Car Sales or Con Men

My friend was looking for a new car recently and was drawn in by the ‘great deals’ advertised by car dealerships in the local area. However I fear she may have been conned by experienced sales people through a ‘that’s-not-all’ technique.

Let me explain. She was looking for a car and we all want a good deal. So she went into a dealership where I can be pretty certain she was exposed to a multitude of sales techniques including flattery, imagery and distraction. I think we can all empathise with the fact that buying a new car can be an unpleasant experience. But she prepared herself against these social techniques and was still caught out with a less than cheap deal.

Once she had decided on a car, all that was left was the price. What you must remember is that a sales person will never sell for a loss. You MUST negotiate (a lot). When you decline a sale and they reduce the price, they compromise. And the socially correct thing to do is reciprocate the favour and buy the goods. However the reduction in price is taking away from a sales person’s commission and therefore they want to avoid lowering the price by making the deal seem better. Cue the ‘that’s-not-all’ technique. (Working in furniture sales I’m guilty of this myself). By adding low cost items onto a sale you can ‘sweeten the deal’ providing the basis for a reciprocal reply. For her it was an additional insurance policy (these have HUGE profit margins because the likelihood of claiming is very low when you already have car insurance) and floor mats (worth £17.99). The cost of the ‘free’ additions was about £250. In relation to a brand new car, that’s about a 1% ‘saving’. Likely far less than if she had simply negotiated the price. And she didn’t want these things in the first place, they just meant more profit for the sales people.

So why was this terrible deal so effective? 

Research by Burger (1986) demonstrated the power of the ‘that’s-not-all’ technique. In this study experimenters used bake sales to see whether adding items to a fixed price sale increased its popularity. 66 people approached one of the three bake sale tables where no details of the prices were displayed. Participants were randomly assigned to a control group or a ‘that’s-not-all condition’. In the second condition participants were told that a cupcake from the table was 75 cents, however before the participant could respond, the two experimenters at the table had a discussion, and the participant was then told that the price also included 2 cookies. In the control condition, the cupcake and cookies were presented from the start as 75 cents. The results showed that participants from the ‘that’s-not-all’ condition purchased significantly more than those in the control condition. The graph below shows the number of sales from each of the two conditions:

 

Figure 1: The number of sales by condition

 So it turns out the technique from a 75 cent bake sale can apply to all sorts of sales, including those for expensive new cars. This example shows that the add on items don’t even need to be of similar value, as long as something is added by the seller, the deal is sweetened, making the customer victim to paying more than they have to. The social power of reciprocity can be successfully manipulated in the sales person’s favour.

I don’t think I’ll tell my friend about this. And I also won’t tell her that, although we have the same car, I spent far less, even if it did mean buying car mats for £17.99.

References:

Burger, J. M. (1986). Increasing compliance by improving the deal: The that's-not-all technique. Journal of Personality and Social Psychology, 51(2), 277.