The Negotiators Paradox

Published: Oct 12 , 2012
Author: Alan Smith

I read a fascinating report that suggested that for many consumers adding more features to products actually has the opposite effect that the producer intended. It actually devalues the product.

A piece of research published in the Journal Of Consumer Research, suggests that consumers adopt an averaging approach when validating the value of a product or service.

The research asked consumers how much they would be prepared to pay for an iPod touch. They were subsequently asked how much they would be prepared to pay for an iPod touch when bundled with a series of apps. They appeared to be prepared to pay less for the product with more features.

A similar survey asked customers how much they would be prepared to pay to stay in a five star hotel, and then again asked how much for the same hotel bundled with a three star pool complex. The same results occurred.

The research concluded that adding lower value items to the core product actually meant that the consumer averages out the value thereby cheapening the proposition rather than improving it.

This comes as no real surprise to the negotiator.

There is usually a very good reason why we want to do, or indeed not do something. We tell the other party what that reason is. We are tempted however to add more reasons, usually weaker ones, to substantiate our original powerful thought.

In the classic western way of thinking, more is always better. The paradox is often it is not.

The issue is two fold.

First our backing up with weaker arguments tends to devalue the original good one thus having the exact opposite effect we intended. Much worse we allow ourselves to be picked off on the weaker feeble reasons. If the other side are able to answer or rebuke the less good reason we may find ourselves on the back foot.

Stick to your guns. State your best reason clearly and appreciate the value of silence.

Alan Smith, Partner


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Alan Smith

About the author:

Alan Smith
My background is marketing and advertising. After graduating in Economics I entered the agency world to become, at 28, MD of London's largest independent below-the-line marketing provider.

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Who is Going to Pick the Fruit?

It’s amazing how many people go into negotiations with no clear idea about their bottom line. “We’ll see how it goes,” seems to be the rather naïve thought and of course they leave themselves open to the risk of a really poor and unprofitable deal at the end of it. It is empowering to know your bottom line, especially when you have internal agreement at senior level. Think about it: the other side are aggressively demanding that you improve your terms, but you know that what they are asking for is beyond your bottom line.

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