Saturday, March 3, 2012

Business Definition ---> Bait & Switch

From the link:

The unethical and illegal practice of a business promoting an item at an especially attractive price with the intention of convincing customers to buy something else that offers the business more profit.

The business is likely to begin a bait and switch by telling customers who want to buy the promoted item that it is of inferior quality or is sold out and no longer available.

Another link:

Bait-and-switch is a form of fraud, most commonly used in retail sales but also applicable to other contexts. First, customers are "baited" by advertising for a product or service at a low price; second, the customers discover that the advertised good is not available and are "switched" to a costlier product.

The goal of the bait-and-switch is to persuade buyers to purchase the substitute goods as a means of avoiding disappointment over not getting the bait, or as a way to recover sunk costs expended to try to obtain the bait. It suggests that the seller will not show the original product or service advertised but instead will demonstrate a more expensive product or a similar product with a higher margin.

Non-retail use of bait & switch tactic:

  • Employers are known to use bait-and-switch tactics by advertising a job opening in a way that gives a misleading impression of likely working conditions or compensation packages.

  • Bait-and-switch tactics are frequently used in airline and air travel advertising.[1]

  • Hotels widely use the form of bait-and-switch tactics known as 'resort fees'. They first attract customers by advertising the lower price (which appears on all promotional materials and rate comparison engines), and charge customers the mandatory "resort fee" when they arrive for check-in. [2]

  • Software companies that initially offer software products or services for free (often under a "Beta" moniker) and at a later point make parts or all of the functionality available only in a paid product without communicating that intention from the start are said to employ bait-and-switch tactics.

  • Online dating sites have been known to post fake profiles as a way of enticing people to join; in some cases, employees of the site's parent company send messages via a sockpuppet in order to encourage non-paying users to upgrade so they can message back.

  • Telecommunications companies often offer services at an introductory price that consumers may find reasonable, then after the introductory period escalate the price as much as 100% depending on the service. Some telecommunication companies also include a contract period in which the consumer is forced to pay the escalated price.

  • Colleges and Universities often use front-loading of grants to reduce the out-of-pocket cost during the first year, replacing grants with loans in subsequent years.

  • Real Estate Brokers and Agents often advertise themselves as buyer agents without disclosing that they may not be able to provide that service if they work for a brokerage that lists homes and represents home sellers.
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