BATNA Marketing Strategy Negotiation Analysis for Peter Sagan's Endorsement
Question
Task: How can DeGrandis Sporting Goods optimize their BATNA Marketing Strategy and negotiate effectively to secure a profitable endorsement deal with Peter Sagan?
Answer
Boosting DeGrandis Sports Good Sales through Effective Marketing
Task 1
1. Peter Sagan BATNA MARKETING STRATEGY and reservation value
Peter Sagan a well reputed cyclist has imprinted his mark on the cycling circuit by winning the most prestigious cycle race the Tour de France in 2012, 2013, 2014, 2015. Today Peter Sagan earns a basic salary of over 3 million pounds sterling. Peter’s BATNA MARKETING STRATEGY would be around 40% of his salary thus 3,000,000×40% = 1,200,000 pounds sterling. Being globally recognized cyclists, brands he promotes are likely attracting the attention of cyclists from across the globe (Thompson 2013).
2. Cycle store BATNA MARKETING STRATEGY and Reservation Value
Cycle Store has calculated Peter Sagan BATNA MARKETING STRATEGY and current reservation value at 24% of 3,000,000 pounds totally to just below 7,000,000 pounds sterling. At just 27 years and globally recognized for winning the Tour de France 4 times , he remains as being a highly competitive contender capable securing several additional major podium finished. With the likelihood of securing several major podium cycle store has calculated Peter’s BATNA MARKETING STRATEGY and reservation price way below his true marketing value (Malhotra & Bazerman 2007, p. 21). 25% BATNA MARKETING STRATEGY estimation is made on athletes who no longer deliver a high podium finish expectation rate but have developed a reputation in the past and likely to be covered reported by media during a race.
3. Calculating the Athletes ZOPA Range
Being an active cyclist who regularly sees podium finished he remains in high demand among sport good manufacturers and distributes. This is due to the athlete offering a high probability of displaying a brands name on the media while on the podium for a good finish. This also results in increasing the Athletes BATNA MARKETING STRATEGY which has a direct negative effect on the ZOPA range (Bruner 2004, p. 774). With high demand from sport equipment companies and advertising agencies, the ZOPA or negotiation range reduces considerably with Athletes only willing to negotiate a maximum of 5% on their current BATNA MARKETING STRATEGY. Some factors influencing the low ZOPA range are discussed below.
a. Athlete at his prime
Peter Sagan is currently 27 and has won the Tour de France 4 times which places him at a prime stage of his life when he must focus his attention towards earning the maximum amount of income from his salary and advertising (Mnookin & Susskind 1999, p. 267).
b. High Podium finish ratio
His also registers a high podium finish rate on most of his races which thus delivering a high probability he would be seem on the podium and being closely covered by sport media during races. This makes his a prime target for advertising agencies to broad caste their brands on his jersey.
c. International brand exposure
Peter Sagan is also a well-recognized name among international viewers who watch cycling and likely to be covered on the international news which results in his being and international brands marketing agent. This automatically increases his BATNA MARKETING STRATEGY and reduces his ZOPA as there is higher demand attaching advertisements on his jersey which are likely to be viewed internationally (Malhotra 2007).
The above points reduces the athletes ZOPA range making it an earning opportunity for athlete as he would be able to secure more higher paying advertising contracts due to him high podium finish ratio.
Task 2 – Negotiations
We have evaluated the contract offers to Peter Sagan by Cycle Store and determined the contract is under prices and the contract is worth more. This we have determined on the basis of the athletes current earnings and current stage in his sporting career. Being active sport professionals with a high probability to win major cycling events. This increases his BATNA MARKETING STRATEGY to an average of 40% due to the high demand to advertisement on the professional’s jersey.
We therefor estimate your offer of 24% to purchase Peter Sagan’s advertising rights to be too low and are prepared to offer 40%. Being an offer above the professionals expected rate DeGrandis Sports Good likely to come to agreement with Peter Sagan and sign a three month advertising contract. With Cycle Store also having shown interest in advertising on Peter Segens jersey we take this opportunity to invite you to share this opportunity to advertise on the professionals jersey and share the contract fee.
This will allow both our brands utilize the professional’s popularity to advertise and increase or sales. We therefore offer Cycle Store the opportunity to pay $695,650 and we will offer 35% of the Peter Sagan’s Jersey to advertise your brand. This would allow both our brands advertise on the sports professionals’ jersey and boost our sales.
Task 3 – Short Report Related To the Negotiation Outcome
[Your Name]
Email: [Your email address]
14/06/2017
By email: [Client email address]
Fergus DeGrandis
Chief Executive Officer
DeGrandis Sporting Goods
Dear Fergus,
RE: NEGOTIATION OF PETER SAGAN ENDORSEMENT ADVERTISING CAMPAIGN CONTRACT
Thank you for your instructions.
I wish to confirm that I have analyzed the above mentioned advertising campaign with Peter Sagan and have perform all relevant research to determine the client BUTNA which is higher than that offered by out competitor Cycles Store but likely to also deliver higher returns for DeGrandis Sporting Goods in terms of sales generated from advertising with this Athlete in the future.
Being an active Athlete with a high track record of podium finished DeGrandis Sporting goods is likely to register an increase in the sales directly generated after entering in to a contract with the Peter Sagan? The brand would also have instant international exposure allowing the brand advertise and sell its products on the global market as opposed to one region.
To be able to enter in to a valid contract with Peter Sagan I have estimated the athletes BATNA MARKETING STRATEGY at 40% of his salary earning which is 3 million pounds sterling per annum. The advertising contract would last 3 months which will maintain a positive effect on consumers and also avoid affecting the athlete’s credibility negatively.
I shall be sending a detailed breakdown of the contract details related to the contract after your approval of the initial contract details
Yours sincerely,
[Your name]
References
Bruner, R 2004, Applied Mergers and Acquisitions, John Wiley & Sons.
Malhotra, DBM 2007, Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond, Random House Publishing Group, New York.
Malhotra, D & Bazerman, M 2007, Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond, Random House Publishing Group, New York.
Mnookin, R & Susskind, L 1999, Negotiating on Behalf of Others: Advice to Lawyers, Business Executives, Sports Agents, Diplomats, Politicians, and Everybody Else, SAGE Publications.
Thompson, L 2013, The Truth About Negotiations, 2nd edn, FT Press. BATNA Marketing Strategy
