Is Pricing a Strategy or just a Tactic?

[john.quinn]

Digging into your responses, I can see that my references to "Old School" strategies and tactics my have stuck a chord with you. You're promoting a process developed almost 50 years ago. When you say that the customer hasn't changed, I agree that you are at least partially correct. But the amount of information they are armed with has substantially changed the playing field.

I'm not talking about merely overcoming price objections as we've done for the past 50 years, I'm talking about eliminating them before they even begin. This truly different mindset is the "moment of zen" and it's part of what elevates it beyond an "overcoming the price objection" tactic into a new strategy.

That said, much of the "Old School" is still applicable today. I have an appreciation for many of the sales tactics that have worked for years and can appreciate that many still work today. But when you come out with "whoring-out your cars on-line to get them through the door, then you don't have a very good process", I have to think that you don't have the best understanding of what a true Market-Based Pricing Strategy entails. I'd be happy to discuss it with you at length.

Give me a call! (but most importantly, have a great weekend!)

Wrong again, Ed -- I did say "Whoring." I did not equate whoring with market-based pricing. You assume too much! You've consistently missed my points and you've done it again. I've been an AVID AAX dealer for years -- I pioneered the movement for my group -- NO ONE understands everything involved more than me. I preach it. I live it. I love it.

Can you argue that whoring your cars is a bad move? Geez, I hope not. It seems to me you're kinda arguing with yourself here -- 'cuz you're still not quite getting what I'm saying. The "whoring" comment, in context, made a comment about pricing at the expense of process -- which is a valid point.

Same thing with getting all down-n-dirty with the "price objections" terminology. I used it as an example, a genre, or "thread starter," if you will. Anybody who's been in the game longer than 2 years knows that there's nothing "merely" about that topic. But this is a targeted audience right? Do we have to use crayons to write it out? Like we're talking to customers?

I've apologized twice now for being completely off-topic, and you keep proving it.

So we agree that right-pricing is important for a myriad of reasons. But if this is moment of zen for this crowd, wow...

 

[ed.brooks]

Wrong again, Ed -- I did say "Whoring." I did not equate whoring with market-based pricing. You assume too much! You've consistently missed my points and you've done it again. I've been an AVID AAX dealer for years -- I pioneered the movement for my group -- NO ONE understands everything involved more than me. I preach it. I live it. I love it.

Can you argue that whoring your cars is a bad move? Geez, I hope not. It seems to me you're kinda arguing with yourself here -- 'cuz you're still not quite getting what I'm saying. The "whoring" comment, in context, made a comment about pricing at the expense of process -- which is a valid point.

Same thing with getting all down-n-dirty with the "price objections" terminology. I used it as an example, a genre, or "thread starter," if you will. Anybody who's been in the game longer than 2 years knows that there's nothing "merely" about that topic. But this is a targeted audience right? Do we have to use crayons to write it out? Like we're talking to customers?

I've apologized twice now for being completely off-topic, and you keep proving it.

So we agree that right-pricing is important for a myriad of reasons. But if this is moment of zen for this crowd, wow...

John, I'll apologize this time my friend. When you said "whoring-out your cars on-line", I assumed it was in response to this thread. Since I'm mistaken, you have my apologies.

I'm glad that you are using some sort of pricing tool. I absolutely will not argue for or against the merits of AAX in this forum. I also won't argue your statement that "NO ONE understands everything involved" more than you. I will state that I've spent 20 years in the car business, not 2, and I will again wish you a very good weekend.

 

[john.quinn]

John, I'll apologize this time my friend. When you said "whoring-out your cars on-line", I assumed it was in response to this thread. Since I'm mistaken, you have my apologies.

I'm glad that you are using some sort of pricing tool. I absolutely will not argue for or against the merits of AAX in this forum. I also won't argue your statement that "NO ONE understands everything involved" more than you. I will state that I've spent 20 years in the car business, not 2, and I will again wish you a very good weekend.

Ed -- if you were in PA -- the 1st round tonight would be on me! And I can just about taste that 1st one now...So you too have a great weekend!

 

[Walt Kustra]

When you say that the customer hasn't changed, I agree that you are at least partially correct. But the amount of information they are armed with has substantially changed the playing field.

I'm not talking about merely overcoming price objections as we've done for the past 50 years, I'm talking about eliminating them before they even begin. This truly different mindset is the "moment of zen" and it's part of what elevates it beyond an "overcoming the price objection" tactic into a new strategy.

That said, much of the "Old School" is still applicable today. I have an appreciation for many of the sales tactics that have worked for years and can appreciate that many still work today.

Great way of saying it. This is truly what I wanted to get at in my original post, but just couldn't get the words our right! Its a delicate combination of old school salesmanship AND new school marketing tactics and process that arm dealers and salespeople with the proper balance of tools needed to really be successful nowadays when dealing with a much more market savvy customer.

 

[ed.brooks]

When questions of strategy arise, I try to refer back to Sun Tzu, a Chinese General who wrote “The Art of War†some 2,500 years ago. “The Art of War’ has been studied by leaders as diverse as Napoleon, MacArthur and Bill Belichick. There have been numerous translations, but everyone in business should own at least one copy.

“The Art of War†teaches that position is supremely important. The relative position of forces will determine the best strategy to pursue. It also teaches that as conditions change, so must strategy. In war or football or business, this seems obvious.

Let’s look at Car Sales in the time before the Internet. For decades we were able to fight the same battle over and over, because it was literally the same battle. Each side fought from the same positions and their weapons (their information) didn’t change. So we were able to hone our battle plan as we fought the same battle over and over. As long as the positions remained the same, and conditions didn’t change, we knew exactly what we were facing.

If you feel that the positions and conditions are the same today as they were 20 years ago, by all means continue to fight the same fight – using the same strategy you’ve been using for decades. If you think, as I do, that we’re facing a different battle, the logical conclusion is to develop a new strategy.

If you really embrace and leverage the Internet you have the ability to adjust your position so that it is very hard to attack. Your position is your price. Sun Tzu said, “…supreme excellence consists in breaking the enemy's resistance without conflict.†When you price your cars to market and use the information available online to prove and defend that price, you can all but eliminate the conflict of negotiation. I believe this change is so fundamental that even the enemy has changed; for years the conflict was with the customer – today the enemy is the dealer down the street.

The importance of this is huge. With every customer – sold and unsold – having the ability to review your store online, unhappy customers today can impact your traffic for months to come. Does any customer emerge from an hours-long negotiation really happy?

My advice (for what it’s worth) is to take a hard look at the current conditions and ask if yesterday’s strategy is really best for today’s battle. Or maybe is it best to avoid the battle completely?

 

[joe.pistell]

... When you price your cars to market and use the information available online to prove and defend that price, you can all but eliminate the conflict of negotiation. I believe this change is so fundamental that even the enemy has changed; for years the conflict was with the customer – today the enemy is the dealer down the street.

Does any customer emerge from an hours-long negotiation really happy?

My advice (for what it’s worth) is to take a hard look at the current conditions and ask if yesterday’s strategy is really best for today’s battle. Or maybe is it best to avoid the battle completely?

Ed,

I was with you 100% but, you dropped the ball. You've moved "market based pricing" (as vAuto defines it) from a STRATEGY into a TACTIC. Price cannot stand alone. You forgot to mention that Customers WANT to Negotiate (regardless what the asking price is).

For the market based pricing to work (as planned), dealer strategy requires the dealer to completely EMBRACE the "market based pricing" philosophy. This is a culture change, from the top down. This "new attitiude" needs to touch every nook and cranny in the dealership (marketing, merchandising, meetings and training). The shopper needs to "see it coming" (marketing & merchandising) and once the sales rep "stands their ground" (training & meetings), the shopper will get it.

Dealers that go at it half-assed (without the complete top down buy in) will fail.

 

[ed.brooks]

Ed,

... Price cannot stand alone. You forgot to mention that Customers WANT to Negotiate (regardless what the asking price is).

For the market based pricing to work (as planned), dealer strategy requires the dealer to completely EMBRACE the "market based pricing" philosophy. This is a culture change, from the top down. This "new attitude" needs to touch every nook and cranny in the dealership (marketing, merchandising, meetings and training). The shopper needs to "see it coming" (marketing & merchandising) and once the sales rep "stands their ground" (training & meetings), the shopper will get it.

Dealers that go at it half-assed (without the complete top down buy in) will fail.

Joe, I respectfully disagree with the statement that "Customers WANT to Negotiate", at least to the degree that happens in most car sales today. I think they want to make sure they're getting a fair deal. That can occur with greatly reduced negotiation (reduced conflict) and strong documentation of the dealership's price position in the market.

I completely agree that this shift must be embraced from the top down. Price can't stand alone for the strategy to work optimally. If I left the impression that I believed that, it most certainly wasn't my intent.

I'm also not saying that this is the ONLY strategy that can work given today's conditions (but it's the best I've seen). I AM saying that every dealership that recognizes that conditions have changed, should review the strategy they use to see if it is the best one available for TODAY,

 

[john.quinn]

Price cannot stand alone. You forgot to mention that Customers WANT to Negotiate (regardless what the asking price is).

BINGO! This is the reality. Customers simply Do Not Trust a one-price system (Oldsmobile, Saturn, anyone?). We see it now with Scion -- soon to go the way of the dodo. It's a deeply-rooted, ingrained notion that you have to get a "deal," and a big part of that is not paying what you see on that sticker. I agree with Ed that conflict reduction is important -- but that's always been the case -- build value and rapport to hopefully make price negotiations secondary or tertiary in the hierarchy of "the deal." (back to the "talent" discussion).

If you are going to stick with the "Internet Price" as "The Price," you do need an added level of "talent," (or culture -- semantics), because you've built-in a "No" to your process -- as in, "No, we will not negotiate that price." And as Joe said, the vast majority of buyers DO want to negotiate that price. Whatever side you take, that is the built-in reality on the floor.

 

[ed.brooks]

BINGO! This is the reality. Customers simply Do Not Trust a one-price system (Oldsmobile, Saturn, anyone?). We see it now with Scion -- soon to go the way of the dodo. It's a deeply-rooted, ingrained notion that you have to get a "deal," and a big part of that is not paying what you see on that sticker. I agree with Ed that conflict reduction is important -- but that's always been the case -- build value and rapport to hopefully make price negotiations secondary or tertiary in the hierarchy of "the deal." (back to the "talent" discussion).

If you are going to stick with the "Internet Price" as "The Price," you do need an added level of "talent," (or culture -- semantics), because you've built-in a "No" to your process -- as in, "No, we will not negotiate that price." And as Joe said, the vast majority of buyers DO want to negotiate that price. Whatever side you take, that is the built-in reality on the floor.

It's not so much that customers don't trust a one-price system, I think it's more that they don't trust car dealers - and they do indeed want a deal. One of my first Sales Managers explained to me that customers walk in with a chip on their shoulder and it was our job to help remove it. With enough talent and training a salesman used to be able to build value and rapport - HOPEFULLY. Today they can add an element. Using the transparency of the Internet they can also provide documentation and PROOF of the deal.

This doesn't happen when you build a "No" into your old process. It happens when you build a new strategy that justifies the price BEFORE a negotiation begins. This doesn't have to be a one-price system, but one of radically REDUCED negotiation. We have seen dealers TRIPLE turn while REDUCING negotiated discounts down to an average of under $200. It does require, as Joe said, "a culture change, from the top down", to achieve these results.

 

[joe.pistell]

When questions of strategy arise, I try to refer back to Sun Tzu, a Chinese General who wrote “The Art of War†some 2,500 years ago... [snip]... The relative position of forces will determine the best strategy to pursue... [snip] “The Art of War†teaches that position is supremely important. It also teaches that as conditions change, so must strategy...

Great stuff Ed! It hits on so many levels.


My $0.02: Your Marketing (& Merchandising) Position is relative and is dynamic.

Position advantages can be

• GeoPosition (i.e. easy to find from any highway)
• Inventory (width and depth)
• Specialty (by class or brand, or services, or...)
• and on and on...

EVERYONE HAS A PROFILE THAT IS UNIQUE.
In the case of JQ and myself, we're the big fish in our lil' pond. So we work that angle. Our gigantic inventory (relative to our enemies) is our strongest asset. We work the one stop shop angle. Loss leaders, traditional advertising and a well trained staff are a common approach for players with our profile. A specialist could rip us up and enjoy feeding off of us.

One of the most profound business models is CityAuto.com, an Auto Mall of skilled, self-employed specialists. They'd smoke nearly any market they'd walk into. Thankfully, it's one location and no one else has tried to duplicate it.

Thnx for the morning exercise Ed!