Behaviour Change

PROPAGANDA FOR CHANGE is a project created by the students of Behaviour Change (ps359) and Professor Thomas Hills at the Psychology Department of the University of Warwick. This work was supported by funding from Warwick's Institute for Advanced Teaching and Learning.

Wednesday, March 12, 2014

A negotiation that’s sweeter than Sugar


Shop owner: “I’ll be happy to try a few of them, I wouldn’t give you a massive order for them at this moment in time”
Seller: “Ok what quantity were you thinking? Because I have a minimum order”
Shop owner: “What’s your minimum order?”
Seller: “It’s 24”
Seller: “If you go for 24 that will be that will be 49.50”
Shop owner: “Can you get the price down a little bit more?”
Seller: “Can you increase the quantity a little bit more?”
Seller: “The least I can go down to is £48”
Shop owner: “How much have I got to have to make it that price?”
Seller: “I won’t say 60, but can we make it 50?”
Shop owner: “40 and you’ve got a deal”
Seller: “45 and I shake your hand”
Seller: “Go on it will shift, honestly, 45 and I shake your hand”
Hand shake and deal closed

This scene from ‘The Apprentice’ is a good example of negotiation techniques at work. Firstly, the seller compliments the shop owner on his shop which induces a positive mood and can increase liking for a product (Petty, Schumann, Richman and Stratchman, 1993) as well as increase compliance (Grant, Fabrigar & Lim, 2010).

The seller’s minimum order is an anchor because it acts as a benchmark in setting the shop owner’s expectations about the product’s value.  Research has shown that anchoring is an effective tool in negotiations, for example, Orr & Guthrie’s (2006) meta-analysis found a strong positive correlation between the initial anchor and the negotiation outcome. They described this pattern in lay terms; ‘every one dollar increase in an opening offer is associated with an approximate fifty-percent increase in the final sale price’ (p. 621). Other research suggests the mere fact that the seller made her offer first could have influenced the negotiation outcome in her favour. Galinsky & Mussweiler (2001) showed that whoever made the first offer across 3 experiments obtained a better outcome and first offers are a strong predictor of final settlement price. However both studies found that the experience and expertise of the other negotiator could reduce this effect.  The seller’s first offer may therefore be less advantageous because the shop owner is familiar with the product and may have the knowledge to reasonably estimate the product’s price. Furthermore, the seller is unfamiliar with the product (the premise of the show) yet she achieves a good outcome which suggests that confidence can improve the outcome of a negotiation. Indeed, confidence has been found to be persuasive (Brewer & Burke, 2002).

Another technique at play is the foot-in-the-door technique. The shop owner agrees to take a few products, and then accepts the minimum order. Both parties ask whether the other can concede a little more and asking has been shown to increase compliance to a request (Santos, Leve & Pratkanis, 1974; Clark & Hatfield, 1989). Similarly, Langer et al. (1978) found that when people plainly asked to use the copy machine the rate of compliance was 60%.

Finally, reciprocity is generated when the seller says she could ask for more but will concede and ask for less.  This shows that the seller is willing to worsen her position and the shop owner responds by feeling he should repay the seller by making a concession himself. Putnam & Jones (1982) found that if a tradeoff is reciprocated then a message of cooperation and problem solving is communicated. Hence the negotiation becomes mutually satisfying and thus more valuable.

One criticism is the fact that the seller says she cannot go lower than an order of 24. Another buyer could assume the seller would not be interested in any offer lower than 24 and walk away. Instead of expressing her limitations the seller could have said she would not be comfortable for the order to go lower that 24 because this would keep open the Zone of Proximal Agreement.

Alice Goodman



References

Brewer, N., & Burke, A. (2002). Effects of Testimonial Inconsistencies and Eyewitness
Confidence on Mock-Juror Judgments. Law and Human Behavior, 26(3), 353-364.

Clark, R. D., & Hatfield, E. (1989). Gender differences in receptivity to sexual offers. Journal of Psychology & Human Sexuality, 2, 39-53.

Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: the role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81(4), 657-670.

Grant, N. K., Fabrigar, L. R., & Lim, H. (2010). Exploring the Efficacy of Compliments as a Tactic for Securing Compliance. Basic and Applied Social Psychology, 32, 226-233.

Guthrie, Chris and Orr, Dan, Anchoring, Information, Expertise, and Negotiation: New Insights from Meta-Analysis. Ohio State Journal on Dispute Resolution, 2006; Vanderbilt Law and Economics Research Paper No. 06-12.

Langer, E., Blank, A., & Chanowitz, B. (1978). The mindlessness of ostensibly thoughtful action: The role of “placebic” information in interpersonal interation. Journal of Personality and Social Psychology, 36, 635-642.

Petty, R. E., Schumann, D. W., Richman, S. A., & Strathman, A., (1993). Positive mood and persuasion: Different roles for affect under high-and low-elaboration conditions. Journal of Personality and Social Psychology, 64, 5-20.

Putnam, L. L., & Jones, T. S. (1982). Reciprocity in negotiations: An analysis of bargaining interaction. Communication Monographs, 49, 171-191.


Santos, M. D., Leve, C., & Pratkanis, A. R. (1994). Hey Buddy, Can You Spare Seventeen Cents? Mindful Persuasion and the Pique Technique1.Journal of Applied Social Psychology, 24(9), 755-764.

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