Dynamics of bargaining

By Don Nyagudi

Every now and then while shopping for negotiable goods eg. second hand clothes and shoes we bargain. We find ourselves in the back and forth situation trying to agree on the price of the goods with the sellers. Many are times we go home satisfied having reduced the selling price of the goods by some margin. It means a great deal ( pun intended). Bargaining is a trend in Kenya that ranges from basic needs such as food to secondary needs such as property and other investments. Thus, bargaining can be considered as a common part of the consumer culture. Most of us if not all are not taught this skill. We develop it from the interaction with the vendors in the shops and market places. So bargaining is more of a psychological issue rather than a financial one. We negotiate with the vendors on the selling price and come up with an agreement that is a win win for all parties. But this is not always the case. Sometimes, people take advantage of desperate sellers and bargain to an extent which is no longer profitable for them.

But why do we bargain? Why can’t most of us just pay the required amount without a counter offer? Even when we have the money in surplus we are still motivated to negotiate. Is it a habit? Are we just selfish? These are some of the questions I intend to answer through the course of this article. Figuring out the incentive behind the idea of always wanting to purchase things at our own lowered price is fascinating. Understanding what motivates us to do what we do is the foundation of knowledge. The knowledge then helps us do better or adjust so that we can not only help ourselves but also others.

To some people, bargaining is aimed at saving money. Whenever they shop, they have the bargaining mentality and a predetermined amount they would want to save from the purchase. And so they do everything possible in the negotiation process for them to realize this goal. Such people derive utility from saving money in whatever purchase situation. They feel satisfied. This is somehow good because some people use the money to shop for extra goods which boosts the output of the economy. Others save the money which increases the amount available for lending at affordable rates and increases the productivity of the economy.

Ashley Bhakita, a consumer

“I bargain so that I can use the the money for other goods and also save up for some other purpose” said Ashley Bhakita, a consumer

Also, when shopping, everyone wants to get back the value of their money in the form of goods bought. Some people usually feel like the marked price of the goods or services is exaggerated. They think that the price does not match the quality or the real price of the goods and so must bargain. In an aim of evading paying more than necessary. To some extent this is very true. Most sellers usually place the marked price of goods at a higher point to create an allowance for bargaining. They adopt the notion that each and every buyer who comes in must bargain. It’s fair since they do this to avoid massive losses from the proceeds of the sales.

Joe Temesi, a consumer

“I usually end up bargaining because I feel like the prices are somehow exaggerated especially for second hand or refurbished goods,” said Joe Temesi ,a consumer

However, some people always want to start a conversation. This makes them bargain even during unnecessary times. Bringing up flaws in the goods, using the famous “I’m a loyal customer.” This to them becomes a habit and so whenever they shop they must try and bargain.The behavioral theory pioneered by John B. Watson states that people have different approaches or personalities towards negotiation rather than taking the prices as they are .The game theory developed by John Von Nueman and Oskar Morgenstern examines why and how people make decisions that affect each other. Moreover,people who have strong alternatives to what is being bargained on usually have the highest likelihood to make the first offer in a bargaining situation.

Bargaining while shopping is acceptable and encouraged if you want to get the most out of your money. But in as much as you are bargaining, understand the situation of vendors and not bargain to an extent which is no longer profitable for them. That’s a real win win for all.

Featured image credit: 365 Careers

Published by Don Nyagudi

Commerce Student, Multimedia University of Kenya.

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