Negotiation with the Retailers Representatives - Case Study Example

Negotiation report from the retailer’s representative Factors negotiated with Sydney Quantity of supplies Keeping in mind the importance of market diversity and variety, a decision was reached to reduce the current supply volume of shirts from Sydney shirts. The current annual volume of supply is to be reduced by 2.5%. the decreased quantity is to be replaced by the supply of a new brand shirt but with the same Sydney shirts label. The decision was reached after considering the outcome of an internal market research which established that it is important to try and offer a wider range of commodities since it attracts more customers. Apart from considering the importance of market diversity, the introduction of the new shirt brand from Stanley in the market will give the customers a wide range of products to choose from while in the stores. This will greatly improve the amount of sales since the customers will have the agility to try the new brand and those who value the current brand will have it at their disposal. Greenberg (2004). The introduction of a new commodity will improve the revenue of the retail both in the short run and in the long run. This is because to have a taste of a new commodity the customers will tend to acquire it. This will in turn increase the amount of sales. All this is done keeping in mind that the current volume of shirts being supplied would be back to its optimal level. This will have a positive effect on the overall profits expected to the retail stores this is because of the following 1. The introduction of a new commodity which will increase the sales 2. Maintaining the current volume of shirts with Sydney which contributes to about 15% of the annual sales 3. Expected increase in sales 4. Attraction of new customers due to introduction of new commodities Sydney agreed that orders will be filled within the proposed seven days instead of 10 days the main reason for this is to ensure that the retail meets the required time after a customer makes a demand. However Sydney rejected the fact that they need to increase the annual special price promotion to four they argued that this may increase the overall annual cost of sales an d the costs may not be recovered, Sydney also argue that this may temper with some of the fixed components of the annual budget. Sydney accepted the other proposals put on the table i.e. they agreed to increase the cash discount period to fifteen days instead of the normal 10 days. This move was aimed at making sure we increase our profit margin. Last but not least Sydney only agreed to give a 5% specially designed package since this was the best negotiable offer put on the table we agreed to pay for the remaining 5% of the remaining special Package. Other factors negotiated included Product promotion Media advertisement A decision was reached to see to it the Sydney shirts are advertised at least twice a month by the store. This new cooperative advertising scheme will see to it that the costs are shared equally between the two parties. The acceptance of this new deal with Sydney will see that the cost of sales raise by two percent, this will in tern increase the organizations cost of sells. However, the advertising scheme will have long term positive effects to both the organizations. This is because promotion of the products of Sydney shirts by our store will create consumer awareness of the products. This will greatly improve the amount of sales of Sydney shirts by the store. This will see to it that there is an increase volume order from Sydney which may attract ‘lovely’ discounts from the supplier. The advertisement will also help in creating awareness of the quality of products offered at the store this will attract customers who have interest in other commodities offered at the store from other suppliers apart from Sydney. This will improve the revenue of the organization that is received from both the Sydney shirts and the other suppliers. Considering the increment in cost of sales per unit, caused by adopting the new product promotion scheme. The amounts will be recovered considering the positive effect that the new product promotion will have on the sales of the company after a given period of time. This is majorly because of the profits which ill be achieved from the revenue created by sales to customers who were attracted to the stores by the advertisement scheme. The decision is important since the introduction of new products from Stanley by the store will be known throughout the consumer base. This will greatly assist in the marketing of any new variety of commodities available at the store from Stanley Advertisement at the store There was a request by Stanley that there should be an increase in the amount of their products shown at the stores’ live display. This request was rejected, basing the decision on the internal research which shows that there is need for product diversification in order to attract more customers and to increase the sales. the adding of Stanley shirts at the stores’ display may make the customers who value other types of shirts go and look such commodities elsewhere and keeping in mind that they contribute to 75% of the sales they are not worth loosing. The increase of such displays will also mean that the store is majoring only on selling products from Stanley shirts which is not the truth. However, the idea that there will be introduction of new forms of display such as shopping carts having pictures of shirts is a good idea and was accepted this is because it is believed that customers like such form of advertisements, the display of Stanley shirts on trolleys will also give the opportunity of advertising the other brands of shirts from other companies. This will attract customers who fancy shirts from other companies apart from Stanley hence increasing the amount of sales of such shirts. Product diversification According to the research done by the retail store the increase in the variety of products will attract more customers and in turn increase the revenue. There was an agreement with Stanley shirts to reduce the current supply volume in exchange for an introduction of a newer kind of shirts. The current volume is to be reduced by 2.5% so as to enable the ordering of the new type of shirt. The above effect will not have any negative consequences on the sale of the current volume since with time the volume will return to the optimum amount after a short time of trading along with the new commodity. The choice reached to increase the variety of commodities offered especially fro Stanley is to attract more customers to the store. The new variety to be introduced was chosen from Stanley because of the fact they attract a lot of customers. The new commodity will attract new Stanley shirts customers and will also improve the purchase rate of the current volume. The new variety shirt is also a good alternative since the new variety will come in at the introduction of a very prolific product promotion scheme. The opportunity to introduce the new shirt to the market will be taken through the utilization of the new cooperate advertising scheme between Stanley and the store. Long term supplier customer relationship The negotiation team from Stanley wished that we have a formal contract which will maintain the customer supplier for a given period of time. The deal is attractive since the retail store will cut down on costs r renegotiation and acquiring alternative suppliers. The agreement set forth was that there will be a contract that will exist for a period of one financial year subject to renewal. The contract will be renewed based on the relationship of the two parties during the year. The liberty to revoke the contract will also be advantageous to the store since the management will have to evaluate the performance of the commodities from Stanley shirts and make the decision whether to continue with the supplier customer agreement, revoke it or move to the table for new terms concerning the amount of supply, the price and new product promotion schemes. The move to have annual contracts with Stanley will assist in ensuring there is stability and trust between the two parties. The agreement will also give the two companies the liberty to quit from the contact whenever there is a feeling that the contract is not beneficial. The knowledge that the contract is renewable at the end of the financial year gives both parties the correct attitude at the end of the financial year to make choices about new suppliers or customers. The flexibility of the business and changes in market trends with regard to the selling of clothes were a very important aspect to consider the choice of having a long contractual relationship with Stanley shirts. This is because market trends change daily and people resolve to acquire new types of commodities over a given period of time. It was good to ensure that the business does not get tied to Stanley for a long time because this may affect the business at the event that there is need to move on to a different form of clothing line. The change of commodities may be characterized by various circumstances in the market in future which may force the business to change its form of operations in order to fit in the new market state. Manufacturer’s representative negotiation report Issues negotiated with retailer four Quantity of supplies An agreement was reached with the retail store to reduce their current volume of supplies by a percentage of 2.5%. The later is to be supplemented by a supply of a new brand of shirts from us to them. The volume of the current supply will not permanently stay at the reduced level but the volume will return to normal after the new brand has traded for some time. This move has positive effects to the business since they can now taste the popularity of their new commodities in the market and since they are not ready to increase their geographically coverage of supply, it will be an advantage to use the current customers to conduct the test. The move is also very important since it will increase the revenue of the business after trading the new commodities for a given period. Greenberg (2004) The introduction of the new brand will also increase the customer base since once the new brand is tested and proves to be popular the business can take the initiative to increase the supply of the new brand and the current brand in circulation. This will have positive effects on the revenue of the business both in the long run and short run mainly because of the following reasons 1. Increase in sale due to introduction of new commodity 2. Maintaining the current volume of supply with retailer four 3. New customers due to introduction of a new commodity There was an agreement with retailer four about the filling of orders. A decision was reached that all orders will be filled within seven days instead of the normal ten days. The main reason for this is to improve customer supplier relationship. The move is also aimed at ensuring that supplies from the businesses are not rejected in the event that the customers from the retailer reject the orders due to delays. The cash discount period for retailer four was extended from 10 days to 15 days. This is very important also in improving the relationship with the customer (retailer four). Product promotion Media advertisement The decision to develop a joint product promotion scheme by the two firms which will see to it that there are at least two advertisements each month, the cost of both advertisement will be shared between the two entities. This is a very important marketing move and agreement with retailer four even though it will increase the cost of sales per each unit. The advertisement scheme will have positive long term effects to the overall income of the organization. Through the advertisement initiative with retailer four, the business will have the opportunity to advertise their new brand. This will greatly help in creating awareness about the new product which depending on the popularity of the commodity will have a positive effect to the overall revenue of the business through an increase in sales. Through this advertisement scheme the business is able to show the quality of product they manufacture this will be able to attract other retailers who will have the need to trade with commodities of such a quality. The advertisement schemes will also to a great extent boost the process of introducing new products to the market since they will not have any marketing difficulties. The new advertisement will increase the cost of sales by 2 cents per unit. However, considering the long term positive impacts of the advertisement will cover the costs. Therefore making the advertisement a scheme a very important virtual asset for the business since it will go a long way in creating consumer awareness which is a very important aspect of the business Advertisement at the retail stores of retailer four The retailer did not agree to the move to increase our displays in their stores. However there was an decision to have pictures in their shopping carts and trolleys, the picture will have shirts of Stanley However, the idea that there will be introduction of new forms of display such as shopping carts having pictures of shirts is a good idea and was accepted this is because it is believed that customers like such form of advertisements, the display of Stanley shirts on trolleys will also help in advertising new brands and upcoming brands. This form of advertisement is also cheaper compared to other form of advertisement that a business may choose to use to promote the products (Business to business agreements 2010).. Product diversification A new brand of product is to be formed and supplied to retailer four; the supply is going to be 2.5% of the volume of the current shirts being supplied. This is a very positive move since it would increase the revenue of the business in the long run though extra supply costs will be incurred. The introduction of this new product will see that the current volume of shirts supplied to retailer four are reduced by 2.5% the decreased percentage will be replaced by the new product. This move was also decided because with time the normal volume the current products will be back to normal after a given period of time. The new product will also be known to the customers since it will take advantage of the new joint cooperation advertising scheme. The new product will also see to it that the supplies to retailer four increase, this is mainly because, after the supply of the current volume of shirts is back to normal, there will be continued supply of the new commodity to retailer four (Business to business agreements 2010).. Long term supplier customer relationship The negotiation team from Stanley wished that we have a formal contract which will maintain the customer supplier for a given period of time. The deal is attractive since the retail store will cut down on costs r renegotiation and acquiring alternative suppliers. The agreement set forth was that there will be a contract that will exist for a period of one financial year subject to renewal. The contract will be renewed based on the relationship of the two parties during the year. The liberty to revoke the contract will also be advantageous to the store since the management will have to evaluate the performance of the commodities from Stanley shirts and make the decision whether to continue with the supplier customer agreement, revoke it or move to the table for new terms concerning the amount of supply, the price and new product promotion schemes (Business to business agreements 2010).. The move to have annual contracts with Stanley will assist in ensuring there is stability and trust between the two parties. The agreement will also give the two companies the liberty to quit from the contact whenever there is a feeling that the contract is not beneficial. The knowledge that the contract is renewable at the end of the financial year gives both parties the correct attitude at the end of the financial year to make choices about new suppliers or customers (Business to business agreements 2010). The flexibility of the business and changes in market trends with regard to the selling of clothes were a very important aspect to consider the choice of having a long contractual relationship with Stanley shirts. This is because market trends change daily and people resolve to acquire new types of commodities over a given period of time. It was good to ensure that the business does not get tied to Stanley for a long time because this may affect the business at the event that there is need to move on to a different form of clothing line. The change of commodities may be characterized by various circumstances in the market in future which may force the business to change its form of operations in order to fit in the new market state. NEGOTIATION GAME DECISION SHEET RETAILER REPRESENTATIVE________________________________ MANUFACTURER REPRESENTATIVE_________________________ DATE___________________________ START TIME______________________ FINISH TIME_______________________ DECISIONS A. Assumptions made 1. Product diversification will increase the number of customers 2. Increase in customer number will lead to an increase in sales 3. A comprehensive and good mode of advertisement increase the amount of customers B. Advertising The advertisements will be carried out twice a month and the cost will be equally split between the two parties i.e. Retailer four and Sydney. The contents will be split equally between the two C. Order time orders will be filled within seven days D. Price promotions the current price promotions would not be increased to four instead they would remain as earlier. E. The payment discount period will be increased to 15 days F. Special packaging 1. There will be a special packaging for a period of three months 2. The cost will be splinted between the two i.e. 50% each G. Ongoing commitment There will be a contract which shall be in force for a period of one financial year, the contract will be subject to renewal for both parties. We hereby agree that the decisions outlined above are agreed by both parties Manufacture(s) __________________________ Retailer(s) ______________________________ (United Kingdom negotiation documents 2010) Bibliographies Laurie Greenberg, 2004, working with retail buyers, retrieved November 18 2010from http://www.intergratedretailsystems.com United Kingdom negotiation documents, 2010, Pre negotiation report, retrieved November 18 2010 from www.uky.edu/.../Sample%20FINS%20Pre%20Nego%20Report%201.pdf Business to business agreements, 2010, Agreement Breakdown, retrieved November 18 2010 From jpr.sagepub.com/cgi/content/abstract/15/4/285 Read More