Merchants and Capitalism

Personally, I hate negotiating. There is something about the conflict that rubs me the wrong way. It probably comes from growing up in a society that cherishes myriad freedoms. We like not to be disturbed by telemarketers, solicitors, or merchants. An effect though is that we seem to wish to be free from the hassle of negotiating prices. Very well, but there are disadvantages to this, too. Many prices are set without merchant-consumer negotiation. There is little possibility, then, that this important ingredient contributes to setting the price. We develop an attitude of being content with fixed prices, something very ironically is uncharacteristic of free markets. A savvy businessman will pay attention to the number of customers who walk away after a price quote. Sadly, many do not.

In many other countries consumers negotiate the price of something at the moment of purchase. If you agree to the price, you make the exchange. If you do not like the price, you bid lower or you walk away. Walking away is very effective in lowering the price, because the merchant will chase after you because he recognizes that right then and there is the time to capture business. Voila! The merchant has important information that he can apply to his judgement about pricing. In the United States, monitoring this information is often overlooked or even completely neglected. Again, sometimes failure in business comes as a surprise, but one that could have been avoided if the management were more watchful and aggressive about collecting and analyzing such information. Allow me to illustrate how quickly this happens . . .

Two weekends ago I brought my car into Merchant's Tire and Auto in Woodbridge, VA, for the state vehicle safety inspection. The car failed inspection. After a nice smile, the service representative claimed that the car needed two new control arms which altogether would cost about $1,200. In the United States, particularly within larger companies, the merchant does not have the authority to negotiate the price. It is either "Yes" or "No." I declined and took my chances to find a second opinion elsewhere. Of course, I am sure the service representative did not run to his manager to explain how he failed to capture my business.

I explained what had happened to a local mechanic and asked for his honest opinion. I told him that if the control arms honestly needed to be replaced, I would go for it. I essentially gave him the opportunity to rip me off, but he said that the control arms were fine. Only a single ball joint needed to be replace. The total bill was $160.

If Merchants wants my business, they need to position themselves for the market I am in: an honest service market. In a recent Forbes article, Sramana Mitra talks about entrepreneurs positioning themselves for targeting your market:

To preserve cash, save time and get as much done with very little, a critical factor is an efficient and thorough positioning and go-to-market strategy. . . . It is a discipline entrepreneurs need to master if they have any aspirations of raising money.

There should be no market for dishonesty, and that is the market Merchant's is seeking.

Get a second opinion and cherish your choices under capitalism, just as you would do with a medical condition. Listen up, Merchants! You have lost my business forever.