PERSONAL SELLING

Using Negotiation Role Playing To Teach

Marketing Skills And Content
Leon Winer
Pace University
The Porter, McKibbin (1988) report has identified negotiation as being
one of the skills that business school students should possess in order
to be able to function effectively as managers. Marketing teachers
have recog-nized indepen-dently the importance of negotiating skills,
for example, Kotler (1988) and McCarthy (1988). The importance of
negotiating is further supported in a recent article in the Journal of
Marketing by Rangas-wamy, Eliashberg, Burke and Wind (1989).
Finally, in an exit survey of MBA students at Pace University, Winer
(1989) found that students also perceived a need for negotiating skills.
On the basis of this evidence, marketing teachers at Pace University
set about introducing negotiating skills training into the basic graduate
marketing course. The issue was how to achieve skill development
with-out sacri-ficing learning of subject matter.
The approach taken was to use a concise set of instructions for nego-
tiating and to prepare two marketing-oriented scripts.
Negotiating Experiences
At the beginning of the 2.5 hour class meeting, the instructor distri-
buted a two page hand-out (see Appendix 1) describing applicable con-
cepts. This was accom-panied by a 15 minute lecture covering the high
points of the hand-out. The instructor also brought two sets of scripts
for each experience, which he distributed after assigning roles to
individual students.
The first exercise consisted of a negotiation between a "Vendor" team
and a "Buyer" team. See Appendix 2. Pairs of students were assigned
to play each of the two roles. For each set of buyers and vendors, a
team of students was appointed to act as "observers."
The scripts started with information about a hypothetical vendor-buyer
relation-ship. Identical opening information was presented on Vendor
and Buyer scripts. This set the stage for the negotiation. Then, each
script presented the goals of that side, some secret information and
some ideas about the needs of the opposing side. Observers received
both scripts.
Students were given time to read and discuss the hand-outs and the
scripts and were instructed to start negotiating whenever they were
ready. The teams were strongly encouraged to discuss their
negotiating strategy before they started negotiating. The instructor
made it clear that there was no "correct" outcome. The negotiation
could end with a contract, or with an agreement to meet again, or with
an agreement not to meet again. The only point of the exercise was to
have an experience in negotiation.
The mission of the observers was to note what happened during the
nego-tia-tion and to make notes comparing actual behavior to behavior
recom-mended in the hand-out. Students moved into the experience
with gusto and completed the first exercise within 45 minutes. Then,
observers gave their reports and there was an open discussion. There
was time for a second negotiation exercise, involving "Brand
Managers" and "Opera-tions Managers." Roles were changed and one
set of negotiators became observers and the observers became
negotiators. Again, the negotiation was followed by observers’ reports
and open discussion.
During the subsequent evaluation, students reacted very positively to
the experience. They recommended it as a permanent feature in the
course and recom-mended inclusion of negotiation experiences in
other courses. They also offered suggestions for improving the scripts,
which had been written by the instructor on the basis of personal
experiences and published case studies. Subsequently, the negotiation
exercise was added to a section of the "Advanced Cases in Marketing"
course and one section of Business Policy.
At the end of each semester, questionnaires were distributed, asking
students to express their satisfaction on a 0 to 10 scale (0 = "Not at all
satisfied," 10 = "Extremely satisfied") with the amount of learning they
had experienced in the course, with specific reference to negotiating
skills and 15 other items. The average for the negotiating skills
question was 7.9, as compared to the average of 4.2 obtained in
answer to a similar ques-tion asked on surveys taken before the
negotiation exercises were intro-duced into the program, for a gain of
3.7. Respondents also gave higher ratings than previous respondents
regarding other learning areas, including "competence in a business
discipline" and satisfaction with the "high standards" maintained by
the instructor.
It was also noted during the semester, that students referred several
times to the scenario exhibited in the "Operations Manager/Brand
Manager" negotiation exercise, which indicated that the experience
had been memorable.
Conclusion
On the basis of these experiences, it appears possible to include
negotiation exercises in marketing courses without sacrificing content,
provided that the scripts are written especially to deal with marketing
issues. Furthermore, properly drafted scripts may not only provide
useful negotiation experience, they may emphasize in a memorable
fashion aware-ness and understanding of important marketing pro-
blems.
Considering the importance of negotiating skills to business students,
and to marketing students in particular, the recommendation to
marketing educators is to include negotiation exercises with
marketing-oriented oriented scripts in their courses. Two such sets of
scripts are provided here with a set of negotiation con-cepts.
References
Kotler, Philip, Marketing Management, 6th ed., Englewood Cliffs, NJ:
Prentice-Hall, 1988, pages 690-695.
McCarthy, E. Jerome and William D. Perrault, Jr., Essentials of
Marketing, 4th ed., Homewood, IL: Irwin, 1988, page 166.
Porter, Lyman W., and Lawrence E. McKibbin, Future of Management
Educa-tion and Development, New York: McGraw-Hill, 1988.
Rangaswamy, Arvind, Jehoshua Eliashberg, Raymond Burke and Jerry
Wind, "Developing Marketing Expert Systems: An Application to Inter-
national Negotiations," Journal of Marketing,Volume 53, No. 4, October
1989.
Winer, Leon, "How An MBA Exit Survey Is Changing A Marketing
Curriculum," Marketing Education: Challenges, Opportunities and
Solutions, edited by Doug Lincoln and Jeffrey Doutt, Proceedings of the
Conference of the Western Marketing Educators Association, April 13-
15, 1989, pages 36-39.
Appendix 1. CONCEPTS FOR NEGOTIATING
What is negotiation? When do you negotiate?
Negotiation is conferring with another person or group to arrive at a
settle-ment of some conflict. Negotiation is useful for resolving
conflicts when the two sides: share an important goal, have some
differences, are in a position to trade things that they value with one
another.
If the two sides have a common goal and no differences, the
appropriate activity is problem solving. If they have only differences
and no common goals, a conference will not be productive. However,
in case of doubt, a conference will reveal whether the two sides share
an important goal.
In business, negotiation has been practiced widely in labor
management rela-tions and in marketing. With the advent of task
forces and matrix organizations, negotiation is growing in importance
as a managerial process. Some authors have defined negotiating as
creative confrontation, to be used routinely for achieving objectives.
What should you hope to accomplish through negotiation?
The mark of a successful negotiation is a contract, written or verbal,
which signifies that a mutually agreeable solution to conflict has been
reached. If the negotiating parties must continue to work with each
other, for a negotiation to be deemed successful, the contract should
be such that both sides "can live with it." Examples would be labor
management contracts, agreements between suppliers and customers
who intend to do repeat business and contracts between depart-ments
of an organization. Examples of the latter would include: brand
manager and sales force or computer department and financial
analysis department.
On the other hand, if the negotiation is between parties that will not
interact with each other after the completion of the deal, each side
may simply try to get all it can while reaching agreement, without
concern about the long term happi-ness of the other side. Examples
would be the sale and purchase of real estate or a business.
Are negotiation skills useful outside of formal negotiations?
Yes. If a manager approaches conflict situations as candidates for
negotia-tion, he/she will achieve objectives, while saving a great deal
of time and energy. The manager will also avoid friction with other
members of the organization.
What do you have to do to be a successful negotiator?

A. Most important: prepare thoroughly for the negotiation.

B. Never enter negotiation when you are tired, hungry or angry.
C. Allow for the possibility of not reaching agreement.

How do you prepare for a negotiation session?

A. Define: your own goals, your opponent’s goals and the conflict.
B. Identify the goals you share with your opponent.
C. Define the things you are willing to trade and their value to your opponent. Do the
same for the other side: what might they offer you and how much is it worth to
you.
D. Anticipate alternative scenarios and prepare your tactics.
E. Define your BATNA (Best Alternative To Negotiated Agreement). This will
show you how important it is to you to reach a negotiated settlement.
F. Realize that you are not weaker or stronger than your opponents. The two sides
share goals and both sides are willing to trade to attain their objectives.

What should you do during a negotiation session?

A. Volunteer to do the paperwork: to keep notes on what is being agreed upon. The
person who takes the notes is likely to be the one that is happier with the results.
B. Open by stating the goals you share.
C. State your demands: high if you are selling; low if you are buying.
D. If the other side makes an unreasonable demand, be prepared to flinch! Let out an
anguished "What?!" If need be, walk out. (You can always walk back in.)
E. If you yield from your demands, yield small amounts, infrequently. Never yield a
large amount.
F. Never give something for nothing. Trade what is cheap to you, but valuable to the
other side for what is valuable to you but cheap to them.
G. Talk less and listen more: remember that you will never give anything away while
you are silent. Use the silent periods to think over what the other side has said.
Consider what tradeoffs you want to offer them.
 H. Find alternatives.
I. Take breaks.
J. If you are going to attack, attack hard and without warning.
K. Reach for agreement, but do not insist on it. The end result may be: agreement, or
agreement to continue later, or end of the negotiation.
L. If you feel pressure to settle, be aware that the other side is probably feeling
similar pressure.

What should you emphasize?

A. Repeat the goals you share with your opponent, from time to time.
B. State your position clearly and repeatedly.
C. Clarify positions. Repeat what they said. Ask questions.

What should you remember?

Nearly everything is negotiable. When the other side says: "This my
last offer!" that too, may be negotiable.
What should you avoid?

A. Do not make concessions early.

B. When you make concessions, avoid large concessions. Make the other side earn
the concessions they get.
C. Avoid irritating the other side or making them angry.
D. Do not accept a deadline for reaching a settlement.

What should you do after each negotiation session?

Review what happened. Could you have done better if you had done some-thing
differently? Did the other side make any mistakes that hurt them?
Appendix 2a. VENDOR
Information Known to Both Parties
Universal Air Conditioners buys 100,000 motors every year that are
assembled into its products. To reduce risk and to benefit from
competition, Universal has followed a policy of multiple sourcing.
Whenever possible, they have divided their business among the two or
three most competent suppliers.
From time to time, and at least once a year, Universal reviews the
perfor-mance of each of its suppliers. Factors taken into account
include: on time delivery; quality of product; price; willingness to make
smaller, more frequent shipments; willingness to deliver directly to all
of Universal’s six plants, which are geographically scattered; prompt
and helpful response to complaints; product innovation.
Universal has just completed a review of its motor suppliers. A
negotiation session regarding next year’s business with one of its
motor suppliers, Giant Electrical is scheduled for today. Participating in
this session will be representa-tives of the two companies: Universal’s
Purchasing Manager(s) and Giant’s Sales Representative(s).
Giant Electrical has been one of Universal’s three suppliers of motors
for the past 16 years. Giant’s performance has been considered
satisfactory in the past, as evidenced by the long term business
relationship. During the past year, Giant has sold 35,000 air
conditioner motors to Universal.
The remainder of Universal’s motor business has been divided
between Western and Reliable. It is generally known that Reliable has
lost a major account to self-manufacture by the customer and is very
eager to replace the lost business.
Information Known Only to the Giant Sales Representatives
Giant Management anticipates a slow-down in business during the next
twelve months due to an expected softening in the national economy.
In order to maintain profits and dividend payouts, they are very eager
to increase volume at Universal and reduce costs of servicing the
account. Accordingly, they have charged the sales team that calls on
Universal as follows:

1. Increase our share of Universal’s air conditioner motor as much as pos-sible. We

expect you to get 50% and will not accept as good performance on your part
anything less than 45%.
2. The small, frequent shipments have got to be reduced, or even better eliminated.
We want to ship carload or truckload lots only.
3. We want you to negotiate a 5% increase in price, from $20 a motor to $21 a
motor.

If you achieve all three objectives, we will recognize your performance with a handsome
bonus. A promotion along your career path is also a possibility, or a promotion to
Management may be discussed. On the other hand, if you fail to achieve the objectives
we have set for you, or worse yet, if you lose part of the business we have now, a transfer
to Goose Bay, Labrador is in store for you. The Giant sales team, as a result of their
regular networking around the home office had made the following discoveries:

1. A new super efficient communications system had been installed and debugged
that would enable customers to dial in and obtain very fast responses from
knowledgeable people regarding just about every problem that was likely to come
up. This system was due to be opened for customer use within six months.
2. The Engineering Department was about to announce a new motor that would cut
electrical consumption by 17%, without any sacrifice in power. The price of the
new motor would be 50 cents higher than the existing motor.

Appendix 2b. BUYER

Information Known to Both Parties
Universal Air Conditioners buys 100,000 motors every year that are
assembled into its products. To reduce risk and to benefit from
competition, Universal has followed a policy of multiple sourcing.
Whenever possible, they have divided their business among the two or
three most competent suppliers.
From time to time, and at least once a year, Universal reviews the
perfor-mance of each of its suppliers. Factors taken into account
include: on time delivery; quality of product; price; willingness to make
smaller, more frequent shipments; willingness to deliver directly to all
of Universal’s six plants, which are geographically scattered; prompt
and helpful response to complaints; product inno-va-tion.
Universal has just completed a review of its motor suppliers. A
negotiation session regarding next year’s business with one of its
motor suppliers, Giant Electrical is scheduled for today. Participating in
this session will be representa-tives of the two companies: Universal’s
Purchasing Manager(s) and Giant’s Sales Representative(s).
Giant Electrical has been one of Universal’s three suppliers of motors
for the past 16 years. Giant’s performance has been considered
satisfactory in the past, as evidenced by the long term business
relationship. During the past year, Giant has sold 35,000 air
conditioner motors to Universal, at $20 per motor.
The remainder of Universal’s motor business has been divided
between Western and Reliable. It is generally known that Reliable has
lost a major account to self-manufacture by the customer and is very
eager to replace the lost business.
Information Known Only to the Universal Purchasing Managers
Universal Management is aware of slower sales due the softening of
the economy and is seeking to reduce costs in an attempt to maintain
profits and dividend payouts. It has issued a directive to the Purchasing
Department empha-sizing the following points:

1. Price increases proposed by vendors are to be resisted vigorously.

2. To maximize manufacturing efficiency, inventory levels are to be mini-mized. All
efforts are to be made to schedule deliveries of parts "just-in-time," so that no
inventories of parts and sub-assemblies are to be maintained.
3. Anything less than timely deliveries are not to be tolerated.
4. Poor quality parts are not acceptable because they cause delays in pro-duc-tion,
which lead to higher costs.
5. Suppliers must be attentive to our needs and problems.
6. We want to use innovative suppliers that provide components that give our
products advertisable consumer-important benefits.

On the other hand, management was giving purchasing managers the lati-tude to use only
two sources instead of three if there was clear indication that higher profits would accrue
to Universal as a result.
To emphasize the seriousness of these goals, management had also
announced a plan to encourage 5% of their employees to retire early
on a reduced pension. There were also rumors of impending
elimination of one level of management. To soften the impact of these
devastating announcements and rumors, management had instituted a
system of generous bonuses to be paid to managers whose
performance had resulted in substantial cost savings or increases in
sales volume.