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In a negotiation, how tough should your first offer be?

New research shows the first offer can have a significant impact on the eventual outcome, and if you try to drive too hard a bargain, it could backfire.

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In a negotiation, how tough should your first offer be? New research shows the first offer can have a significant impact on the eventual outcome, and if you try to drive too hard a bargain, it could backfire.

Whether you’re buying a house, a car, or second-hand furniture, it’s likely you will need to negotiate the price, so being able to negotiate effectively could save you significant cash.

Behavioral economist Professor Lionel Page from the University of Technology Sydney (UTS) said opening offers in real-world negotiations are sometimes intended to signal the “toughness” of the buyer – but whether this strategy actually works was not known.

“This experiment allowed us to study whether and how the level of the opening offer influences the beliefs of buyers and sellers, their actions and the final bargaining outcome,” said Professor Page.

The researchers conducted the experiment using a bargaining game where players exchanged offers for a split of $10. The aim was to mimic the start of a typical negotiation process.

They found that the success or failure of a negotiation depended not only on the final offer on the table but also on the emerging dynamics of the bargaining process.

“The intermediary offers made during a negotiation can be interpreted as suggesting either kind and compromising intentions, or unkind and uncompromising ones,” said Professor Page.

“And the perception of these intentions can, in turn, influence the final outcome. Low offers are perceived as disrespectful, so players react negatively and can be spiteful in their counter-offers.

“In a substantial number of cases, the responder chose a ‘‘punishing’’ counter-offer that was lower than what he believed was the buyer’s minimum acceptable amount,” he said.

This means it is not the best strategy to always be as tough as possible in a negotiation.

Previously there has been two conflicting views on first offers in negotiations, said Professor Page.

One view is that a low opening offer works as an “anchor” that moves the final offer in the direction of the first offer.

The second is that a more reasonable initial offer achieves a better outcome because it doesn’t sour the atmosphere and endanger the agreement.

Professor Page said their study showed support for both these ideas.

“We found that there is a small window where an offer is lower than an equal split, but not so low that it triggers negative emotions. It was viewed as ‘fair game’ to start the negotiation at this point.”

So in summary to strike a good bargain your opening offer needs to be not too hard, or you risk a spiteful counter-offer, but not too soft either, or you might be taken for a ride.

The study: Driving a hard bargain is a balancing act: how social preferences constrain the negotiation process, by Professor Lionel Page and Dr Yola Engler was recently published in the journal Theory and Decision.

BizNews

Study finds saturation in images is key to marketing menu items

The food in the more highly saturated photos looked fresher and tastier to participants, and that led them to be more likely to purchase the food.

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An appealing photo of a pizza or other menu item can help a restaurant increase sales – especially if the right filter is used, a new study suggests. This is because photos high in color saturation make food look fresher and tastier to viewers, which increases their willingness to order the menu items.

Color saturation refers to the intensity of the color in the image – the vividness and richness of the reds and greens and blues.

But how well color saturation works to make food appealing depends on the visual distance of the food in the photo – and even on whether consumers plan to dine alone or with others.

In the cutthroat restaurant business, these results provide a simple method to increase sales, said Stephanie Liu, lead author of the study and associate professor of hospitality management at The Ohio State University.

“On Instagram, it means using the ‘X-Pro II’ filter on your food photos rather than the ‘Earlybird’ filter,” Liu said. “It is not difficult and doesn’t cost a dime, so it is an easy win for restaurant marketers.”

The study was published in the Journal of Business Research.

The researchers did two online studies.

In one study, 267 participants were asked to imagine themselves browsing through options on an online food ordering platform. They were shown photos of a poke bowl, a Hawaiian dish featuring chunks of raw, marinated fish, vegetables and sauce over rice.  They were from a fictitious restaurant named Poke Kitchen.

Study participants were randomly assigned to view one of the four different photos with either high or low color saturation and either close or farther away visual distance.

The photos with high color saturation were edited with professional graphic design software to be 130% more saturated than the low-saturation photos. The up-close photos were 130% larger in radius and appeared nearer to the observer than the more distant photo.

Participants were asked to rate how fresh the food in each photo looked, how tasty it looked and how likely they would be to purchase it.

The food in the more highly saturated photos looked fresher and tastier to participants, and that led them to be more likely to purchase the food, results showed.

But color saturation had a stronger effect when the food appeared more distant in the photos, Liu said. “When the food is shown close up, it is already easy for the viewers to imagine how fresh and tasty the food would be,” she said. “Color saturation is not as necessary.”

The second study involved 222 online participants.  In this case, the participants were asked to imagine they were browsing Instagram and came across images of pizza from a fictitious restaurant near their home named Pizza City. They were shown photos either high or low in color saturation.

People in the study were also told they would either be eating alone or with family that night and were again asked to rate the pizza on perceived freshness and tastiness and on whether they would likely purchase the menu item.

As in the previous study, the food in the color-saturated photo was always seen as fresher and tastier and one that people would be more likely to buy.  But that effect was stronger for people who were told they would be eating alone and weaker for those who would be eating with family.

“When people are eating with others, the social experience is a big part of what people look forward to,” Liu said. “But when they anticipate eating alone, they focus more on the food itself. They want the food to be fresher and tastier and that’s why color saturation is more important in this context.”

These findings are more important now than ever before, with people ordering online and looking at photos to help them decide what to eat, Liu said.

“Restaurants have to post pictures of their food on social media and online ordering platforms,” she said. “They should be paying as much attention, or maybe more, to the photos they post as they do to the text. Color saturation is one key element they need to focus on.”

Co-authors on the study were Laurie Luorong Wu of Temple University, Xi Yu of the City University of Macau and Huiling Huang of the University of Macau in China. Xi Yu and Huiling Huang are recent doctoral graduates of the hospitality management program at Ohio State.

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BizNews

One way employers can head off ‘quiet quitting’

Companies can address “quiet quitting” among employees by ensuring employees spend time with other people who identify with the company. The findings can inform everything from office layouts to assigning mentors to new employees.

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A study from North Carolina State University finds that companies can address “quiet quitting” among employees by ensuring employees spend time with other people who identify with the company. The findings can inform everything from office layouts to assigning mentors to new employees.

“We’re not fans of the term ‘quiet quitting,’ since it seems dismissive of employees who are fulfilling their roles in a company,” says Erin Powell, co-author of a paper on the work and an associate professor of entrepreneurship in NC State’s Poole College of Management. “That said, it is clear that companies can benefit significantly when employees go above and beyond what’s required of them. And our study offers insights into what gives employees that sense of purpose and drive that can benefit their employers.”

Says Tom Zagenczyk, co-author of the paper and a professor of management in NC State’s Poole College of Management: “Historically, attempts to explore ‘organizational identification’ – or the extent to which your organization is part of your identity – have focused on how employees perceive the organization’s reputation and how they view the way they’re treated at work. We really wanted to explore possible social influences.”

To that end, the researchers conducted an in-depth social network study of 91 employees at a company that employs a total of 97 people. Study participants were given a survey designed to capture the role of each employee, how they related to the company, and how they interacted with other employees. For example, questions assessed the extent to which each employee identified with the company; how they viewed their treatment by the employer; how helpful co-workers were; and how they fit into the structure of the organization.

The researchers then used statistical tools to account for potentially confounding variables and to identify factors that affected organizational identification and helpfulness at work.

“One key finding was that a given employee’s organizational identification was similar to the organizational identification of the people who give that employee advice in the workplace,” Zagenczyk says. “In other words, it appears that the people an employee turns to for help at work have a significant influence on how the employee feels about the company.”

“That’s important because it is well-established that the more a person identifies with their company, the more likely they are to go beyond the call of duty at work,” Powell says. “And that helps the employer’s bottom line.

“This finding has practical applications, since employers have myriad ways of influencing how employees interact with each other. For example, employers decide where people’s desks or offices are located, they can determine who is assigned to mentor new hires, and so on.”

The researchers also found that, when people occupy similar places in their employer’s social network, they exhibit similar levels of helpful behavior. That was true regardless of how closely the individuals identified with the employer.

“We think this demonstrates that workplace behavior can also be influenced by observing the behavior of peers, regardless of whether they interact directly with those peers,” Zagenczyk says. “This highlights the importance of establishing those positive social interactions we mentioned earlier – the effects can extend beyond the people directly involved in the interaction.

“One reason companies are freaking out about quiet quitting is that many workplaces have moved away from clearly defined job descriptions to adopt team-based, decentralized organizational structures,” Zagenczyk says. “In that sort of environment – in which many tasks don’t fall within any employee’s defined job description – a lack of ‘organizational citizenship’ in employees can really hurt the company. Employers can address this challenge by better understanding the informal social networks that influence the way people feel about their employers. Studies like this one will help managers do that.”

The paper, “Social Networks and Citizenship Behavior: The Mediating Effect of Organizational Identification,” is published open access in the journal Human Resource Management.

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Strategies

Beyond likes, shares, and comments: How can brands use social media to stimulate both engagement and sales?

With more than three billion social media users worldwide, brands have long recognized the importance of establishing a strong social media presence.

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Researchers from Vrije Universiteit Amsterdam published a new article that examines the impact of owned social media on customer engagement and sales.

The study, appearing in Journal of Marketing, is titled “A Meta-Analysis of the Effects of Brand Owned Social Media on Social Media Engagement and Sales”, and is authored by Georgia Liadeli, Francesca Sotgiu, and Peeter W.J. Verlegh.

With more than three billion social media users worldwide, brands have long recognized the importance of establishing a strong social media presence. Recent surveys indicate that over 91% of firms will increase social media marketing budgets in the next three years and that 62% of consumers believe brands will succeed in the long run only if they have a strong social media presence.

The content that brands create and share through their social media channels is called “owned social media.” Liadeli says that “While brands are increasingly investing in owned social media, many are unsure about the overall return on their social media presence and ask how they can design more effective social media campaigns along the purchase funnel.” In other words, firms ask the following questions:

  1. How effective are owned social media and do they only drive engagement, or also sales?
  2. Can the content that generates social media engagement also be used to improve sales?
  3. Is a firm’s owned social media equally effective across settings? Is it more effective for hedonic brands than for functional brands?

This new study about the impact of owned social media on social media engagement and sales is based on a meta-analysis of 1,641 elasticities across 86 studies spanning from 2011 to 2021 that covers 31 industries, 14 platforms, and 17 countries. Sotgiu explains that “Contrary to managerial beliefs that owned social media are primarily an engagement tool, we observe a stronger impact of owned social media on sales. There may be many consumers who ‘like’ individual posts or take the time to leave a comment or share the post from their personal accounts, but brands may be underestimating the impact of their owned social media by focusing on such easy-to-measure metrics.”

To create engagement via social content, companies are often advised to include a question at the end of their posts or create a contest. “However,” says Verlegh, “our study shows that the most effective content to stimulate social media engagement is to focus on emotions, such as with funny or touching posts. But if the goal is to stimulate sales, social media content should focus on communicating information and product benefits and steer away from the emotional.”

The study provides the following guidelines for Chief Marketing Officers and social media managers:

  • Balance “what you say” and “how you say it” depending on the goal: Focus on the “how” to engage consumers with more emotional content and on the “what” to stimulate sales with more informational content (e.g., the hedonic brand Oreo recently boosted its sales using an informational post on Facebook about a recipe featuring its limited-edition red velvet flavor).
  • It is not necessary to always grow communities to reach as many consumers as possible. Owned social media are more effective for small brand communities with consumers valuing the intimacy of a small community with greater trust in the brand and its messages.
  • Social networks like Facebook and Instagram are better suited for stimulating social media engagement than microblogs such as Twitter. This suggests that tie strength and trust are more important than open access and wide dissemination.
  • The introduction of advertising on different platforms weakened the effect of owned social media on engagement. While advertising may amplify the reach and engagement of owned social media content, it can distract the audience and reduce its contribution.
  • It may be suboptimal for brands to use one social media strategy across different geographies, so managers should adapt strategies to account for differences in country characteristics. The increasing use of social media on smartphones amplifies the impact of owned social media on sales, and managers can expect stronger sales effects in countries with a greater mobile phone penetration. For countries with high power distance, owned social media exerts stronger effects on sales. High power distance is related to greater receptiveness of branded communications fulfilling materialistic and status needs.

Full article and author contact information available at https://doi.org/10.1177/00222429221123250.

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