Haggling and market research

August 27th, 2010 § 3 comments § permalink

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I never liked haggling, so I was terrified when I first heard there are places you can visit, like Arab countries, where sellers get literally mad at you if you don’t participate in their ritual of arguing, going away, being disappointed, and after some time eventually settling on price of the already ultra cheap piece of pottery.

Running a business of my own, I slowly learned that the art of negotiation is a good skill to have, and one you never stop improving. It is a social game that demands whole person to contribute. Not just oral skills, body language, imagination, improvisation are equally important, as well as intelligence and empathy to be able to guess and predict opponents motives and lusts.
So eventually I also realized the true source of rage for those Arab merchants – by ignoring their custom, you refuse them opportunity to practice their skills.

But, i believe there is a even a higher cause, a systemic function to this ritual, that makes it universal across all human societies, and most visible in the ones based on trade. Haggling and negotiating is ultimately about setting the price, or value of an object or service. Since the value of goods and services is something we made up and is not their natural attribute, it can exist only trough infinite debate, that is constantly questioning and confirming it’s place and value for the society at large.
By refusing to haggle, you also refuse to participate in this culture-wide debate and refuse to make society better. Anybody on the other side should be insulted with such ignorance.

Now, this is true in cultures like traditional arab was/is. I am not trying to say that we should all start haggling in supermarkets. In western world, it is often illegal not to be able to quote a price and stick to it. Let’s take a brief look at what happened here.
The process of figuring out the optimal price was, just like everything else, converted into science. Today, the science of marketing and market research is responsible for going out on the field, analyzing audiences, identifying markets, and defining price points that are optimally aligned with targeted market segments willingness and ability to pay.

Because we have built theory that can calculate optimal price and because we have trained society to conform to the model, haggling is not necessary anymore. Even more, it became unwanted, a bad word. If as a seller you don’t know exactly how you price your service, it means you didn’t do your homework. Instead, you are wasting my time as consumer, because you were lazy or incompetent of reading my mind.

Granted, I am exaggerating. We also have supply-demand game mechanism built into the theory, and all of this is more true for store-sold goods for mass consumption than for services and luxury items, but still, i believe that culture-wide mind shift is apparent and profound.

And understanding the origins and history of contemporary phenomena always helps hacking them 😉

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