There was an interesting story on multi-party negotiations in the WSJ, “Environmentalists Oppose Clean Air Plan“. It is not that they are against clean air but object to a plan that disallowed big trucking companies and instead encouraged owner-operators. On the surface it would look like the environmentalists support the big trucking companies, but it is only because the workers of these companies are the members of the union that supports the environmentalists. The union is against the plan as well and favored the trucking companies.
The Mayor of the City, Villaraigosa, is for the trucking companies as well. He couches his argument with environmental concerns by saying, “Right now, the burden to clean up and retrofit the trucks is on an independent contractor who makes $11 an hour and has no benefits. They are never going to have the resources to do that.”
Only the Port Officials seem to support the poor independent truck operators. That is again not out of the concern for them but from the fear that the union will end up unionizing the port workers.
Do environmentalists care more about the environment or union jobs? Why do the unions support the cause of environmentalists? Why do unions sometime side with management? Does the mayor of a city care about protecting jobs or the environment?
The answer is, it is a package. An individual issue matters only to the extent it adds to the total value of the package. If winning one issue would add more to the package than losing or compromising on another, the parties would do just that. Sometimes the issues are hidden and are based on long term concerns than what is currently at play. For example, the environmentalists want the union support in all their battles, port officials are afraid of unionization, etc.
This is a text book case of multi-party negotiations. Everyone is trying to maximize their share of the pie and have more riding on this negotiation that it meets the eye. They all will be willing to trade one for the other as long their share keeps increasing.
Do you feel instant ownership of items you touch in stores?
Does touching objects and the ensuing ownership lead you to value the objects more than you would have had you not touched it?
Does that higher value translate into higher Willingness to pay?
A recent study by two marketing professors from Booth School and Anderson school finds that the answer to all these questions is yes. A less academic version of the research report is available in TIME magazine.
Professors Joann Peck and Suzanne Shu, posed the questions
Does holding an object and imagining that it is yours influence how much the object is valued? More generally, does mere touch influence the feeling of ownership and the valuation of an object?
The core premise that ownership increases perceived value (endowment effect) in itself is not new and the authors do state twenty years of research on endowment effect. What is innovative in this research is finding that touch as a way to increase ownership and directly relating it to higher willingness to pay.
What does this mean to you as a customer?
- As a tourist wandering the local streets for merchandise, resist the temptation to hold the item. Or have a partner and have them touch it while you negotiate.
- If you are buying a new car, do not negotiate after the test drive. In fact do your test driving with a completely different dealership and buy from another.
- If you are buying used car, do not negotiate right away or follow Tip-1.
- If you are looking to buy a house do not imagine, this will be my workspace, this will be the baby’s room etc. Be aware of your agent telling you, “imagine yourself cooking in the kitchen and your kid playing here …”. Be detached.
- At garage sales, don’t touch anything.
What does this mean to you as a marketer?
- Do not try to sell, do not talk price . Let the customers play with the items. Engage the customers first then sell.
- For new cars, make the customer test drive, take a picture of the customer at the wheel or standing with the car and give it to them.
- Same for selling used cars.
- If you are selling a house, buy Polaroid (do they sell them?) and keep them for use during showings. Encourage the showing agent to shoot pictures of the prospective buyers in the house and give the pictures to them. Make the visitors feel that they “own” it. This is the reason home staging works.
- At garage sales, encourage touching your wares.
What do you think?