The Bait-and-Switch Confusopoly Economy
The Bait-and-Switch Confusopoly Economy
August 4, 2016
I recently blogged about the impossibility of buying a Chevy truck with the features you want. The quick summary is that there are so many truck features and options that it would be almost mathematically impossible for a dealer to have the truck you want on the lot. Likewise, there are generally no nearby trucks at other dealerships that your local dealer can ship in for you.
So how does the dealership handle the fact they have no trucks you want?
They first tell you they do have the truck you want, right on the lot. Then you find out they were “mistaken” or the truck “just got sold.” But they can sell you a truck with the wrong features today!
When you say no to buying the wrong truck, they offer to find your exact truck at another dealer. Then they fail at that, all the while trying to convince you to buy a different truck they can find. Eventually they wear you down because – mathematically speaking – the truck you want doesn’t exist, and you really want a truck. So you give in and live with the bait-and-switch.
After I blogged about my truck-not-buying experience, many readers emailed to tell me how they beat the system and got a great deal. I almost cried reading those messages because every one of them got screwed with obvious dealership scams, yet they feel they won. The most obvious scam is going through the fleet sales person at the dealership. People think that’s the backdoor to a clever bargain. It isn’t. The dealership makes sure that suckers who go in that backdoor pay an average price higher than a consumer who negotiates hard. Likewise, there is sometimes an “Internet sales” person at the dealership who purports to give good prices to people who shop online. Same scam.
The best way to know the dealer screwed you is to ask yourself if you think you got a great deal. If you did, they not only took your money, but they also made you love them for it.
My Chevy experience prompted an executive from Ford to contact me and offer to fix my truck-buying experience and get me into a Ford. It would have been good PR for Ford, and it would solve my problem too. That felt like cheating, since the offer involved avoiding Ford’s own dealership system. But I wanted a truck, and Ford has some great products. In fact, their 360-degree camera for parking sold me on a Ford. That feature isn’t on the Chevys.
What happened next tells you we are in a bait-and-switch confusopoly economy. Keep in mind that Ford was highly motivated to help me, and they hooked me up with the best contacts in the company to make it happen, both at my local dealer (an expert truck guy) and within management. They all coordinated to satisfy me. I’m betting no customer ever had so much help buying a truck. The folks I was dealing with were smart, friendly, helpful, and motivated. They offered to get me any truck model I wanted to test drive for a week. They would deliver it right to my door, no obligation.
Problem solved, right?
So I described the truck I wanted. This is how it went.
The first truck I wanted (Raptor) isn’t made this model year, but I could wait months and get the 2017. I didn’t want to wait that long.
So I specified a different truck model they do make for 2016, but none could be found anywhere in California.
Ford offered to build me a truck with my features, and rather than wait months, they would put me at the front of the line and I could get it in a few weeks. But that offer came just as the 2016 manufacturing cycle was ending, and I couldn’t order one of those trucks in the time I had available to do it.
Plus, once I knew the 2016 trucks were already discontinued, I didn’t want one. Now I was mentally sold on the 2017s because those have some improvements that sounded interesting.
So Ford agreed to push me to the front of the 2017 line – which would get me the truck I wanted in September. They successfully baited-and-switched me (I didn’t want to wait) and I agreed.
But after specifying my truck, I heard back that the engine I wanted isn’t going to be available until end of year. But I could get a truck I don’t want sooner.
So I surrendered and agreed to go to my local Ford dealer and speak to their truck-selling expert. I planned to get all of the detailed advice about options tradeoffs that I needed and order my truck. Then I would wait for months to get it. Ford even allowed that I didn’t have to purchase it once it arrived if I didn’t like it. (I’m not sure regular customers get that deal.)
So I set aside my Saturday morning and went to my dealer. My contact was sick that day. But the dealership helpfully offered to let me talk to someone who didn’t know much about trucks, which is exactly what I was trying to avoid. I went home.
To be perfectly clear, every person I dealt with at Ford was great. I have no complaints about the people. And their product looks great too. The problem is that Ford and Chevy both have a business model (too many features, not enough trucks) that makes that nearly impossible, even if the customer and the salesperson are 100% motivated to make it happen. There are simply too many options available, and there are few people – even at the dealership – who can explain the tradeoffs for each of them. So customers either accept the bait-and-switch or they don’t buy a truck, like me.
Speaking of bait-and-switch, I’m in Maui at The Westin Ka’anapali Ocean Resort Villas. This is my first real vacation in three years.
Here’s what they call “ocean view.” The image is somewhat distorted, so you can’t tell I’m overlooking an active construction site.
I learned after arriving that I should have asked for “Beachfront” not “ocean view.” But the beachfront homes are not available because they are owned privately. So upgrading wasn’t an option.
I also learned that “room service” only operates until 8:30 PM, which is exactly the time I am not in my room. And there was no menu in the room.
I also learned that this is what The Westin calls a two-bedroom “suite.” It’s two regular rooms with some sitting space connected by a door. Here’s one of them.
Obviously I’m not suffering. I’m just saying the resort bait-and-switched me. I pointed that out to them in direct language, and they later offered a $150 credit. I accepted. The other hotels were booked.
My larger point is not about Chevy, Ford, or The Westin. My point is that in an age of potentially perfect information (via the Internet) the only way big companies can sell products at a profit is through confusion and baiting-and-switching. Economics majors will already understand that to do otherwise would allow direct competition and drive down prices to non-profitability.
So you live in a world with lots of promises (baiting) followed by lots of switching. Luckily for you, you can still buy products and feel great about it. Just ask the folks who bought trucks through the fleet sales channel. Those people are delighted. They just didn’t get the truck they wanted at the best price. That was never an option.
And when it comes to Clinton versus Trump, you know you’re getting baited-and-switched no matter who you pick. But half of the country will think they got a good deal from the fleet sales guy no matter who gets elected. Psychology always beats reason.
P.S.: It took so long to find a truck that my requirements changed. I don’t think I need one now. And thank you to Ford for trying to make it work. I appreciated the effort.
P.P.S: I counted approximately 20 times that Chevy (mostly) and later Ford offered me a truck that did not have the options I requested or was not available, for a variety of reasons. I’m stubborn. Most people would have settled for the bait-and-switch by now.
If you don’t like confusopolies, you might like my book.