Tag Archives: distributive

Viacom’s attempt to Position vs. Music Industry

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February 12th Philippe Dauman, Viacmon’s president and CEO, issued the following statment:

As we go forward, we are continuing to focus more on software than hardware, looking to reduce the cost structure associated with Rock Band, being selective in the music titles that we choose for Rock Band based on their cost. The music industry will assist with this category to make sure that it can continue on a profitable basis in the future and then finally we think we have the best games in the category, we’ll continue to rollout exciting products.

An obvious signal to the Music Industry as he begins the negotiation by creating his position through the media.  It is even more effective when followed by a letter/email/phone call to each company with his offer.  Effective positioning helps to shift the frame of reference before the negotiation technically begins.  Philippe is preparing the industry to receive his demands. To truly shift their expectations you need to deliver an offer, effectively dropping an anchor.

The Music Industry would be wise to attempt to shift the focus back onto their position with a preemptive strike.  Instead of allowing Viacom to open the discussions with some ridiculous offer like 50%, they need to provide an anchor of their own to begin the discussions around their position.  By opening first the initial expectation is set.  This is definitely shaping up into a classic Hard Bargaining negotiation.  I’ll keep my eye on any developments.  What do you think?

Characteristics and Behaviors of Hard Bargaining

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Hard Bargaining is probably the most recognizable type of negotiation.  Buying a house, buying a trinket in a foreign market, selling an asset, buying close out inventory, disposing of equipment, etc.  When most people picture Hard Bargaining they think of some over the top personality slamming his fist on the table making ultimatums and demands.  Because motives are clear (it’s all about the price) trust is not a factor.  A lack of trust combined with high levels of conflict breeds an environment filled with all sorts of negotiating tactics.  (Click the link for a list of common negotiating tactics)

Contrary to popular belief I have found that it is the strong silent type that tend to be more effective during these types of negotiation.  Antics simply run the risk of antagonizing the other party causing them to make emotional rather than rational decisions (i.e. they won’t do business with you because you have pissed them off).

EXTERNAL CHARACTERISTICS: When there are several alternatives.  Deals become more complex, however, price is still the main consideration.  This type of transaction is generally a one–off, however, subsequent transactions can be associated with the deal terms.  Subsequent deals with the other party will be influenced by the outcomes achieved as precedents start to form.  The focus of a hard bargaining negotiation is primarily short-term (one year horizon).  Typical negotiations include asset and equipment purchases, leases, acquisitions, divestitures, etc.

BEHAVIORAL ELEMENTS: Hard bargaining requires very little trust, often financial concerns are dominant (“is it doable”).  Satisfaction is received through opening positions, subsequent moves, and compromise on minor issues.  Again, you can afford to use as much power as possible without causing an emotional response from the other party.  You can afford to demonstrate your power through arrogance, intransigence, and obstinance.  The primary differences between an Auction and Hard Bargaining are more variables, subsequent transactions, long term precedents, and less extreme divergence of power.  Often neither party is entirely dependent and both parties may refuse the deal.

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Characteristics and Behaviors of an Auction Style Negotiation

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Auctions aren’t just for eBay and Sotheby’s anymore.  An auction doesn’t require a barker or online presence either.  An auction can be held by a buyer or a seller.  The primary characteristic is a one to many relationship.  Auctions are always one-off transactions where price is usually to only factor and at the very least the dominant driver of the deal.  The hallmark of an auction is utilizing game plan theory to take advantage of competitive behavior to maximize value without respect to the other party.

The perfect opportunity to hold your own auction is the very next time you are shopping for a new car.  Think about it, it’s a commodity, and price is the primary concern.  You flip the script on the dealers and make them compete for your business.  Don’t believe the hype of these online sites that claim to provide this service for you, you are better off running the auction yourself.  3rd parties have ulterior motives, just remember who is paying their bills.  I’ll post a step by step guide to running the new car auction in a future post.

EXTERNAL CHARACTERISTICS: An auction exists when there is a one-to-many situation for either the buyer or the seller.  Price is the primary objective and many times the only variable.  This type of transaction is strictly a one–off and any future transactions are not predicated or dependent upon the terms of this transaction.  There may be subsequent deals, however, each one will be unrelated and negotiated separately.  The focus of an auction is solely on short-term gain without consideration for the other party’s financial situation.

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