Behaviour Change

PROPAGANDA FOR CHANGE is a project created by the students of Behaviour Change (ps359) and Professor Thomas Hills at the Psychology Department of the University of Warwick. This work was supported by funding from Warwick's Institute for Advanced Teaching and Learning.

Saturday, December 10, 2016

The Art of Bargaining in Asia


 Asia is undoubtedly a shopper's paradise, not just in terms of the vast variety of products available, but also the prices which are incredibly accommodating to modest shopping budgets of students like me.

Only in countries such as China, Hong Kong,South Korea and Thailand would you be able to find yourself shopping in a huge indoor/outdoor market teeming with literally thousands of tiny physical stores independently run by local vendors, usually selling wholesale goods like clothing, accessories or souvenirs at relatively inexpensive prices that depend on the whims of the owners (and yes, you WILL get overwhelmed,confused and lost at one point). Think of it as a mix between a huge multi-level mall and a bazaar, with the shops selling almost homogeneous goods.

 These markets are very popular with locals and tourists alike for a good reason - think scoring a dress pretty much identical to something you would find in high street fashion shops like Topshop for a fiver. A bargain hunter's dream? Well, only if you've truly mastered the art of bargaining in Asia, and be prepared to deal with some of the shrewdest salespeople you have ever met.







Dongdaemun Market (Seoul, South Korea)

Chatuchak Weekend Market (Bangkok, Thailand)

Haggling is actually part of the culture in many Asian countries and accepted, even expected by the vendors. I was fortunate enough to have my aunt ,who was quite the master at haggling the Asian way herself, to observe and learn from during our shopping trips together in such markets when I was young. Interestingly, several of Cialdini's (1987) weapons of influence and mental heuristics learned in class can be used to explain the intricate strategies and performances used by my very formidable aunt, which so mystified me back then. Here are a couple of important tips:


1. Don't fall for the first offer.

Sellers tend to state a grossly inflated price (depending on how much you resemble a clueless tourist). This quoted price functions as an anchor to skew our perception and judgment,especially when we are faced with a situation of uncertainty in estimating the true value of the good. The anchoring effect ultimately results in our evaluative estimate of the true price to be biased towards the opening offer (Galinsky & Mussweiler, 2001). This is due to the engagement of what Tversky and Kahneman (1974) called the anchoring and adjustment heuristic, where we tend to make insufficient adjustment from the anchor, such that our final offer at the end of the negotiation gravitate towards the initial anchor price (Tversky et al., 1974).
Even after bargaining, customers are fooled into thinking that they’re getting a deal when it is far from the case.

To counter this insidious anchoring effect, a general rule of thumb is to adopt extremely reluctant or shocked expression,and counter with an offer about 30-50% lower than the offered price,  providing a counter anchor.  

If possible, it is also good to keep in mind your reservation price, or best alternative to a negotiated agreement (BATNA), to factor into your counter offer. However,knowing your BATNA requires some research for the "market rate" on your part, so when it comes to more expensive items, avoid one-off bargains and take your time to go to a few vendors and compare their "lowest offer" prices. Knowing your alternatives will hence give you leverage in negotiations.

2.  Walk Away.

If the seller does not seem to budge much within 5 minutes,be prepared to shrug and walk away (this always gave me anxiety as a kid, because what if I can't find it elsewhere??), avoid spending too much time/energy haggling for one thing. Due to commitment and consistency effects such as effort justification (Aronson and Mills, 1959), where we may find it more difficult to walk away if we spend too much time and mental energy haggling due to a tendency to attribute a disproportionate value to an outcome we put effort into  achieving. In this case, we may think that the final price we get is a greater bargain than it actually is or improve our attitude towards the good to justify a high price.
Also, sellers may pull the "let me call the owner/manager" trick on you where they spend an interminable amount of time on the phone apparently negotiating for a discount on your behalf with their superior, and then ending with giving you an apologetic expression and offering you a slightly discounted price that may still be above your budget. Due to the “norm of reciprocity” (Gouldner, 1960), we feel obligated to return the favour and wish to restore equity by complying with a request made by the seller i.e. buying the good at the "final offer" price, whether you are happy with it or not.

All in all, adopt “I could take it or leave it” attitude throughout. Walking away is actually the key to finalizing many haggling exchanges in Asia, as the seller would most likely chase after you and offer you a much better deal rather than risking losing you to competition.
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As you can tell by now, it is quite a stressful and complex shopping experience compared to the constancy and transparency of fixed,mostly non-negotiable prices at chain and department stores. If you ever have the opportunity to visit such markets, by using the above strategies and adopting the most unyielding stance, you may still have a chance of not getting a sucker's deal, with the added bonus of walking away with a feeling of a tiny victory every time.

-Gladys Pea

References

Aronson, E., & Mills, J. (1959). The effect of severity of initiation on liking for a group. The Journal of Abnormal and Social Psychology, 59(2), 177.

Galinsky,  A. D. and T. Mussweiler, “First Offers  As  Anchors:  The  Role  of  Perspective-Taking  And  Negotiator Focus,” Journal of Personality & Social Psychology, Vol. 81: 657–669, 2001.

Gouldner, A. W. (1960). The norm of reciprocity: A preliminary statement. American sociological review, 161-178.

Tversky,  A. and D. Kahneman, “Judgment Under Uncertainty:  Heuristics  and  Biases,” Science, Vol.  185:  1124– 1131, 1974.


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