In 2004, the typical U.S. home sold for 99% of the original asking price, according to the National Association of Realtors, leaving little room for haggling on price. In the West, more than one-fifth of homes sold above asking price as competing bids drove up the price. There is little downward price haggling in the booming housing market, though haggling is sure to return when the cycle turns from seller's to buyer's market.
How CarMax cleaned up the sleazy business of selling used cars by listening to consumers.
"CarMax provides its customers the opportunity to shop for vehicles the same way they shop for items at other `big-box' retailers by offering a broad selection of high quality vehicles at low, no-haggle prices in a customer-friendly atmosphere."
* Used cars sold at no-haggle prices listed on vehicles, in newspaper ads and on carmax.com.
* Trade-in done as separate transaction; CarMax offers a price that allows owners to sell their cars regardless of whether they intend to buy a vehicle.
* Sales reps paid fixed dollars-per-unit commission.
* Financing rates, extended-service plans and accessories offered with no-haggle approach.
* Vehicles backed with five-day, 250-mile, money-back guarantee.
* Average used-vehicle sale price (fiscal 2005): $15,789
"We are still at an early stage in the national rollout of our retail concept. We believe the primary driver for future earnings growth will be vehicle unit sales growth from comparable store sales increases and from geographic expansion. We target a roughly similar fixed dollar amount of gross profit per used unit, regardless of retail price."
* Average gross profit: $1,817/11.5%
1. Percentage change in used vehicles sold at stores open at least a year. Fiscal years ended February
Advertising Age's American Demographics appears the first Monday of each month. Go to AdAge.com QwikFIND aaq37m to search the American Demographics archives. Send consumer research to email@example.com
Hear from Fortune 500 brands that have been forced to pivot as consumer preferences evolve, as well as entrepreneurs building brands from scratch to meet new consumer needs. This event peels apart the layers of brand building with a carefully crafted roster of top marketing, technology, and creative leaders.Learn more