Negotiation Strategies for Endorsement Contracts with Celebrities

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Thinking Styles
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Part 1: Pre-negotiation
In negotiation theory, BATNA is considered to be the best alternative which can be taken
if negotiation fails or if the negotiating parties fail to come to an agreement (Notini, 2013).
BATNA calls for some diverse actions such as the suspending the negotiations, looking for
different negotiating partners, appealing to court’s ruling, forming other forms of alliances,
among other actions. BATNA is one of the major driving forces of successful negotiators
(Reynolds, 2014, pp.611-614). In our case, the client’s BATNA is the suspension of the
negotiation until to a time when the two parties will reach the best price which will be reasonable
and acceptable to both parties. Reservation value is the maximum price or value which a buyer
or a consumer offers to buy a product or a service (Hao et al., 2014, pp.45-57). In our case, our
client is the corporation by the name Sports-Bay Limited which manufactures and sells sports
products and the other party is the celebrity to do the advertisement. The client’s reservation
value is $150,000 which the other party (the celebrity) feels is not enough.
As already said, BATNA usually represents the alternative strategy which can be taken if
negotiation fails (Saorín-Iborra, Redondo-Cano, and Revuelto-Taboada, 2013, pp.419-433). The
BATNA of the other party where in our case the other party is the celebrity is similar to the
client’s BATNA where the celebrity supports the idea that the negotiation and the contract
(advertisement) should be suspended till the time when both parties (the corporation and the
celebrity) will come to a reasonable price which will be fair and acceptable to both parties
(Sebenius, 2017, pp.89-99). The reservation value of the other party (the celebrity) is $250,000.
The reservation values for both parties differ by $100,000 which is quite a big value. The seller

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feels that $250,000 is a very high amount to be paid for an advert while the celebrity feels that
$150,000 is quite low compared to his fame and the many customers he’ll attract to the company
and the huge sales which will result from his advert (Belch and Belch, 2013, pp.369-389). The
two parties decided to suspend the negotiation (BATNA) until a time when they’ll come to a
price which is fair and friendly to both parties (Korobkin, 2014).
In negotiations, ZOPA stands for the zone of possible agreement (Foster, Mansbridge and
Martin, 2015, pp.121-125). ZOPA is also referred to as the bargaining range and mainly
describes the intellectual zones which exist in sales and negotiations between the associated
parties and the possibilities of coming into an agreement (Patel and Rubin, 2016, pp.756-758).
ZOPA is simply the zone of the possibility of coming into an agreement between two negotiating
parties. Outside this zone of possible agreement, there exist zero chances that the two negotiating
parties will come to an agreement on the prices being negotiated (Wertheim, Glick, and Larson,
2018, p.237). In our case, the zone of agreement can be seen as the difference between the
corporation’s reservation value which is $150, 000 and the celebrity’s reservation value which is
$250,000, which means the ZOPA range is $100,000. As the agent representing the company in
the negotiation process to endorse the advertisement contract, I’ll use the negotiation skills and
critical thinking skills to make sure the company will enjoy the many financial benefits which
will result from the advertisement services of the celebrity (Aldhizer, 2015, pp.1-34).
Firstly, I’ll go through all the information given to me discussing the whole contract of
endorsing the celebrity in the advertising campaign of the company. After going through all the
information and understanding all the main points or ideas given by the information, I’ll engage

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in my detailed research to see how the contract of endorsing the celebrity in the advertisement
campaigns of the corporation will impact the company both positively and negatively (Mansour
and Diab, 2016, pp.148-166). It is in my research that I’ll visit different social media platforms
(such as his Facebook, his twitter, among others) of the celebrity to know the approximate
number of followers and this will help me to determine the possible number of new customers
who the celebrity can bring in the company (Marwick, 2015, pp.333-350). I’ll also do some more
research to see the improvements achieved by various corporations after contracting the celebrity
to make some advertisements for them (Chaudhary and Asthana, 2015, pp.220-225). It’s after
this research and some more research about the performance of the celebrity especially in
making in adverts that I’ll be able to come into a good negotiation with the celebrity or his agent
to come up with the best and the most reasonable price which is within ZOPA range and which
will benefit both parties (Walch, Mardyks, and Schmitz, 2017). The celebrity can claim a greater
proportion of ZOPA if he has the potential of earning the corporation many new customers and
the company can give a maximum of $225,000 for the advert campaigns if the campaigns are
likely to earn the corporation a total of over $5,000,000 in a duration of six months.
Stage 2: Negotiation
In the first part of the paper, we have discussed the major activities to be done in the pre-
negotiation stage where we have seen that the main activities in that section involve the two
parties (the corporation and the celebrity) giving their reservation values which help in defining
the ZOPA range and then doing some research and some analysis to see what can make the
celebrity earn a great portion of the ZOPA range. The celebrity demands to be paid $250,000 for