Negotiation process of an Advertising Campaign

This report describes the negotiation process of an advertising campaign by celebrity endorsement. It includes pre-negotiation, negotiation, and post-negotiation stages. The negotiation is settled on $420k plus 12% commission on sales for four months. The report also includes the effects of the advertising campaign on the company's sales revenue.

Running Head: Negotiation Process 0
Negotiation process of an
Advertising Campaign

Negotiation Process 1
Introduction
Negotiation is a discussion done to resolve a particular issue in such a way that both of the
parties find it acceptable. In this, both the parties try to persuade and agree with their point of
view and try to gain more from the negotiation (Ahammad et al., 2016). In this report, there is
a detail description of the negotiation of the advertising campaign happen by the celebrity
endorsement. In the following, the celebrity for the endorsement is MS Dhoni, an Indian
cricket player. The company for which the celebrity will do the endorsement is DeGrandi, a
Geelong established company. This is established in the year 1929, by George De Grandi. So,
the negotiating parties include the Agent of Elite Sports Star’s Tsungai Michelle Mayoyo and
the agent of DeGrandis who is Gautham.
The various stages of the negotiations are (Arief and Supriyono, 2018).
Pre- Negotiations
The Pre-Negotiation includes the answers to the basic questions necessary to conduct any
kind of negotiation (Barak et al., 2018). This includes three parts which are the BATNA and
Reservation Value of both of the parties, and lastly, the ZOPA of the negotiation is been
described.
BATNA
The BATNA stands for the Best Alternative to a Negotiated Agreement. This means the next
solution given for a deal if the party is not agreed with the final price of the negotiation.
BATNA of Gautham: In this case, if Elite Sports is not agreed with the final price. Then
they will start their deal to sign the alternative sports star Sachin Tendulkar for the
DeGrandis.
BATNA of Tsungai Michelle Mayoyo: In this case, he will try to negotiate till the time he
will get the best price for the brand endorsement of MS Dhoni.
Reservation Value
The reservation value is the least favourable value for any kind of negotiation. This means the
minimum acceptable amount any party can get from the negotiation (Bennett, Hatfield and
Stefaniak, 2015).
Reservation Value from Michelle: The reservation value from the Elite Sports agent is $600
000 for three months.
Reservation Value from Gautham: The reservation value from the Degrands Sporting
Goods agent is $300 000 for four months.
ZOPA
The reservation value is the least favourable value for any kind of negotiation. This means the
minimum acceptable amount any party can get from the negotiation (Betzold, 2014).

Negotiation Process 2
Reservation Value from Michelle: The reservation value from the Elite Sports agent is $600
000 for three months.
Reservation Value from Gautham: The reservation value from the Degrands Sporting
Goods agent is $300 000 for four months.
Strategy: Both the parties had given the example of third-party negotiation for the
consideration for claiming high ZOPA rate. They started the negotiation with $600 000 but
the Degrands agent wants to start by $300 000. At last, they decided to start the negotiation
by $495k for three months and plus 12% commission based on sales if the sales are as per the
projection. Michelle, the Elite sports agent had given the example of fitness fanatics’ prices,
as a strategy to increase the maximum price for the negotiation. They told them that fitness
organization had offered 347,820 for their particular advertisement campaign. Gautham had
given the example of the price they are going to offer to Sachin Tendulkar for the deal. They
said that they are going to offer Sachin the price of $674,060 and they believed that they can
negotiate it down by 15%. For this, the Michelle had said that MS Dhoni is still the captain of
Indian Cricket Team. He had a lot of exposure and experience in his particular field. He is a
very growing and strong brand in the market. According to Forbes 2018, he is twenty in the
top paid sportsman. More than 80% of his net worth is just from the endorsements so they are
very sure that he can generate $1.8m sales for the organizations (Derek et al., 2018).
Negotiation
Negotiations with their counterparts for the endorsement contract: In this negotiation,
there are some of the important counterparts. In this, the agent of Degrands Sports had
informed that they are interested in making a negotiation deal and the Elite Sports Stars are
interested in the contract. They want the deal of $300 000 for four months. But the other
party wants to start the negotiation by $600 000 for three months. So, by this, the range for
the negotiation will be $600k-$300k. Both of the parties try to negotiate the price by giving
reasons for the price negotiation by giving other examples like Degrands Sports had given the
example of Sachin Tendulkar and the Elite Sports had given the example of Fitness Fanatics
for their negotiation, at last, the final price decided is $420k plus 12% of the commission on
$1.8m sales for four months. The commission will be given only when the company is able to
make the sales of 1.8m from the endorsement (Chien, Post and Siu, 2018).
The negotiation is the process with the aim of transferring the particular ownership of a
product or a service. In the following, the Communication Log is being prepared (Crocker,
Hampson and Aall, 2018).
Date Method Items discussed Outcomes
12/4/15 Mail Introduction of Agent
and company
Acceptance of offer
14/4/15 Mail Cash transfer on
closing
$300000 for 4
Months
16/4/15 Mail Starting offer and
assurance of
minimum amount of
$600000 for 3
months and can
assured earning of

Negotiation Process 3
sales. $1.8m
18/4/15 Mail Offer by competitor
and next amount.
$347,820 is Fitness
Fanatics price and
next offer is $305
000
20/4/15 Mail Offer of Fitness
Fanatics and offer
price of Sachin
Fitness Fanatics offer
is $347 820 and price
offered to Sachin is
$647060
22/4/15 Mail Range of offer and
the starting price.
Range is $300k-600k
and $495k for 3
months plus 12%
commission on sales.
25/4/15 Mail Contingency clause
and final figure
(Gastinger, 2016).
clause states 12%
commission is given
only if $1.8m sales
are due to
endorsement and
figure can increase or
decrease from $495k
27/4/15 Mail Value by the
consultation of High
officials.
value is $420,000
30/4/15 Mail Final value for 3
months (Howson,
2017).
$420k+12%
commission on sales
(only when projected
sales target is
achieved).
2/5/15 Mail Not agreed not agreed with 1.8m
sales
4/5/15 Mail Take it as a sample
first (Kaynak and
Herbig, 2014).
Degrants wants to try
for $420k+12%
commission of $1.8m
sales.
6/5/15 Mail Try to find a mutual
solution.
Increase it to 5
months.
8/5/15 Mail Not agreed
(Kukucha, 2017).
Not practical for the
trial.
10/5/15 Mail Months For four months
12/5/15 Mail Conformation Negotiation over
with mutual consent
Post-Negotiation
This basically includes the implementation steps taken assuming that all the planning of a
particular negotiation had taken place. In the following, the letter of outcome is provided by
the entire negotiation (Wang, Wang and Ma, 2016).
DeGrandi Cycle & Sport Pty Ltd.
419, Moorabool Street,

Negotiation Process 4
Geelong. 3220
Victoria, Australia
Date: 21 June 2015
Global Elite
Level 21, 144 Edward St
Brisbane, QLD 4000
Australia
Sir,
There is a negotiation is taking place between the DeGrandi Cycle & Sports Pty Ltd. and
Global Elite. In this, the agent of Degrand Sports had offered negotiation deal to Elite sports
to sign MS Dhoni for the endorsement of their bats. Michelle who is the agent of Elite sports
want to accept the offer at the price for the endorsement as $600 000 for three months. But
the Gautham, who is the agent of DeGrand Sports wants to do it for $300 000 for four
months. The negotiation ended by the “win-win” strategy by both of the parties. This
negotiation had taken place with mutual discussion. The negotiation is settled on the $420k
plus 12% of the commission and the commission is payable only when the company will get
$1.8m from the endorsement for four months. Then, after three months the length of the
advertising campaign is measured and from that, it has been concluded that negative effect is
been observed in the three months on the product sales revenue. After signing MS Dhoni for
the brand endorsement, there are some of the effects that had been observed. In the first
month of campaign, the company had a loss of $500,000. In the second month of the
campaign, there is a decrease in the loss, this means the loss is of $250,000. In the third
month, the company was in a situation of no profit or no loss. This is also known as a
breakeven point. In the fourth month of campaign the company had started making profit.
They had earned $250,000 in addition due to the advertising campaign. In the last and fifth
month of the campaign, the company had earned $500,000 in addition to these sales revenue.
As per the negotiation deal, the company had expected to generate $900,000. The Elite Sports
Stars had a much higher estimate. So the company will give the $420,000. But the company
will not give the additional 12% commission on sales. The reason behind this is the
contingency clause, which states that the additional 12% commission is given only when the
company is able to generate 1.8m from the advertising campaign in four months (Meinera,
2017).
Thank You
Sincerely
John Gilbert
DeGrandi Sports Pty Ltd.

Negotiation Process 5

Negotiation Process 6
Conclusion
This report is based on the negotiation deal taken place between two organizations. These are
DeGrandis Sporting Goods and Elite Sports. In this, there is a detailed description of the
negotiation stages which are described. In the pre-negotiation stage, there is detail description
BATNA (Best Alternative to Negotiating Agreement) is been explained by both of the
parties. Then after, the brief description of reservation value is given and the reservation
value for both of the organization has been given. The next part contains the ZOPA (Zone of
possible agreements) of the negotiation. This also includes the basic strategy to decrease the
minimum value of the negotiation. Then in the negotiation part, the communication log is
being prepared. This includes the result of the entire conversation that happened between the
agents of the organizations through e-mail. Then, the last part of the report consists of Post-
negotiation strategy. This includes the letter of the outcome of the entire negotiation and also
the actual price paid to the celebrity endorsement. The major result of the entire report is the
actual price paid to MS Dhoni. This price is $420,000 only.

Negotiation Process 7
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Negotiation Process 8
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