Real World Negotiation

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Competitive and Collaborative Negotiation

REAL WORLD NEGOTIATION

Negotiation: Buying goods on display Role: Buyer

Introduction

Negotiation is the process of resolving a problem by consensus through mutual


concessions, exchanges, and creation when there is a conflict of interest between two or more
parties on a particular issue. Negotiation is an inevitable part of the organization's activities for a
series of transactions and coordination in any organization. Negotiation as a broad concept
means everything that happens in the process of giving and receiving, and it is no exaggeration
to say that we are constantly negotiating. In other words, negotiation is the process of resolving a
problem by reaching an agreement through mutual concessions, exchanges, and creation when
there is a conflict of interest between two or more parties on a particular issue. For example,
negotiations exist even when a child chooses a time to go to bed and sleep. Young children will
try to sleep according to their own biorhythms, and mom and dad are encouraged to sleep on
schedule. When there is a conflict between a child and a parent, one is persuaded by the other, a
time decision is made through command or compromise, and the child and parent are following
the decision. In addition, there are many negotiations that we experience in our daily lives.
Examples can be found around our lives at any time, such as between lovers, friends, teachers
and students, lawyers and clients, couples, politicians and politicians, military commanders and
division heads, group headquarters and affiliates, managements and the union, a diplomat
representing one country and a diplomatic country of the other country. The topic of this
assignment is what I negotiated with a general store employee (manager) to purchase a
blender that my wife extremely wanted. Of course, I personally wanted to make the topic of
this assignment that negotiation with my wife about whether we should buy blenders. However,
since the relationship between husband and wife is not a horizontal one, but a vertical one, it is
always considered that the outcome of the negotiation is a failure for me. (My wife is mostly a
decision maker and I'm just a follower). Because of this, I excluded it because it did not match
the real world negotiation's objective.

Parameters of the negotiation (the most important issues ; list in order of importance)

The most important thing before product negotiation is also the price and product quality.
Buying the display product at a price similar to the price of a new product sold on Amazon has
no advantage for me. Also, no matter how the price was good, if there is a problem with the
quality of the product, there is no reason to buy. And most of all, since my wife wanted a specific
brand's model, I don't have the option to buy another product within the same product line.

1. Price
2. Quality
3. Brand
4. Method of payment
5. Free accessories available (Additional Gifts)
Competitive and Collaborative Negotiation

1. Price
Price is the most important of the negotiating factors. The reason I deliberately went to
the small and medium-sized stores rather than the large stores such as Bestbuy and Walmart was
to be more advantageous for the price negotiation. In other words, if I deliberately went to a
small store and bought the product at the same price as a large store, there is no benefit for me.
Since it is the most important factor, a weight of 40% is applied. Sellers will want to sell at a new
product price anyway, so I set a 10% discount on Amazon price for reservation price. If I
calculate the 10% discount by weighted value, the reservation price is 24 pts.

2. Quality
Quality is another important factor for negotiation. Even if the seller gives you a lot of
discounts, if I buy a product that I can't actually use, all of this effort will be in vain. Since the
product is not a factor that the seller can manage, I checked the condition of the product before
negotiation. Of course, if I do not have any functional problems in the future, I will not hesitate
to buy, I set a reservation price for slightly noticeable scratch would be fine to me. If I calculate
it by weighted value, the reservation price is 18 pts.

3. Brand
My wife decided on a specific model for a particular brand. As such, there are no
alternatives to the brand. For this perspective, weighted value of the reservation price is 10 pts.

4. Method of payment and Free Gifts


The payment method or additional free gift is a minimal safeguard assuming that
negotiations on the factors set up earlier were not successful. That's why I set only 10% of
weights for them, and these parts didn't matter much whether I could achieve my goals or not.

Preparations / Strategies

The preparations of the negotiation is as follows. The store displays the products for
display purposes, but there is no difference in performance from the new products, so from the
consumer's point of view, I believed that I can negotiate with seller about 10-20% cheaper than
the new products. From the standpoint of the seller, the product is already on display to
customers, and it is necessary to exhaust the inventory of the product with the living life.
Therefore, I prepared three proposals before the store visit.

Proposal 1: Require 20% discount compare to new Amazon products


Proposal 2: Require the presentation of a free gift that is not given when purchasing a
new product or the demand for more free gift than the gift that is presented when a new product
is purchased.
Proposal 3: Require more store points than unopened new products when purchasing
display items (However, this proposal would not effective for me since I do not intend to visit
again in the future)

The first proposal is the price discount on the display as mentioned above. In the first
proposal, I could happy to buy 10% to 20% off the same product and unopened new product with
the same performance. For the first case, this would be the scenario most consumers want.
Competitive and Collaborative Negotiation

Next, if it is difficult to negotiate the first proposal, I could negotiate with the second
proposal. For the second proposal, when discounts on display goods are difficult, seller could
give free gifts in the form of free gifts. In this case, although the first proposal failed from the
consumer's point of view, it was difficult to obtain the satisfaction as the first proposal desired by
the consumer because he received a free gift when purchasing the display goods under the
second proposal. Nevertheless, it is generally a satisfactory strategy because I think that the
negotiation has been benefited by additional free gifts.

Finally, if both the first and second proposals fail, there is a third proposal. In the third
proposal, instead of discount on the display good, seller could offer the store points. In this case,
although it is less satisfactory than the first and second proposals, but it still beneficial due to I
could expect future discount. However, since it is unlikely that I will find the same store in the
future, I didn't think it was a benefit for me.
As a consumer, the best scenario for me would be: first> second> third.

BATNA / Reservation Price / Target

- BATNA : Find another seller


- Reservation Price : Amazon selling price of the same product
(Assuming quality, brand, and model are all the same)
- Target : 80% of Reservation Price(Amazon selling price)

Through "camelcamelcamel", which provides Amazon price tracker, Amazon price


history charts, price watches, and price drop alerts., sets the price level I should target. I
occasionally gathered information that Amazon sells 10-15% off for refurbished products and
bargains. Through this, my best target was to get a discount of up to 20% off of new product for
this negotiation.
For our reservation price, the most important issue for me was offered discount by seller
about 10% to 20%. My reservation price was 10% off on this issue. The second important issue,
the quality, should be almost same as new product. Scratch of lines without problems of quality,
which was my reservation price, was fine with me. As mentioned earlier, my wife decided on a
specific model for a particular brand. As such, there are no alternatives to the brand. However,
other lineups of the same brand seemed to have room for negotiation with my wife. For the best
method of payment for me was paid by credit card. Because if I pay by credit card, I could get
around 2% cash back from your credit card company. Additional gifts didn't mean much to me.
Given my weighted value for each issue, my reservation price is 77 pts.

Sources of power

- This may help the store run out of long-term sluggish inventory.
- Display products are usually something that consumers are reluctant.
- If there are end-of-month earnings pressures for the store, the seller will sell the product
with minimal margin.

Results
Competitive and Collaborative Negotiation

I always think about how to get more benefits when I buy expensive appliances or
furniture, especially if I negotiate with the store about the benefits of buying goods that are often
negotiated in everyday life. It's possible. In the case of this negotiation, I was prepared for the
first, second and third proposals by applying what I learned in class. In addition, the store was
not only able to reduce inventory on display items that were difficult to dispose of, but also paid
for it in cash, so the seller would be satisfied with the negotiations.
Through this negotiation, I learned that the higher the negotiator’s position in his or her
organization, the stronger the bargaining power over the negotiating partner. In fact, the
conversation with the store's general staff didn't seem to work so well, and the store managers
started negotiating with me directly, and finally we were satisfied with each other. Also,
negotiating with non-large retailers at the end of the month should be a better deal for customers
due to they have a performance pressure at the end of the month, compare to the large retailers
like BestBuy, Wal-Mart, and Amazon. In fact, I went to the store at the end of August to
negotiate a purchase, and I believe that the sellers after time offered me more benefits than usual.
Competitive and Collaborative Negotiation

Exhibits

Exhibit 1. Scoring System based on Reservation Price


Competitive and Collaborative Negotiation

Exhibit 2. Scoring System based on Result

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