Bait And Switch

DEFINITION of 'Bait And Switch'

A dishonest marketing tactic in which a marketer advertises a very attractive price/rate/term that is really a teaser rate meant to attract customers. Once the customer comes into the store/office to inquire about the advertised price/rate (the "bait"), the advertiser will attempt to sell the customer a more expensive product (the "switch").

BREAKING DOWN 'Bait And Switch'

The bait and switch tactic has gained notoriety in the mortgage market as an unscrupulous marketing tactic meant to drive business. In a mortgage bait and switch an agent or company will post exceedingly low mortgage rates, knowing full well that the vast majority of applicants will be unable to qualify for these teaser rates. Once customers begin to come into the office to inquire about the low rate, the agent will proceed to offer them the higher rates they are more likely to qualify for, thus earning greater commission.

RELATED TERMS
  1. Bait Record

    An internal control used in accounting to detect fraud and improper ...
  2. Credit Card Teaser Rate

    A lower-than-normal interest rate that a credit card company ...
  3. Initial Interest Rate

    The interest rate that is initially assessed on an adjustable-rate ...
  4. Customer

    An individual or business that purchases the goods or services ...
  5. Flighting

    An advertising scheduling strategy in which a business alternates ...
  6. Advertised Price

    The price of a product or service as displayed or announced in ...
Related Articles
  1. Investing

    Bye, Mad Men: How the Net Is Changing Advertising (FB, TWTR)

    The Internet and digital media are changing the way companies advertise and market themselves. More targeted, varied and faster advertising is possible.
  2. Investing

    How is Programmatic Advertising Changing Media?

    Understand what programmatic advertising is as well as the technology that drives it. Learn about the top four ways programmatic advertising is changing media.
  3. Investing

    Trends And Growth In The Digital Advertising Industry

    The rapidly expanding digital advertising industry is leading a shift towards content and demanding forced innovation.
  4. Personal Finance

    How The Internet Web Ad Industry Works

    Over the past 10 years, advertising strategies have evolved as a result of technological development as the internet has provided new channels for advertisers to reach a larger audience.
  5. Brokers

    3 Dishonest Broker Tactics

    Learn how to spot three dishonest techniques that your broker might be using on you.
  6. Investing Basics

    How to Dodge Brokers Using Smarmy Sales Tactics

    Many finance professionals use illegal, high-pressure sales tactics to sell bad securities to investors. Here's how to know if you're being swindled.
  7. Investing

    Advertising From TV To Internet: An Industry History

    Changes in television consumption habits have forced advertising to target audiences through new means, namely Internet advertising.
  8. Economics

    What's Involved in Customer Service?

    Customer service is the part of a business tasked with enhancing customer satisfaction.
  9. Economics

    Understanding Marketing

    Marketing includes all of the activities of a company associated with buying and selling a product or service.
  10. Professionals

    Advertising

    FINRA/NASAA Series 66 - Advertising. In this section forms of advertising, advertising standards and performance advertising.
RELATED FAQS
  1. What is the "bait & switch" technique?

    The bait and switch is a advertising technique which can be considered illegal, but in most cases is merely looked upon as ... Read Answer >>
  2. What are the key differences between marketing and advertising?

    Understanding the role advertising plays in the marketing mix will help business owners define their promotional strategies ... Read Answer >>
  3. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
  4. How does a customer base dictate goodwill?

    Find out how a customer base dictates the value of the goodwill by providing a ready market for its products and spreading ... Read Answer >>
  5. Is good customer service something to look for in a company in which I am considering ...

    Learn about the importance of customer service when deciding whether to invest in a stock. Good customer service can ensure ... Read Answer >>
  6. What does it mean when they refer to the churn rate of a telecommunications company?

    Learn what companies in the telecommunications industry mean when they refer to a churn rate, and discover tactics companies ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center