Negotiating Purchase Price vs.
One-Price Selling and Value Pricing
April, 1996
| Back to the Dohring 1996 Automotive Consumer Study Index |
This 1996 Management White Paper is being provided by The Dohring Company as a supplement to our 1996 National Automotive Consumer Study.
The national study, provided as a service to the automotive industry, focused on the most topical issues of the day including:
This white paper is intended to provide in-depth answers to help you better understand the consumer perspective on specific issues.
The national study has not been funded by any outside source and is strictly provided as a service. The design intention was to address several primary areas of importance to our automotive, OEM supplier and dealer client base.
The Dohring Company is North America's largest provider of custom market research to the retail automotive community. We have conducted more that 3,000 automotive market research studies for dealers, dealer associations, advertising agencies, manufacturers and suppliers in North America and internationally. The company, based in Glendale, California, employs over 100 full time staff and has conducted over 300,000 interviews with vehicle buyers in 1995 alone, and over one million in the past ten years.
Additionally, we are proud to have been designated Marketing Research Supplier to the 1996 Atlanta Olympic Games.
The Dohring Company is a full-service provider of marketing research and the developer of TrendTrak®, our exclusive on-site survey polling device. For additional information, please contact us at 1-800-242-8022.
A total of 1,253 respondents were surveyed from across the 50 United States in proportion to their household populations. All respondents were surveyed by telephone during December 1995, and were qualified as intending to purchase a new or used vehicle in the future from a new car dealership. The study has a standard error of ± 2.8%.
Negotiated or Paid Exact Price for Most Recent Vehicle Purchase Top
Three fourths of the respondents (75%) negotiated their most recent vehicle purchase and one fourth (24%) paid the seller's exact asking price.
Negotiated purchase of most recent vehicle vs. paid exact price:
When those who negotiated their most recent vehicle purchase were asked if they liked or disliked their most recent purchase negotiation, almost two thirds (65.2%) said they liked their most recent vehicle purchase negotiation and only 21.7% disliked their most recent purchase negotiation. Comparing these results with those of prior years, a pattern of increasing buyers' satisfaction with the purchase negotiation process has emerged, as, each year, more respondents have liked their most recent vehicle purchase negotiation and fewer have disliked the negotiation than in the previous years' studies.
Liked vs. disliked most recent purchase negotiation:
The top reasons for paying the dealers' exact asking prices were: "Sale price" (39.8%), "Good price" (17.3%), "Value priced model" (10.5%) and "One-price Store" (7.1%).
More of those whose most recent vehicle purchase was a light duty truck were satisfied with their purchase negotiation, and fewer of those whose most recent purchase was a sport utility vehicle were satisfied with their purchase negotiation.
Liked most recent purchase negotiation:
Those who purchased domestic makes were more frequently satisfied with their purchase negotiation than those who most recently purchased import nameplates. It could be, however, that there was more negotiating being done on the prices of vehicles near the top of this list (domestics) than those makes nearer the bottom of the list.
Liked most recent purchase negotiation: (by nameplate)
Contrary to many industry observer's expectations, a greater percentage of females liked their most recent purchase negotiation than did males.
Liked vs. disliked most recent purchase negotiation:
Awareness of One-price Selling Top
Only about four in ten respondents (38.9%) have heard of the term "One-price" or "One-price Selling". This percentage has remained relatively unchanged over the past 3 years.
Have consumers heard of "One-price selling":
Males generally had a higher awareness of One-price (49.0%) than females (30.5%) and awareness of One-price increased across age categories from a low of 25.2% among 18 to 24 year olds to a high of 46.2% among those 65 and over.
Preference for Negotiating or One-price Selling Top
Each respondent was read the following description of One-price Selling:
The "One-price" Selling concept is where each new vehicle at a dealership is marked with a specific, non-negotiable price which has been substantially reduced from the manufacturer's suggested retail price or window sticker price. The customer can walk freely around the dealership and see exactly what each vehicle would cost to purchase without having to negotiate cost with a salesperson. Dealership personnel are available to answer questions or help you select or locate a vehicle on the lot which may be of interest to you.
Following this, each respondent was asked which of the two stores would they be more inclined to shop and purchase from: a One-price dealership or a negotiating dealership? About a third of the respondents (32.8%) chose the One-price dealership and almost half (47.9%) chose the negotiating dealership.
Preference for negotiating vs. One-price dealership:
Comparing these results with those of earlier Dohring national studies, the desire for One price Selling has waned substantially from where it was in 1993. While 39% of respondents in 1993 chose the One-price dealership and only 29% chose the negotiating dealership, today, 33% prefer the One-price dealership and 48% prefer the negotiating dealership.
Preference for negotiating vs. One-price dealership:
Comparing this trend with the trend of increasing buyers' satisfaction with their most recent purchase negotiation, above, it appears that, the efforts of the auto manufacturers and dealers to improve buyers' satisfaction with their vehicle purchase experience has generated the desired result. And, as a further result, more buyers desire and prefer to negotiate their vehicle purchases. From earlier Dohring national studies which addressed One-price selling, it was made clear that automotive consumers need to feel that they get a good deal when they purchase a vehicle, and, for most, the only way they feel that they can get a good deal is through negotiation. Thus, the trend is toward more buyers preferring to negotiate their vehicle purchases and, while One-price Selling will likely not disappear, it will remain the preference of a decreasing minority of car buyers.
More females preferred the negotiating dealership (50.5%) than did males (44.8%).
Respondents intending to purchase a European nameplate next were substantially more inclined to shop and buy from a One-price dealership than those intending to purchase a Domestic or Japanese nameplate (42.5% of those intending to purchase a European nameplate next are more inclined to shop and purchase from a One-price dealership, while only 33.4% of those intending to purchase a Domestic make and 33.1% of those intending to purchase a Japanese nameplate would.)
The "Achilles Heel" of One-price Selling Top
The Achilles heel of the One-price dealership remains. Nine in ten buyers who would shop the one price store (89.1%) said they would take the "One-price" price and then shop another dealership or other dealerships to try to find a better price for the same vehicle, rather than buy from the One-price store. This percentage has remained consistent over the past three years, as nine in ten buyers in both the 1993 and 1995 Dohring national studies indicated that they, too, would "shop" the "One-price" price at another dealership or other dealerships.
Would they likely buy from the One-price dealership or shop another
dealership to compare:
Younger respondents were much more inclined to take the "One-price" price and shop another or other dealership (96.4%) than older buyers (78.3% of those 65 and over would "shop" the "One-price" price).
When asked if they would prefer that every dealer which sold a particular make of vehicle sold them at the same price as every other dealer selling that make or would they prefer that each dealership established its own separate pricing, over half (53.5%) preferred that dealerships establish separate pricing and a little over one third (36.5%) preferred that all dealerships of a certain make have the same pricing.
Would consumers prefer "Value Pricing" or seperate
dealership pricing?
The top reasons for choosing the same pricing were: "you get honest prices" (42.0%), "prefer not to haggle" (35.0%) and "you get a quicker deal" (29.5%).
The top reasons for choosing separate pricing were: "you get a better price or deal" (68.7%) and "prefer to negotiate or haggle" (26.1%).
More males preferred separate pricing (60.7%) than females (47.4%), and more females preferred the "Value Pricing" (41.7%) than males (30.2%). Desire for separate pricing was strongest among those 18 to 24 years old (69.1%) and lowest among those 65 and over (49.7%). Desire for "Value Pricing" was strongest across the 25 to 64 year old age categories (approximately 39% of all of these preferred Value Pricing), and was low among those under 25 (25.4%) and those 65 and over (30.1%). Among those who preferred Value Pricing, more younger respondents preferred it because of a "quicker deal" (41.2%), while older respondents felt they would "get honest prices" (53.5%).
More respondents who intend to purchase a European nameplate as their next vehicle preferred the "Value Pricing" (42.5%) than those intending to purchase a Domestic make (36.7%) or Japanese nameplate (34.3%). For the European nameplate buyer, the top reason for choosing "Value Pricing" was that "they could get a quicker deal" (52.9%), followed by "no haggling" (41.2%) and "get honest prices" (29.4%).
|
Company Services Online Automotive Client Media Employment Contact Home The Dohring Company © 2000 The Dohring Company. All rights reserved. |
