When was the last time you bargained at a market? I know, I know, for a many of us it is a terrifying prospect to not just say yes to the first price and be done. But what is really happening in a situation like that? Examining the most basic of selling activities will help you see marketing for what it really is: a human interaction based on assessing relative value, price and alternative solutions.
Sounds simple, but this is exactly what every buying decision hinges on – regardless of whether we can actually haggle or not – and understanding the process is step zero for constructing a working marketing strategy.
Let me show you two different scenarios from the buyer’s perspective.
a) It’s the day before your dad’s birthday and you are browsing at the flea market. It’s always tricky to choose a gift for him, and your family has a culture of giving throughtful gifts on birthdays so you can’t get away with a bottle of wine.
Luckily this year you had an epiphany, a vintage whiskey decanter it will be. Your absolute highest budget for this is 75 whatsit. However, seems like this time there are very few to be found and there is something wrong with each of them. Finally, you find one that seems perfect, offered at 100 whatsits. Now this is not a completely unfair price, but not cheap, or within in your price range, so you offer 25 whatsits.* The vendor laughs in a friendly manner and says, sorry, no, but only for you, only today, it is 90. Obviously, it won’t go down to half price (he would have matched your offer with 75 in that case), so you try another offer, 50 whatsits. It is still a no, but he matches your offer with 80. (And by the way, since you jumped up to double the original offer, he also knows you actually want this item.) 75, and that’s your last offer, but he doesn’t relent, so you buy the decanter for 80 whatsits.
What happened here? Well, the item you wanted to buy was one of a kind in the given situation and you had no other options to try to go and find another. Remember, in out story you need it the following day and thinking about worthy alternatives would be very hard. The value of the decanter went up for you, thanks to scarcity, a lack of alternatives and time pressure. Even though it is slightly over your ideal price, the fact that it’s exactly what you were looking for and now you can relax about the birthday gift, worths the extra spend.
b) You are browsing souvenirs at a market on vacation. You really like those scarves on display – though they are by no means unique or handmade – and ask for the price. It’s 100 whatsits, way over the top of course, so you start by offering 25 instead. The vendor makes noises implying it’s a ridiculous amount and says 75. You think it’s on track for a 50% drop and counter with 50. However, the vendor doesn’t say yes, instead tries again, for 70 or 120 for two. You thank her offer and walk away to try your luck at a different stand. (Chances are the vendor will give in then.)
The difference? You were bargaining for something that’s not a necessity by any means and you had plenty of other options to choose from, should this opportunity not present a very seductive price.
There are tonnes of potential variations on this theme:
- maybe you have a relationship with the vendor and she values you as a customer so will be happy to offer a lower price (think loyalty programs)
- maybe the market is closing and the less crap they have to bring back to storage the better, so you have higher chances of a bargain (clearance sales)
- maybe there are alternatives on the market but you are okay paying a higher price because this man has the tastiest tomatoes every time (brand loyalty)
- or you pick a particular seller, maybe even with a higher price because you feel sympathetic towards them** (think social enterprises)
The point is, it is easy to lose sight of how understanding our customers on a pretty mundane level is the basis of good marketing for two reasons. One, we all spend so much time behind our screens, talking into the social media void, buying and selling online, it is easy to think that the answer to how to sell better will come purely from technology as well. Two, marketing did acquire an image a little bit too glamorous for its own good. There is a feeling that there must be some dark magic to it, thanks to decades of communication based on outright manipulation and sales gimmicks and the millions spent on shiny car, perfume and sportswear ads. No wonder getting down to your own communication plan feels dirty or worse, a futile without millions to throw at it.
It’s time to hit the flea market then and simplify your perception of marketing. Buying decisions – and thus the fate of your company – are made by human beings like you and I every day. They have budgets and each and every item they might desire competes with everything else on that list for the given time period. The value of an item changes depending on how crucial it is, how difficult to get it, how perfectly it matches what we want and who do we buy from. Sometimes, when the price is higher than what we think the item is worth we walk away. At the core, supply, demand and competition balances prices and therefore the success of a business.
And therein lies the key to stop hating and/or being intimidated by having to create your own marketing strategy.
*Depending on the country, culture and how reasonable the offered price seems, where haggling is encouraged it’s customary to offer 25% of the original price and agree somewhere around the 50 to 60% mark. The key is to think about how much the item worth for you and always offer a lower amount first, only bargain if you actually want to item and only try walking away as a tactic if you are actually happy to walk away from the deal.
**An example? Once in Cambodia, I bargained less for a pair of trousers than I normally would have, because the seller was very pregnant. Or would always buy grapes from an old lady en route to work because she reminded me of my gran.