Dread of Dental Clinics
Dental Clinics and the Dread Pirate Roberts
Name: The Dread Pirate Roberts
Assignment: Discount Case
April 7, 2005
Case Type: Personal Life Example
Negotiating Parties: Me vs. Comcast Customer Service Representative
Background and Negotiation Description
In the last year, TV and internet competition has grown stronger in the Jackson Market. Currently, DirectTV offers 80 channel satellite TV for only $29.99 a month, and Earthlink offers various cable and DSL internet options at, or slightly below, the prices of Comcast.
My five roommates and I currently pay a total $88.94/mo for our TV and internet bill with Comcast, about $14.82/mo/person. If we switched over DirectTV and Earthlink, we would save about $13/mo. There are six roommates in the house, so I would be saving $2.32/mo. Our lease is up in June, I am not sure we are going to be living in this house past that time. In reality, the time costs involved in closing our Comcast accounts and setting up DirectTV and Earthlink services far overshadow the $2.32/mo I could save.
Nevertheless, Comcast is not aware of these facts and I feel I have some bargaining power due to the increased competition Comcast faces. I am not willing to purchase any new services from Comcast in this negotiation, because I cannot speak for the other five roommates.
I began my negotiations with an opening statement close to this one:
‘I’ve been looking at some of the alternatives to Comcast for our TV and Internet services, and these alternatives seem to be offering some really competitive options. I’m looking to pay a fair price for our internet and cable, I’m thinking around $65/mo before taxes. What kind of deal can you get me?’
After an 11 minute and 18 second phone call, I decided to stay with Comcast for the same monthly charge of $88.94/mo.
Analysis
This was a fixed pie negotiation in that there was the $88.94/mo to be distributed between Comcast, and my roommates and I. The pie was fixed since I could not negotiate on anything but price without agreement from my roommates, and I was not willing to go back to persuade them into changing our services because I did not want any more services myself. In this case, the acid test is negative, since there cannot be a resource gain for both parties. This negotiation could not have been an expanded pie or mixed negotiation where, in such cases, other resources could be negotiated into the deal. The negotiation was clearly a win/lose situation. If Comcast moved our monthly charges down, I won and they lost.
The BANTA, or best alternative to Comcast, I had calculated was $12.50/mo for myself ($75/mo for the house as a whole). Although, this $12.50/mo did not include all the time and hassle costs involved in changing services, which raised the BANTA to an estimated $25/mo for myself ($150/mo for the house). Originally I had calculated my resistance point, or the highest I would be willing to pay, at my current portion of the monthly payment, $14.82/mo ($88.94/mo for the house). My target point, or my goal for the negotiation, was $12.50/mo ($75/mo for the house).
I estimated the resistance point of Comcast to be around $70/mo based on the competitors’ prices, and their target at $120/mo. Their target was higher than the current monthly charge because I thought they might try and add on services during the negotiation.
The bargaining zone, or area between Comcast’s and my resistance points, when measured, is called the bargaining surplus. This number was $88.94 - $70 = $18.94. When a bargaining surplus exists, this is called a positive negotiation range because a range of values exist where both sides of the negotiations will be content.
The negotiation dance is the process of making an opening offer and eventually coming to a mutually agreeable deal. The negotiation dance never actually begun with Comcast. I failed to present a first offer and make an anchor point from which our negation can begin. The anchor point is vital as it sets the tone for the negotiation, and moves it forward. Aggressive anchor points, on average, produce better results for the negotiator. Hypothetically speaking, if I had made a first offer, Comcast could have used a demand to request more money than my offer provided. From that point, I could have made either made an offer lower than my first, a concession, or stuck to my first offer, a commitment. The term quid pro quo concessions describe negotiators offering concessions to one another in a back and forth exchange.
One type of concession I could have used was the even split ploy. In an even split ploy, my next concession would be halfway between by previous offer and Comcast’s last offer. Although this appears to be a fair way of negotiating because both parties give up the same amount of resources, in reality, this ploy can be less than fair since the previous offers may have no economic basis.
The Comcast customer service person was very friendly because of the mixed motive negotiation characteristic. She wants to cooperate to make sure the negotiation ends up within the positive bargaining zone, but simultaneously she also wants to maximize her negotiator’s surplus.
In this negotiation I learned the value of picking one’s negotiation wisely. One needs to consider factors in a negotiation that have no value associated with them, and assign those factors some value. This will aid one in determining precise resistance points and BANTAs. In regards to Comcast, I found out my resistance point was much higher than what I was currently paying. Furthermore, my BANTA were not nearly as attractive once I figured in the hours it would take to transfer services, not knowing the quality of the new services, and the energy it would take to convince my roommates to switch services (I may not have even been able to convince them).
I also discovered what happens when information is readily available about one’s BANTA and one identifies their names of their BANTAs to the other negotiating party. When Comcast asked what competitors I was comparing them to, I replied DirectTV and Earthlink. Within a few seconds, the Comcast customer service representative had the quotes of the competitors in front of her and begun to point out why Comcast’s services were better than the competitors. I felt like it would be a shady move not to reveal the competitors to which I was referring. It seems I was caught in a catch-22, and I look forward to hearing about some ideas on how to escape this dilemma.
In the future, I am going to more precisely determine my resistance points and BANTAs to make sure I want to be involved in the negotiation. Secondly, I will find out before my next negotiation what to do when the other party requests their competitor’s name when the competitor’s rates are public knowledge.
Ending Elements
Resource being negotiated: Money
Type of negotiation: Fixed Pie, Zero-Sum, Distributive, Win/Lose
Outcomes:
|
Me |
Them |
Give |
11min 18sec phone conversation |
11min 18sec phone conversation |
Get |
0 |
0 |
Key Terms: Fixed Pie, Persuade, Acid test, Expanded Pie, Mixed Negotiation, Win/Lose, BANTA, Resistance Point, Target Point, Bargaining Zone, Bargaining Surplus, Positive Negotiation Range, Negotiation Dance, First Offer, Anchor Point, Demand, Concession, Commitment, Quid Pro Quo Concessions, Even Split Ploy, Mixed Motive, Negotiator’s Surplus
My RP: $88.94, our current price
My Target: $75
Comcast’s estimated RP: $70
Comcast’s estimated TP: $120, selling me more services
Bargaining Zone: $70 - $88.94
BATNA
$75.94/mo + $78savings over 1st 3 months
Rationale
Hi there. I’d like to talk to someone about negotiating down our Cable TV and internet bill.
I’ve been looking at some of the alternatives to Comcast for our TV and Internet services, and these alternatives seem to be offering some really competitive options. I’m looking to pay a fair price for our internet and cable, I’m thinking around $65/mo before taxes. What kind of deal can you get me?
Evidence to Mention:
Some other TV companies offer more channels at a lower price.
Instead of going down, our expanded cable price has only gone up by 11%. (27.69à 30.69)
Do we have 4Mbps Cable internet?
Expensive installation, we have 6 computers in this house
Internet hasn’t been the most consistent. We have to reset the thing every couple days. Disable,Enable the connection, restart our computers etc.
If they ask specifically for competitors prices, Say: Ok, I’ll tell you that information, if you tell me the lowest per month charge you’re authorized to set our bill at with the same services. How long will that rate apply?
Concessions
Begin Small $2 at a time, then go to 3, 4 or 5 once.
Comcast Cable TV |
Direct TV |
42.99/mo |
29.99/mo |
Up to 75 channels |
80 Channels |
|
|
|
|
|
|
Comcast Internet |
Earthlink Cable Internet |
45.95/mo |
4Mps – 19.95/mo for 3mo, then 45.95/mo |
Do we have 4megabytes/sec verson? |
Free install |
If not 29.95 for 5mo, then 45.95 |
|
Expensive installation for multiple computers |
EarthLink DSL |
|
1.5Mbps - 19.99/mo for 6mo, then 39.95/mo |
|
Free install |
|
|
DirectTV – CCDish 29.99 vs. 42.99 for Comcast
Cartoon Network
ESPN
ESPN2
ESPNEWS
Food Network
MTV
TBS
Plus Local
http://www.ccdish.com/packages/basewo.shtml
Comcast customers4 Introductory rate $19.95/month for
3 months Regular monthly rate (after introductory period) $45.95/month:
Up to 4Mbps service Installation FREE
Call this number: 1-866-570-8333
http://www.earthlink.net/highspeed/pricing/
For a limited time only, get 5 months of Comcast High-Speed Internet for only $29.99/mo!*
Installation Options: Self Installation (1 Computer): If you only have one computer in your home, choose this option. You pay only a $29.95 (shipping and handling is free). A kit is mailed to you with easy instructions to connect one computer with a modem.
Professional (1 Computer): If you only have one computer in your home, choose this option. The one-time $99.99 fee covers full-service installation for connecting one computer with a modem.
Home Networking (2-5 Computers): This option lets you connect up to five devices wirelessly. The one-time $149.99 fee covers connection of devices to the Internet, network security setup and shared file/folder setup.