The Couch Deal

By
Shailee Desai
Introduction:

Negotiation is a process whereby two or more parties work towards an

agreement.

My negotiation case is with AB furniture retailer in Houston area from where I

purchased a leather recliner couch -Loveseat set. As a part of the purchasing

process, I was able to apply negotiation skills and techniques that I learned

during the coursework. This helped me purchase the couch within my budget.

To begin my hunt for therequired furniture, I visited Ashley Furniture store in Katy

area and looked for different recliner couches to choose from.Once I narrowed

down my selection to two options, I took their pictures and noted down their

serial numbers for my reference. AB Furniture store is also a distributor of Ashley

furniture. They also trade locally made furniture that they sell out of their store

at Houston.I was aware that this store sells the same Ashley furniture at a

discounted price as they are retailors and are able to buy their Ashley furniture

stock at much cheaper rates. So, to get a good deal on the couch, I visited AB

furniture store at the end of October.

I have described my negotiation experience for this particular case in five

phases, which are as below:

The Five Phases of Negotiation

Phase 1: Investigation

The first step in negotiation is the investigation, or information gathering stage. I

began with introspecting my motives: What are my goals for the negotiation?
What do I want to achieve? What would I concede? What would I absolutely not

concede? Leigh Steinberg, the most powerful agent in sports, puts it this way:

You need the clearest possible view of your goals. And you need to be brutally

honest with yourself about your priorities.

During the negotiation, I was faced with making choices as the situation

developed. It was best to know what I wanted upfront, so that in the heat of the

moment I was able to take the best decision as per the goals I had decided. For

example, in this negotiation I asked myself, What do I value most? Is it the

couch quality? Or comfort? Is it the best price that I get? Colour preference? Will

it help me with my back pain?

Phase 2: Determine Your BATNA

If you dont know where youre going, you will probably end up somewhere

else.

-Lawrence J. Peter

One important part of the investigation and planning phase is to determine

your BATNA, Best Alternative To a Negotiated Agreement.

Thinking through my BATNA was important for me to decide whether to accept

an offer I received during the negotiation. I needed to know what my alternatives

were. Could I get a better outcome than the proposed deal? Focusing on my

alternatives from the start enabled me to quickly identify whether a particular

deal is favorable as per my needs.

For my case here, my thought process behind finding different alternative was: If

the store price is higher than what I want, what alternatives do Ihave? Look for

another couch? Or should I look for different method of payment? Or do I really

need a power option or manual recliner is sufficient for my needs?While I was

thinking about my BATNA, I took some time to think about the other partys

BATNA. Does the furniture store have any other customer who is ready to buy the

couch Im looking for at a higher price? The price of couch at Ashley store was

$2,390 while my Reservation Price was $1,500.

As I had already identify my goals, I now started to understand the seller, Jack

Pham with whom I was about to start negotiating with. What did Jack want? I

tried to put myself in to his shoes. What alternatives could he be looking in to?In

my case, he wanted a frequent customer and a fair price for his furniture.

Moreover, as we started discussing the deal, it became evident that since it was

a month end, he was desperate to make this sale to meet his target for the

month. So, he was more flexible on pricing than he would have been earlier in

the month.

Phase 3: Presentation

The third phase of negotiation is presentation. In this phase, I assembled the

information I had gathered in a way that supports my position. Another important

factor to building a successful deal is the development of rapport. I initialized

that by greeting him in the Vietnamese tradition, as I already knew about his

origin. By asking a few personal questions and providing some background on

my life, it built a kind of preferable relationship that paved a smoother path from

the beginning for this deal. Once I informed him of which product I wanted out of

the Ashley furniture line, he was quickly able to look up the pricing and delivery

option through his sellers account on the brands website.

After spending around 10 minutes at his store and going through trying to know

each other phase, we were both ready to get started on this deal. In the
beginning Jack Pham had an upper hand since he knew what the discounted

pricing was going to be for him as a seller. He insisted that I tell him what exact

price I was offered for this couch set at Ashley store. Although at first I felt

uncomfortable being the first one to say the price, his question opened the gate

for me to realize that he was someone who will be willing to negotiate to seal the

deal. After making this quick mental note and also knowing there was a sale

going on at Ashley retail store as a part of breast cancer awareness month, I

quickly made my decision and said I was getting the couch set for $1,750 even

though actual price I was offered was $2,390. And, thennext we entered the fun

part of this process - bargaining.

Phase 4: Bargaining

During the bargaining phase, each party discusses their goals and seeks to get

an agreement. A natural part of this process is making concessions, namely,

giving up one thing to get something else in return. Concessions are often in the

areas of money, time, resources, responsibilities, or autonomy. While keeping all

these basic rules in mind, my goal was not just to reach a deal for this time but

mainly to facilitate a deal that would build a relationship for future purchases as

well.

One key to the bargaining phase is to ask questions. I did not simply take a

statement such as we cant do that at face value. Rather, I tried to find out why

the other party had that specific constraint. As stated earlier, my goal was to get

the lowest price for this particular product within my budget. The retailer, of

course, wanted to get the highest price for his sale.

After learning that I was able to get this couch set from Ashley store for $1,750

plus shipping cost of $130, he counter-offered right away saying he was willing to
sell it to me for $100 less if Im willing to pay in cash and he was going to charge

only $100 for shipping and handling. I responded acknowledging the fact that I

was able to buy from Ashley furniture at 0% interest financing for four years and

paying to him in cash for only $100 less was not worth burning through my

savings. So, I offered him $1,100 plus S&H in cash for the leather power-recliner

couch set and also added by saying I was willing to wait for it to be delivered late

as it was not in stock at Ashley warehouse with a waiting time of 23 days. Jack

reasoned saying at that price he will be actually at loss and asked to pay $1,530

to finalize the sale which I countered for the price of $1,250 in cash. Jack, again,

did not agree to this but was still desperate to make the sale.But, this time, he

offered the same couch set with manual reclining option that he had is his

warehouse at the price of $1,450.Considering I had no preference between

power or manual recliner option,I offered to pay $1,300 in cash with no charges

for S&H for a leather manual recliner sofa set. After few seconds of mental

number crunching, Jack finally shook hands to seal the deal.

Phase 5: Closure

Closure is an important part of negotiations. At the close of a negotiation, you

and the other party have to come either to an agreement on the terms, or one

party has to decide that the final offer is unacceptable and therefore make a

decision to decline the offer. So, after almost spending 45 minutes at his store, I

finally bought a couch that I wanted within my budget of $1,500. I was able to

buy the couch for only $1,300 compared to price of $2,390 had I bought it from

Ashley furniture store. On the other hand, Jack was happy to clear the inventory

and still make reasonable profit on this sale to count towards his targets for this

month.