to Haggle? The CarMax TV Ad
Have you seen the CarMax “I hate to haggle” TV ad? It runs frequently in Southern California and probably also in any big metro area where CarMax has a presence. Let’s have a look at the popular Barista and Fireman commercial, featuring the “I hate to haggle” theme.
It’s true that many (if not most) Americans do hate to haggle. Haggling has been bred out of our culture. We see the price tag and we don’t question it. At least when the seller is cloaked in an impressive air of legitimacy. Sure we may haggle for a craigslist purchase or at a garage sale or a seedy used-car lot, but not at a fancy restaurant over the chicken parmigiana. Or at a modern, upscale and grand-looking used-car dealership. That’s the message and by all accounts it is working. CarMax is a big success with 140 locations and growing.
Clearly the no-haggle policy works for CarMax, but is it best for the customer? Well, it does relieve the customer of some of the downsides of haggling: anxiety, uncertainty about what the price really is, time spent, aggravation, conflict and contentiousness and the feeling of being at a disadvantage — having to fight for a fair deal. But does the car buyer get the best deal? Are they leaving money on the table? Are they missing out on the chance to make a better deal for themselves?
Should buying a used car be like ordering the chicken parmigiana? What’s the price of used cars these days? I scanned a few pages for the Burbank CarMax dealership and the lowest no-haggle price I saw was approximately $9,000. I saw one at $70,000 and many at $30,000 plus. Let’s just say we’re shopping for a rather modest 4-year old car at $15,000 which is below mid-range for this dealership. If we’re the buyer should we just order it up like the chicken parm?
First off, we confess a bias here, that we are passionately committed to making business people better negotiators. We believe that negotiation is a valuable skill: one that makes your life better, makes you better able to cope in the business world and makes you a more valuable employee to your organization. Haggling is an important form of negotiation – a rather simple form, that lies on the elementary side of a negotiation continuum that starts at non-negotiating and goes through bargaining to deal-making to relationship building and finally partnering. It’s helps to be a good haggler and the skill can be learned and practiced.
As a negotiator, the buyer should look at the CarMax no-haggle price with a degree of skepticism. How did they set this price? What is included/excluded in the deal? Is this the right price for me? Is it even the right price for the dealership? The salesperson?
If I were buying, I would certainly haggle. Maybe I won’t succeed at getting a lower price. But I will make them defend their price, see if there is any leeway, find out if there are any available “extras” (warranty, service, floor mats, better financing, turn-in or upgrade credit, trial-period). Just by saying “I like this car, but $15,000 is more than I wanted to spend” I might find out something of value. Maybe there is a better car choice for me. Maybe I’ll learn something about their mark-down policy after a car has been on the lot a while. Maybe I’ll even find out about a higher-priced car that better fits my needs. Or I’ll find out why this car really is a bargain at $15,000 – it fits my needs and wants, has high resale value and low total cost of ownership. And then if I do pay the $15,000 I’ll be happier with the purchase than if I didn’t haggle. I may learn something else entirely by how the other side handles the haggling process: maybe I don’t want to buy a car at all from this salesperson or from this dealership. Or maybe I’m not prepared to buy a car now at all – I can get by with my current clunker for another year.
Buying a $15,000 car is different than buying a $25 chicken parmigiana and don’t be convinced by a slick advertisement that the process should be the same. Of the two, only the car decision will remain with you for a long time. There are many issues beside the price. You may need to finance it. A buying mistake has much greater consequences. The dollars involved are much greater: one involves month’s of salary, the other you’ll hardly notice on your credit card balance. Resist the temptation to become a non-negotiator. It is not in your overall best interest.
Just to come full-circle I must admit that I will always negotiate on the chicken parmigiana! I may not haggle over the price but by asking questions of my server like “I’m considering the chicken parmigiana, is it good here?” I may find out something like this: “It’s OK, but the chicken Milanese is the house specialty and it’s really fantastic.” Or, “I served a few and it didn’t look up to par tonight – but the salmon special looks great.” On the other hand, I might hear: best in the city – can’t go wrong. And just knowing this will add to my enjoyment. I might “negotiate” the side dishes – even if the menu says “no substitutions.” And by building rapport and trusting the server’s suggestions, I’m sometimes clued in to some off-the-menu secrets and occasionally given free tastes or samples of deserts or drinks.
In the next piece for this blog space we’ll look at another commercial – one with an entirely different message from Priceline’s “The Negotiator” series.