Sales Negotiations in Professional Service Firms: An Exploratory Study on Agenda Setting and Issue Management

88 Pages·2014·0.92 MB·English

by  Mireia Prat (auth.)

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Mireia Prat
Sales Negotiations
in Professional
Service Firms
An Exploratory Study on Agenda
Setting and Issue Management
Mireia Prat
Berlin, Germany
Masterthesis, Freie Universität Berlin, Berlin, Germany
ISBN 978-3-658-04498-5 ISBN 978-3-658-04499-2 (eBook)
DOI 10.1007/978-3-658-04499-2
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Foreword
Individualization in service design and production has also prompted more
individualized ways of marketing those services. The sales process has thus become
more and more of a negotiation situation, in business-to-business (B2B) settings
anyway, but more and more in business-to-consumer (B2C) settings, too. In contrast to
a pre-structured sales process in which the salesperson may follow a certain persuasion
and closing-the-deal routine, a real negotiation situation is characterized by a greater
diversity in terms of the twists and turns the process may take and in terms of
outcomes, too.
Over the last 60 years, negotiation research in various disciplines such as game theory,
social psychology, communication studies or marketing research has done a great deal
to better understand negotiation processes and outcomes. Structural (e.g. power,
media) and personality-specific (e.g. gender, culture, personality traits) determinants
of negotiation as well as communication and cognitive processes in negotiation have
received a lot of attention. Interestingly, this is not true for the tangible issues in
negotiation: Only very few works have touched questions like the number of issues in
a negotiation or the agenda into which they assemble.
In her master thesis, which is part of a larger research project on issue management
and agenda setting at Freie Universität Berlin, Mireia Prat focuses on the service sector
and a cross-cultural comparison between Spain and Germany. Using an exploration
oriented, qualitative method based on in-depth interviews with salespeople in various
service industries (banking, financial services, management consulting) she tries to
shed light on various questions concerning the issues in negotiation. Specifically, she
analyzes the following questions:
(1) Which are the issues that are negotiated during a sale in professional service firms?
(2) When and how are these issues introduced and why?
(3) How are these issues negotiated and why?
(4) Which factors (including culture) influence the negotiation of these issues?
V
Her most noticeable results include a finding that is contrary to prior conceptual
works: Agenda setting in professional service sales negotiation in practice is not driven
by negotiation strategic considerations that would advocate simultaneous treatment of
the issues, but rather by industry standards. Before talking about and eventually
agreeing on price and other commercial conditions, an understanding about the service
scope is reached. Consequently, sales negotiations in this industry can be characterized
by a division of issues and issue packages. A second interesting finding of the present
study pertains to the influence of culture: Despite differences in cultural values and
communication context between Germany and Spain, the only noticeable differences
in negotiation conduct come from different legislations in both countries.
Overall, Mireia Prat makes a fine contribution to both sales and negotiation research. I
wish her master thesis the kind of appreciation among practitioners and scholars that it
certainly deserves.
Berlin, September 16, 2013
Prof. Dr. Ingmar Geiger

VI
Table of Contents
Foreword .........................................................................................................................V
Table of Contents ......................................................................................................... VII
List of Figures ............................................................................................................... IX
List of Tables ................................................................................................................ XI
List of Abbreviations ..................................................................................................XIII

1. Real-life negotiation research in Spanish and German professional service
firms .............................................................................................................................. 1
2. Theoretical foundations .............................................................................................. 4
2.1 Negotiations as cooperation and competition .................................................... 4
2.2 Professional service firms as a suitable object of study ..................................... 8
2.3 Characterization of Spanish and German cultures ........................................... 12
2.3.1 Hofstede and GLOBE cultural dimensions ................................................. 12
2.3.2 High and low-context communication ........................................................ 15
3. An exploratory study based on qualitative interviews .............................................. 16
3.1 Qualitative research study following an interpretative paradigm according
to a grounded theory approach ............................................................................. 16
3.2 Data collection through qualitative in-depth interviews .................................. 19
3.2.1 Qualitative in-depth interviews ................................................................... 19
3.2.2 Interview guide ............................................................................................ 20
3.2.3 Theoretical sampling process ...................................................................... 21
3.2.4 Sample characteristics ................................................................................. 22
3.3 Data analysis and interpretation ....................................................................... 26
3.3.1 Data treatment: transcription and coding .................................................... 26
3.3.2 Overview to data results .............................................................................. 27
4. Results ....................................................................................................................... 28
VII
4.1 Which are the negotiation issues? .................................................................... 30
4.2 When and how are negotiation issues introduced? .......................................... 33
4.2.1 First stage: contact initiation ....................................................................... 33
4.2.2 Second stage: proposal and negotiation preparation ................................... 36
4.2.3 Third stage: proposal submission and closing the deal ............................... 43
4.2.4 Issue introduction in banking ...................................................................... 45
4.2.5 Issue introduction recapitulation ................................................................. 47
4.3 How are issues negotiated? .............................................................................. 48
4.3.1. Agenda setting or the order in which issues are negotiated ....................... 48
4.3.2 Issue management or the negotiation strategies involving issues ............... 51
4.3.3 Agenda setting and issue management in banking ..................................... 53
4.3.4 Multi-party sequential negotiations in consulting companies dealing
with clients with organized purchasing departments ......................................... 54
4.4 Which factors influence the negotiation of issues? .......................................... 57
4.4.1 Institutional guidelines and performance evaluation .................................. 58
4.4.2 Focus on long term relationships and trust building ................................... 58
4.4.3 Negotiation power and switching costs ...................................................... 59
4.4.4 Emerging cultural differences ..................................................................... 60
5. Discussion ................................................................................................................. 60
5.1 What needs to be reconceptualized on our understanding of negotiations ...... 60
5.2 Towards a productization of professional services .......................................... 63
5.3 Attenuation of cultural differences in sales negotiations in professional
service firms ......................................................................................................... 64
5.4 Conclusion: limitations and future research ..................................................... 65
Exhibits ......................................................................................................................... 69
References ..................................................................................................................... 73
VIII
List of Figures
Figure 1: Classification of issues by issue group .......................................................... 31
Figure 2: Sales process in PSFs .................................................................................... 33
Figure 3: Contact initiation ........................................................................................... 34
Figure 4: Types of preparation ...................................................................................... 37
Figure 5: Main issue introduction in banking ............................................................... 46
Figure 6: Negotiation agenda ........................................................................................ 49
Figure 7: Management of cross-selling issues in banking ............................................ 53
Figure 8: Multi-party sequential negotiation model ..................................................... 56

IX