MKTG 5624 Project

MKTG 5624; Prof Dr. France

Preparations for Moms.com

Please preserve these headings and answer each question separately, beneath the question. I expect well-written papers that reflect the concepts discussed in the readings and class and that demonstrate a thorough grasp of the facts of the exercise. The papers should be 5-10 pages double-spaced. Please place in the drop box on the course website by noon, Friday, August 21^st.

1. Describe the issues facing the negotiators in this case.

WCHI wants a syndicated show from Hollyville. WCHI audience position has eroded because of the lack of new product, which now ranked fifth among all seven stations.

As the negotiators want to get the best price and terms for moms.com they face following key negotiating issues:

• Runs per episode
• Fee per episode
• Payment schedule

The other issues include:

• Juniors pricing
• Bet on Ratings confidence

2. Describe your interests or fundamental concerns that will guide you in the negotiation. Note that negotiators often have non-financial (e.g. strategic) as well as financial interests.

The following are my interests in Moms.com that will guide in my negotiations for moms.com:

• Rank - It is ranked in the top 10 each week with 20 rating and 30 share in a prime time
• Audience& Demographics - The show appeals primarily to 25-54-year-old women, who constitute 45% of its viewing audience. These demographics make the program particularly appealing because of the high rates that advertisers will pay to reach this market.
• Prime time slot i.e. at 6pm
• Financial Interest - Advertising revenue is calculated based on demographic number
• Least competition - I have researched my competitors’ programming profile and concluded that they would not be interested in pursing for the following reasons:
• WILL which is no 3rd , has 10% market share, target young men only
• WXYZ, the smallest station, has financial problems.
• WWIN, the market leader, currently has strong 6pm show

The following are my concerns that will also guide in my negotiations for moms.com

• Currently has weak demographics
• Past failed aggressive buying strategies
• Low house hold ranking

3. Why are the interests you describe of significance to you?

Rank - Currently we are ranked 5^th amount all station. We are hoping to move up, as mom.com is top ranked show.

Audience& Demographics – Currently out audience position has eroded because of the lack of new product.

Financials -  As advertising revenue is calculated based on demographic number, we have better financial revenues from moms.com

4. Describe your BATNA and assess its strength. Explain.

My BATNA would be to purchase a different program for the same time slot from another producer.  If NO DEAL of Moms.com, my alternative programs show would produce $3,000,000 in revenue. If NO DEAL of Junior, my alternative revenue for Junior produces USD 0

My strength of BATNA came from following reason:

Management will not let me buy the program if the licensing fee exceeds  $60,000 per episode; and the show would never sell for less than $30,000 per episode. Hence my min revenue requirement is ($60,000 - $30000)*100 i.e. $3,000,000

5. What is your reservation price below or above which you will walk away?

I would walk away for the following reservation prices.

Price/Episode > $60,000
Run/Episode < 6
Void the Junior program (per episode) > $20,000

6. What is your target?

Price/Episode: $40,000
Run/Episode: 8

Junior (per episode): $12,000
Financing % of payment in each year: 1>40%; 2>25%; 3>20% and 4>15%
Net Value of deal: $ 6,500,000

7. What is your opening position? What concessions do you plan to make if necessary?

Price/Episode: $30,000
Run/Episode: 10

Junior (per episode): $7,000
Financing % of payment in each year:  zero payment up front and the payments spread evenly over 5 years.

8. Describe the strategy that you plan to pursue in the negotiations and important tactics.

I will use accommodative negotiation style, as relationship is important factor for us. This will help us in creating goodwill, demonstrate cooperativeness and avoid damage to relationship. On the negative side it could reduces influence, reduces value creation

I would use win-win Integrative strategy with these methods

• Contingency contracts
• Bet rather than argue over on differences in expectations
• Avoid reliance on estimate accuracy
• Share risk
• Provide incentive to perform well
• Manage own decision-making biases
• Provide Multiple equivalent offers (same value for me) - Two or more different “package” offers such as:
• $60,000/episode, 4 runs, 20% now, 30% in yr 1, 50% in yr 2
• $60,000/episode, 6 runs, 50% now, 25% in yr 1, 25% in year 2
• $60,000/episode, 8 runs, 75% now, 25% in yr 1
• Post-settlement settlements

9. Discuss possible agreements that you might accept.

• NO DEAL, take my BATNA with NET Revenue USD 3,000,000
• DEAL Moms.com only
• DEAL Moms.com with Junior

10. Discuss what you take to be potential barriers or obstacles to reaching agreement. These might include characteristics of the issues, situation, and/or the negotiators representing the other party.

Communicating by willingly providing information and enquire questions develops the relationship and trust amongst all parties. By sharing information, a negotiator encourages view taking and improves the quality of the agreement

11. What do you take to be the interests of the other party? Why do they want what they want?

• Show interest on Junior program
• Show flexibility on payment schedule
• Offer packaged deals

12. What do you take to be their BATNA? How strong is it?

Assuming that they know same information as we know, I would take their BATNA is:

Price/Episode: $60,000
Run/Episode: 6

Junior (per episode): $12,000

Given HOLLYVILLE's financial position, I have heard that they hope to obtain 50% up-front payment and 25% in years 1 and 2.

13. What do you need to learn from the other party at the bargaining table? Be specific. How do you hope to obtain this information?

• Provide different packages to learn their interests
• Learn their non-financial goals
• Provide information to assist in developing a win-win negotiation
• Make multiple iterations of bargaining and learn Buyers Sensitive analysis to match with mine