I hear this all the time in car commercials both on TV and on the radio. Usually they claim that the car manufacturer (Toyota, Honda, etc.) won’t let them show the prices. Why is that? Are they getting some kind of special deal that they don’t want other car dealers to know about? Or is it some kind of marketing gimmick?
I’m leaning toward the latter.
Well, it obviously means you don’t find out the price until they actually have you there in the dealership.
When I worked in a retail camera store (long ago), we had co-op advertising and were official dealers of certain camera brands. We did not get co-op if the ad price was below the minimum they wanted to pay, and some items couldn’t be advertised at all below a certain price, co-op or not. (Is co-op the right term? It’s been a long time.)
So, the dealer probably has some restrictions on just what pricing they can put in an ad, but not on what they can actually sell it for. Hence the Call for Price!! you often see in printed adverts.
I was just about to post the same thing as NoClueBoy. Mail order places frequently have “Call Us for Best Price! $$$$” or some such in their ads. They are selling items below what the manufacturer wants the price to be displayed. It’s not that they can’t sell at these prices and still be supported by the mfg (IIRC), the mfg just doesn’t want these lower than authorized prices in print.
WAG:
Maybe the manufacturer can’t legally fix the prices at which the dealers sell their cars (they could include such clauses in the contract, but anti-market restriction legislation would make those clauses void). But maybe it’s legal for the manufacturer to impose restrictions on its dealers about the prices they may advertise, and maybe the manufacturer is doing so in order to protect its other dealers, who would very likely not like to be involved in a price war.
Which leads to the ridiculous situation online, where Amazon and others won’t show you the price of stuff until you actually add it to your cart.
Is it used at all to finc control the price? Maybe the first 5 sales are done as a loss leader but after that the rest of the sales are made for profit. So they don’t want to advertise a price that they must then stick to?
I’m sure it’s used mostly as a sleazy advertising trick (another favorite is “no dealers” – as if they’re selling lower than the price another dealer could get from the manufacturer.)
But here’s one example of why the term might actually need to be used.
Damn near every mass-produced item has a suggested retail price – you’ll even see it already printed on some things like snacks or magazines.
The manufacturer’s advertising programs will help pay for store ads that feature the product at the standard price. From time to time the manufacturer will cut their price to the store, and the store is expected to cut their price to the consumer. The manufacturer will also help pay for the ads that promote that price.
But the advertiser won’t pay for advertising that undercuts other retailers. Hence, “prices so low we can’t even advertise them (and still get our advertising allowance from the manufacturer.)”
Another WAG:
Many stores have a “Beat Any Price” policy. When you read the small print on the policy the to meet or beat a competitor’s price the item in question must be advertised at that price and usually excludes pricing from the internet.
If the people selling the item at a super low price advertised that price you need not visit their store. You could go to your nearest store, show them the ad and get that same price. Often selling a certain item at a super low price, possibly even losing money on it, is a loss-leader. Supermarkets would do stuff like this. Sell, say, lettuce at absurdly low prices to get you in the store but jack up the price on things like salad dressing. The idea is to get you in the store where you will hopefully buy something else while you are there. This fails if you take their ad somewhere else and get the same low price.
And as mentioned you’ll probably really cheese off other merchants that way too who may then complain to the distributor or manufacturer to get them to (perhaps) do something to get you to stop.
I used to work for a large electronics company with both a brick-and-mortar store and an internet presence.
Manufacturers will often give retailers a price known as a MAP price. MAP stands for Minimum Advertised Price. A retailer cannot advertise a product for less than that price. They can sell it for whatever they want, but cannot advertise it.
While a store is not legally bound by MAP rules, manufacturers can (and will) pull products out of a store that refuses to honor MAP restrictions. I remember a few times when one of the managers would come to our department (I worked on the website) and tell us that we accidently “broke MAP” on a product and he got a call from the manufacturer.
Zev Steinhardt
Some states require that items advertised must be available to be sold at the price advertised for a reasonable amount of time and a reasonable number of items. Of course, what is reasonable is debatable, but one or two is not. Of course, if you don’t disclose a price, you are exempt.
What is the reason for this? What is the disadvantage to the manufacturer in having their products advertised below the MAP?
Of course the other reason is that the manufacturer may forbid selling it below a certain price and still receive ‘discounts’.
Manufacturers – mainly “prestige” or upper-tier brands – understand that price is a big factor in creating an image. A manufacturer who wants to attract customers from a certain economic class will price their products accordingly. Is that Toyota built as well as that Cadillac? Probably. But when a big executive is ready to buy a new car, which will he more likely go for? The Cadillac. Why? Prestige. The Cadillac has an image that says “I paid a lot of money for this car, because I could.” Frequently advertised, deep discounts in the prices of Cadillacs will eventually erode that image, because it will become generally known to the public that Cadillacs really aren’t all that expensive.
As a manufacturer, setting appropriate pricing is of upmost importance. You need to look at the competition, and want to make it affordable and attrative for the customer but also protect the necessary profit margin for yourself and the dealers (stores, etc.). If one store or dealer strongly advertises lower prices for a one-time sale, it can drive down prices below where the desired range.
We’re in a different market, so it’s not the same, but I’d guess the same principles apply.
In the late 80’s and early 90’s, I bought several camcorders through mail order outlets. This was pre-web time, after all.
I noticed after many phone calls that vendors fell into two camps of price ranges. The reputable ones all had nearly identical bottom line prices, within a few bucks of each other.
Then you could also find cheaper stores, ones that would sell you the exact same camcorder for about $200 cheaper than the other guys. They’d swear up and down they were brand new, factory sealed and came with a full warranty.
I finally called Canon directly and was told by their customer service rep that those super low price ones were usually refurbished or something and did NOT have a warranty from Canon. (When I told them one of the vendor names, they said that camera would absolutely not be under warranty.)
I called the (ahem) scumbag at one of the stores back and confronted him with this information, to which he replied that he had never said they came with a warranty. I reminded him that he had, and he responded with, “OK, so I lied. Do you want the camera or not?”
So SOME of the stores going below official prices may not be as legitimate as others, so buyer beware.
Which is why it pays to always make sure that you buy from an Authorized Dealer. Not that there is any guarantee that they’ll be more honest, but at least the product will be covered under warranty if it breaks (unless grey-market goods).
Zev Steinhardt
Thanks, zev. MAP was the term I was trying to explain.
On a related topic: Pennsylvania controls the minimum price at which certain items may be sold. Examples include milk and cigarettes. /hijack
Wow, so they’re not necessarily being as sneaky as I originally thought. How about that?