Preparation for Negotiation and Post Presentation Critical Analysis
Introduction
The rising cases of a health condition of growing grey hair basically to people in the age bracket of 16-50 years had raised concerns of shampoo companies in need to reduce the problem. Control GX Shampoo Company is a company based in Canada that has developed a unique product that has the power to reduce grey hair (Keshal Parekh, 2016). The product is highly recognized in the United States and the Canada and other countries, but the company felt the need to broaden their market by introducing it in the United Kingdom. Therefore, they analyzed the possible destination and targeted the Tesco Company, one of the leading stores in U.K with over 33 branches (Keshal Parekh, 2016). Therefore, the Control GX Company decided to have a negotiation process with the aim of agreeing on a contract. Furthermore, the company had obtained a detailed analysis of the U.K economy and other possible considerations before deciding what step to take.
- Research on the popularity of the grey hair problem. The research concluded that Middlesbrough, London, and Leeds towns had the highest population probably with the grey hair problem (Keshal Parekh, 2016).
- The anticipation of not having any similar product and the lack of competition in the U.K was an added advantage.
- The negotiation process detailed the procedure that would be carried out in the production, distribution, and supply of the product in the U.K environs.
- The post-negotiation stage entailed the discussion of possible outcomes if the required marketing, purchasing, and supply were employed (Keshal Parekh, 2016). For instance, applying the principles of these strategies would help both companies in maximizing their sales and revenues.
Pre-Negotiation Stage
The negotiation entailed the process of selling the newest shampoo product named Control GX Shampoo for men and customers with a problem with grey hair. The Control GX product is based in the Canada, and the company has recorded an enterprise in various countries. The product is said to reduce the growth and restoration of grey hair for the users ranging from the age of 16-50 (Keshal Parekh, 2016). Therefore, the production company has decided to enlarge their market niche by investing and introducing the product in the U.K regions. The marketing strategy started by targeting a recognized store based in the U.K known as Tesco Limited.
Research Conducted
The Control GX Shampoo Company started enlarging the market niche by investigating the possible situation of the U.K market. The first step taken to succeed in the marketing procedures was taken by the Control GX Company by inventing a unique product that has never been seen in the market. The new Control GX shampoo was aimed at reducing the effects of grey hair to the consumers (Keshal Parekh, 2016). Grey hair had been an issue probably seen through genetics and biological processes, and many users were willing to use any product that would reduce the rising cases of grey hair. Therefore, the Control GX Company would go beyond their projected sales and revenues by distributing their product all over the globe.
The company as well had investigated the nature of U.K market by realizing the densely populated areas of people at the range of 16-50 years (Keshal Parekh, 2016). Some of the regions suggested included Leeds, London, and Middlesbrough. Similarly, the knowledge obtained from their marketing partners such as Wal-Mart and Amazon. The two stores based in the U.S and Canada had had a significant successful history of selling the Control GX products and had offered the required information regarding the marketing of the product. Additionally, choosing the Tesco Limited in the U.K was based on the performance and success of the store that was obtained probably from the recognized websites claiming that the Tesco was the largest stores in the U.K with many branches (Keshal Parekh, 2016). Therefore, the Control GX product would receive maximum exposure as well as availability to the consumers.
The other research on the marketing procedure was through the investigation of financial information that would be obtained from the revenues generated from the product. For instance, the pricing of the Control GX product was based on its importance and its uniqueness (Keshal Parekh, 2016). There was no other similar product hence; giving it a higher price than the normal shampoos was a good idea. Additionally, the company representatives had analyzed the distribution processes that would ensure the availability of the products to their projected stores on time. Shipping was their option since the use of ship could reduce transportation costs regardless of its slow delivery (Keshal Parekh, 2016). The alternative was the use of air if the stores required emergent delivery. The company representatives also suggested the use of promotions in their marketing concepts. Promotions would only be offered after the trial period which would increase the sales and revenue generation thus; reducing the risks of poor sales.
Expected Shortcomings
The Control GX Company could experience several challenges in their process of marketing their products. For instance, the company has focused on two products, that is, the 2:1 Control GX Shampoo that is aimed at reducing the effects of grey hair and a normal shampoo. The first Control GX product was to be used in the treatment of grey hair which was to be used for about the first two months. After the grey hair, treatment is over, and the consumer is satisfied, then they would stop using the Control GX and start using the normal shampoo (Keshal Parekh, 2016). The problem would be that the company and the Tesco stores would have super-normal profit maximization for the first introduction of the product. Then after almost every consumer is satisfied, the product would cease its importance shifting their concern from the 2:1 Control GX shampoo to the normal shampoo. Meaning, the company would not make enough profits from the unique product for a long time (Lockamy and McCormack 2004).
Another challenge would be in the context of the side effects generated through the use of the Context GX product. The survey indicated that one of a hundred of the customers was sidelined for side effects seen in his or her fingernails. The cause could be from the infection of the chemicals used in the production of the product or the sensitivity of the skin of the consumer. Therefore, if the information reaches the consumers, most of them would fear using the product knowing the risks associated with the use of Control GX. The company officials had taken the initiative to prevent any further skin damage by introducing protective gloves that the customers were advised to use while applying the shampoo on their hair (Keshal Parekh, 2016). The gloves would reduce the risks associated with the use of the shampoo regardless of a person’s skin sensitivity. Therefore, placing safety and precautions in the user guide of the product would help many Control GX users not to worry about the side effects.
The cost of the retailing price of the Control GX shampoo is relatively higher than the normal shampoo. The high price could prevent the access of the product reducing the chances of increasing their revenues. Additionally, using advertisement in Medias such as magazines and social Medias could be expensive bearing in mind that the costs of the product are higher than alternative products (Keshal Parekh, 2016). Another challenge could be seen in the marketing procedures of the product where if the projected sales would not meet their expectation, the Tesco had suggested the use of promotions which would be a risk to the revenues generated. Similarly, if the sales of the products would be lower than expected the Control GX Shampoo product would be reduced by 25% as well as the company would be required to take away their products.
Suggested Recommendations
The problem of having a decreasing sale of the Control GX shampoo and the rising purchase of normal shampoo could be avoided by specifying the use of the product. The company should advise the consumers to continue with the use of the Control GX shampoo regardless of their outcomes. For instance, a continuing use of the shampoo could not have side effects thus; the consumers should not have to stop purchasing the product. Additionally, the case of the side effects on the use of the product was stopped by the introduction of gloves to the users. The hiked price of the retailing product should be reduced to avoid the effects of the consumers boycotting the use of the Control GX Shampoo. A decreased price of the product could see an increase in the demand and rising sales could maximize the profits of the company as well as the Tesco. Furthermore, the projected sales of the Control GX product discussed by the company representatives would have positive impacts towards the realization of consumer satisfaction in the context of production, distribution, and marketing of the product.
Chosen Tactics
The negotiation between the seller (Control GX Company) and the buyer (Tesco Limited) were incorporated by a detailed information gathering of each opponent’s business data. The Control GX Company targeted the Tesco Incorporation thus; showed the need for information gathering. The seller company had gathered the relevant information on the success of the Tesco Company in an effort of identifying business prosperity. The Control GX Company had used the “Intelligence Gathering” technique that included data collection, processing, analyzing, and evaluation in the pre-negotiation framework (Lockamy and McCormack 2004). Control GX representatives had aimed relevant information including the branches of the Tesco stores all over the U.K region. Similarly, they had analyzed the process of obtaining a collaborative procedure which would boost both states of their businesses.
Additionally, the Control GX Company representatives had formulated speculated their objectives and goals in the business to discuss with their business components with the aim of coming to agreeable terms to do business together. The strategy involved setting business parameters that would help in the growth and sale of the projected product (Peleckis 2016). Furthermore, both companies had developed a strategic plan that would see the success of their negotiation in agreement. The strategy was to make profits as well as overcoming the possible challenges that would face the business idea. Lastly, both company representatives had prepared their information that would be discussed in the negotiation by laying down the required questions and answers from both business in their new partnership (Lockamy and McCormack 2004). Therefore, the Control GX Company representatives had prepared video evidence and written documents that were to be used in convincing their business partners to accept their offers.
The used negotiation tactics would develop the relationship between the two businesses. However, some disparities might be seen in the pre-negotiation period if the seller would not have enough information regarding the buyer. Obtaining and analyzing information should be the first step in achieving a successful negotiation process. Similarly, preparation of verbal and communication skills would benefit the sellers in presenting their agenda to the sellers (Peleckis 2016). Shallow and non-communicative attributes would spoil the process of negotiation which would lead to the rejection of the offer from the buyers. Therefore, the company should select representatives with good communication skills in an effort of convincing the buyers.
Post-Negotiation Stage
The negotiation process took place between the sellers and the buyers with the aim of coming up with an agreeable term that would benefit both companies. The negotiation process was shallow and was based on the task of coming into a contract. The sellers were unable to express themselves in a better way as they were outdone by the buyers. For instance, the sellers had suggested a profit margin of 25% offered to the buyers, but the buyers objected the idea and asked for 35% which would have been higher than expected regardless of the production, marketing, and distribution costs (Keshal Parekh, 2016). The sellers were unable to protect their company despite having a unique product leave alone the competitiveness which was zero by then.
Sellers and Buyers View
The Control GX Shampoo Company was having an aim of making a contract with the Tesco Company. However, their tactics were well organized despite having some challenges of expressing their strategies to the buyers. The sellers had a positive perspective towards the buyers and were welcomed to the meeting professionally for a business objective. Regardless of the need to maximize their profits, the sellers had aimed at presenting their goals and profit margins which they thought would be easily accepted by the buyers. However, the buyers rejected the profit margin of 25% asking for a higher markup of 35%, and other rebate offers (Keshal Parekh, 2016). The struggle for an agreeable profit margin was easily resolved to show that the sellers lacked the power that would have convinced the buyers to accept their offer. Similarly, the sellers viewed the buyers as a composed group that had similar goals throughout the negotiation process. For instance, the buyers had mutual trust where they showed a positive relationship during the negotiation. The buyers would agree with the terms laid down by the sellers meaning that they were ready to agree on a contract that would benefit both of the groups.
Additionally, both teams had shared interests by both portraying the need for meeting their set goals and objectives. For example, the buyers accepted the goals set by the sellers on the profit maximization. Similarly, the sellers agreed to increase the rate of profit margin from 25% to 35% to evade an argument erupting between their contracts (Keshal Parekh, 2016). Therefore, both sellers and the buyers had similar objectives that were aimed at making a contract that would increase the productivity of their companies.
Purchasing Principles
The Control GX Shampoo Company had managed to agree on basic terms with the Tesco Company on the mode of supply and purchasing methods. However, the negotiation process could not discuss the possible method of purchasing because they focused on other issues on their contract apart from deciding the possible purchasing method (Hesping and Schiele 2015). Therefore, the method that was suitable for purchasing the unique product included the “Sole Source Procurement” which is far different from competitive seal proposal. The method of sole procurement would be suitable because the Control GX Company does not have any form of competition in the U.K (Hesping and Schiele 2015). The lack of competition would be an added advantage because the product is unique and newly introduced in the market.
The merchandise of Control GX Shampoo should adhere to the principles of purchasing in retaining the superiority of the product. For instance, the buyers should place procurement ordering through the analysis of quality, quantity, lead time, source, price, and place (Hesping and Schiele 2015). The quality of the product should determine the revenues generated. For instance, excellent and better quality of the Control GX products would welcome sufficient consumers who would be directed or recommended by other satisfied customers. Similarly, the quantity of the products to be purchased should as well determine the revenues generated by both companies. It would not be advisable to provide fewer products to the suppliers making the consumers lack their proposed product to use. The right quantity could increase the supply chain in the business. Additionally, the lead time for the delivery of the products from the production plant to the retailing facilities should be significant to avoid overstocking or under-stocking of the required products (Hesping and Schiele 2015). Another procurement requirement to consider is the cost of purchasing bulk products. The sellers would consider negotiating a price that would generate profits, and the sellers would recommend a specific price that would cater for their manufacturing costs and an added percentage of profit margins. The right source and the right place for delivery should be discussed by both parties to avoid misunderstanding within the delivery of the products after placing an order. For instance, the Tesco Company suggested Middlesbrough city because of the availability of a docking space as the Control GX Company had suggested the use of shipping in product delivery.
Marketing Principles
Marketing of the Control GX product entails the idea of collaborating with the Tesco Company by agreeing on similar terms because the seller chose to use Tesco to retail their products. Therefore, the seller should comply with the marketing strategies and principles aimed at promoting the selling and creating awareness of the existence of their product. The marketing principles are products, price, place, and promotion. The products discussed by both parties are the Control GX Shampoo and the normal shampoo. Both products serve a similar purpose, but the Control GX is unique and used in retaining the color and texture of human hair by removing the grey hair. Therefore, the products should accomplish their purpose of satisfying the consumers without negative side effects. Similarly, the price of both products should be affordable and should not exploit the consumers or the retailers (Brindley and Oxborrow 2014). The seller company should not focus on making super-normal profits but rather maintain a steady supply of the product.
Additionally, both companies should look into details the promotion procedures that would increase the awareness and increase their revenues. For instance, the Control GX Shampoo Company had suggested the use of discounting procedure where the consumers could be awarded points anytime they purchase the products. Similarly, the seller had as well suggested the use of “Buy one get one free” strategy where the consumer purchasing the Control GX shampoo would be awarded a free normal shampoo. The procedures would develop a good relationship between the consumers and the producers hence; increasing their yields (Brindley and Oxborrow 2014). The place would be considered with the appropriateness of access. For example, the use of shipping in transportation should be followed by the existence of a docking harbor.
Supply Chain Principles
The role of both the seller and the buyer in business is to conduct business with minimal obstacles. Similarly, most wholesale buyers would recommend the availability of a mutual interest in a business that would help both parties attain profit prosperity. Therefore, the negotiation between Control GX Shampoo Company and the Tesco Company could not lay down specific details of improving their business. Discussing the principles of supply chain management would be a recommendation of what they should have improved in their contract hence; improving their business interaction.
The seller company should fragment and place different buyers into groups per their nature of products needed. The groups would then require being selected and products delivered at interval depending on the lead time of the procured items (Dooley 2016). Additionally, the production company selling the items to retailers should customize the logistics of the products depending on the orders place to avoid mixing products. Another attribute to consider is the market signals if there are shortages or excess of similar products in the market probably from the competitors but in this case, Control GX product does not have a competitive disadvantage. Subsequently, the company should separate products depending on the closeness of the retailers. If the customers are near the production plant, the producer should directly deliver the goods as soon as possible (Dooley 2016). Additionally, the company should utilize the availability of technology development that helps in easing the work of manual loading of information of the consumers. Lastly, the suppliers should ascertain measures that are aimed at creating a clear channel in realizing whether the products reach the end-users effectively.
Conclusion
The availability of the principles of management in the production, distribution, marketing, and supply would be beneficial in most companies if keenly followed. The management is required to analyze every business strategy that would develop the company in the right direction. The example of the Control GX Shampoo Company and the Tesco Company relates to the application of the required strategies in improving business relations through negotiation. Both companies achieved a mutual interest of maximizing their sales and revenue as well as creating a unique brand that would not receive any competition. However, the negotiation skills employed could not achieve what was intended since the sellers lacked a sense of proving their products and protecting their company from exploitation regardless of having a unique product brand.
Appendix
- Tesco Company is one of the largest retailing stores in the UK with 3259 branches all over the place that accounts for 28% of the market share (Keshal Parekh, 2016).
- The Control GX Shampoo Company has a market share of 45.5% spread all over the U.S and its environs and has expanded to other countries such as Canada, Brazil, Argentina, Italy, Ireland, and Israel amongst others (Keshal Parekh, 2016).
- For a span of five years from 2007 to 2012, the UK market share has grown with a 12% developing from £512million to £574 million and the projected income from the Control, GX Shampoo is expected to generate $4.4 billion in 2016 being an increase of 16% from 2011 (Keshal Parekh, 2016).
- If Tesco would manage to make sales of £3.5 to £4.0 million they would be offered a rebate of 1.5% and if they make £3.0 to £3.49 million they could welcome a refund of 0.5% (Keshal Parekh, 2016).
- The projected demand is forecasted within the first 12 months and six months being a trial period with a sale of 33000 units of Control GX shampoo and 23000 units of the regular shampoo at 33 stores in the UK generating £4.4 million and £1.5 million respectively (Keshal Parekh, 2016).
- Each order placed should have a minimum of 165 pallets each containing 100 pieces of the shampoo products of 177 ml (Keshal Parekh, 2016).
Bibliography
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Hesping, F.H. and Schiele, H., 2015. Purchasing strategy development: A multi-level review. Journal of purchasing and supply management, 21(2), pp.138-150.
Keshal Parekh. (2016). Purchasing video. [online] [Accessed 5 Jan. 2017]. Available at: https://www.youtube.com/watch?v=qR3QfWrdXiM&feature=youtu.be
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