Tricks of the Trade

An article published in the NYT yesterday revealed that one of the earliest shopping techniques is making a comeback. Not that haggling ever really left, but it is definitely not thought of as common practice in any of the places that I shop. This article says that the notion of bargaining down the price is becoming increasingly popular in major retail outlets. According to the article, retail historian from the Harvard Business School Nancy Koehn says that haggling in department stores used to be commonplace, before stores adopted fixed pricing in the 1850s. But with technology-enabled price comparison and online negotiating, the retail salesforce is quietly being allowed more freedoms to negotiate prices with customers. The downward spiraling economy has also put more power in the consumers’ hands when it comes to price negotiating. There are examples of in the article of people who’ve successfully “haggled” down the prices of large and small ticket items, from big screen televisions at well-known retailers such as Best Buy, to things such as rugs and clothing. Koehn blames the “ebay phenomenon.” She says that ten years ago people didn’t like to haggle, and they thought they weren’t any good at it. But using ebay has boosted confidence. I am not sure I agree with her. Bidding for something on ebay is quite different than negotiating face to face with someone. First of all, price negotiations go on all the time. Didn’t today JP Morgan increase they offer to buy Bear Stearns to $10 a share in order to appease shareholders? That’s price negotiating. Paying below sticker when you buy a car. Making an offer on a house. These are all instances in which people are haggling. I was in New York a few months ago, and my roommate and I made a few purchases from street vendors. We never paid what they asked initially. It’s all part of haggling. My confidence in haggling is pretty limited when I am negotiating with someone face to face about a purchase. Whereas on ebay, I have no problem making a bid on something. That being said…is haggling really making a comeback? How far is it going to to? And how is this going to affect the lines at registers? I know I intentionally go grocery shopping late at night because there are few people there. I don’t like waiting in line to buy my groceries. If we have to wait for people to haggle on the price of everything in their basket….would we get home before the milk went bad?
I need to stop and buy some toothpaste on my way home. I wonder if I can get it for $2.50, instead of $3.14. I guess it’s worth a try…wonder how many people I will irritate in the process by trying to haggle with the cashier.
Happy shopping!

The TiVo Giant…

I have a DVR in my house. Not TiVo, but a DVR from Comcast. As a result, I never watch live television anymore. Well, I rarely do. Although, with my busy life right now, I barely watch anything. I am so spoiled to being able to “zoom” through commercials, that I get irritated when I have to watch them. I usually catch the beginning of the first commercial, and the tail end of the last commercial. I have been wondering for a while now how the advent of TiVo and DVR are going to affect companies that advertise with commercials on television. Actually, I have peppered one of my professors with so many questions about it, that when he found an article regarding the subject, he forwarded it to me. The article, published today in Advertising Age, answers, or tries to, some of the questions I’ve had regarding the effect of TiVo. The study which was conducted over three years, found that new product purchasing in DVR households was about 5% lower than in non-DVR households. This is not a significant enough number to be distasterous for any major brands. Brands that spend 20% of more of there media budget outside television saw no difference. So, are we going to see any changes to the way brands are marketed in the media? I’m willing to bet yes. A 5% decrease in sales in households that have DVRs is not threatening right now. But eventually, DVRs are going to penetrate more and more households. That 5% starts to look “bigger and badder” as DVRs become more popular. I predict more product placement. It doesn’t have the same effect as a commercial, but given the choice of the product being seen, or not…what do advertisers choose? I also think that we are going to see a restructing of how media buys are conducted. I think it will get as detailed as which place your commercial will hold in the 5 minute slot in the second commercial break of CSI Miami. The first commercial and the last commercial should be more expensive, because (as I said) those are the commercials that are more likely to be seen in a DVR situation. How about online advertising? Are we going to see more online advertisements? I think so. People don’t think about online advertising as much right now, but let me state one glaring fact. People are more engaged when working on the computer than they are when they are staring at a television screen. Think of it as leaning back in a recliner, versus sitting at a desk. Even if I am just playing a lame computer game I am more engaged when I am on the computer than when I have the television on. I guess we will just have to wait and see in the months (years) to come.
You can read the rest of the article by Jack Neff here.