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In "The Zone"

Posted by admin VIP     16 Comment(s)    Add a Comment  comment-icon.png
03/27/2012 02:57 PM

In the last entry, Anchoring (establishing a point, figure, range, issue, etc. as the negotiation's focus) was introduced and the discussion of when to "drop" an anchor began.  We acknowledged that for anchoring to be effective, you must be in a certain "zone".  So what exactly is meant by "The Zone"?

The Zone would be anything that is not insulting, so as to set negotiating opening points the parties are willing to negotiate in.  Being in The Zone for opening and any subsequent offers in a negotiation will ensure "the dance" will go on; where insulting offers stop the dance dead in its tracks.  If Betty asks Joe to buy a candy bar for $100, Joe likely knows that he can get at least 100 candy bars for that price and he won't even counter.  So an offer in this Insult Zone is perceived by the other party as so unreasonable that it not only fails to set a negotiation parameter, it most likely deters any counter offers from the other party. 

The Zone we want to move the dance along in is made of 3 other zones: Credible, Reasonable, and The Zone of Agreement.  Here are definitions related to a wonderful life experience - school dances.

Offers in the Credible Zone are ones that are perceived as unreasonable, though it does not turn-off the other party to stop negotiating.  Likely, an offer in the Credible Zone will not set a parameter for negotiation, thus it is not a good zone for anchoring.  This is like solo dancing, you hope to make yourself appear credible enough to be a possible dance partner with a special someone.  

Caution should be used when trying to negotiation in this zone because it is so close to the Insult Zone.  You better have very reliable information on how the party will perceive your offer or what you think is credible ends up insulting, leaving you on the side of the gym to drink your punch.

Offers in the Reasonable Zone are those that the other party perceives to be outside of an agreeable range, but it appears reasonable enough that the ultimate agreement point is predictable (mid-way point).  It's an offer that keeps the other party motivated to a deal.  This zone is like getting that special someone to do a fast dance with you, no touching, but you are on your way.

Offers in the Zone of Agreement are those that are in the range of an acceptable agreement to both parties.  Range is the important part here.  Just because the offer falls in the Zone of Agreement does not instantly mean a deal is reached, or that you have that special someone wrapped in your arms.  People often continue to negotiate in this zone to improve their positions.  This zone is like getting that special someone to slow dance, though the distance between your arms is not quite set.  The natural negotiation dance likely needs to take place, so if you have not planned your "dance moves" right, instead of only being able to fit a toothpick between you two, you start the dance with space between your arms that the starting football center would fill.  This would require the dance to continue to get to that sweet embrace.  As such, planning the zone where your opening and subsequent offers land are crucial when negotiating for the best possible value.

How do you start the "dance" and move through the zones?  Next time we will go from wallflower to the dance floor.  

 


 
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