DIGITAL MARKETING REPORT

Analysing ShampooHeads

Managing Negotiations: Individual Coursework

6. Deal acceptance

3. Counter Pitches

5. Combining alternatives

5. Final offers and coalition creation

4. Deliberation

2. Information Finding

1. Opening Pitch

Negotiation Timeline

Before the negotiation started in earnest, the ShampooHeads team utilised their Pitch to frame the negotiation discussions

The Pitch

Communication

Influence and PowerLiking Consensus

PerceptionThe Halo Effect

The Pitch allowed ShampooHeads to frame themselves in the negotiation, using the following concepts

“I think your product is great but, moreover, I think you two are great" (Dragon's Den 2012)

Early in the Pitch, Geoff displayed nerves, and Collette could be heard audibly encouraging him and supporting him. I believe this interaction further strengthened the Dragons' perception of them as authentic and trustworthy.This was so effective that some Dragons even noted it: "I think your product is great, but moreover, I think you two are great" (Hilary Devey, 2012).Through their friendly, smiling approach, Geoff and Collette were successful in utilising the 'Halo Effect' to underpin their pitch and influence the Dragons' perception of them to predispose the Dragons towards investment.

One of the ways that ShampooHeads were able to influence the negotiation process was via their framing of themselves and their company during the pitch. They imbued their pitch with a sense of authenticity, modesty and friendliness by smiling and encouraging each other, creating a 'Halo Effect; whereby one party makes a subconscious judgement about another's character based on their knowledge of one attribute (Lewicki, Barry & Saunders, 2021). In this case, the Dragons subconsciously warmed towards their personalities.

Perception:The Halo Effect

A key part of the ShampooHeads pitch was the creation of referent power and influence via 'Liking'. By sharing mutual attributes with the Dragons, such as being parents, ShampooHeads were able to create a 'liking' response and referent power, where the Dragons wanted to be closely associated with them due to their personality and common experiences. Hilary and Peter responded particularly well to this, and both shared reciprocal anecdotes about their own positions as parents.

Another key factor in the perception of the brand was Geoff and Collette's use of their Boots deal to showcase 'consensus': using a big brand to demonstrate consensus about their product. This was key in cementing the deal, and Dragons such as Theo and Deborah Meaden confessed how impressed they were.The context of the negotiation set up a substantial power imbalance: the Dragons utilised power created by their command of resources (money) and social stature (power derived from organisational hierarchy of their positions as Managing Directors, CEOs and millionaire business people). The TV-show format also created legitimate power in that the Dragons were judges and arbiters and the ShampooHeads team were seeking the judges' approval. Thus, the use of the Boots deal to create power via consensus was a successful strategic move which helped ShampooHeads to level a weighted playing field somewhat, and demonstrated what Lewicki, Barry and Saunders (2021) describe as: "creating a state of power equalisation".

“Wow. That is worth a lot of money. They obviously believe in the product"Theo Paphitis (Dragon's Den, 2012)

Building on the framing of their company, Collette and Geoff were also successful in influencing the Dragons via 'Liking' and 'Consensus'

Influence & Power: Liking and Consensus

ShampooHeads also successfully used non-verbal communication tactics which have been shown to achieve better outcomes (Lewicki, Barry & Saunders, 2021)Through maintaining good eye contact, an erect and responsive body position and nodding of the head, Collette and Geoff were able to convey a demeanour of attention and interest in the Dragons' questions - suggesting active listening and creating rapport with the other party.It could be said that this early communication contributed to their later success in having all five Dragons interested in working with them.

“Researchers find that “thin slices” of negotiation—­communication patterns during the first five minutes—have a large effect on the negotiated agreements that the parties eventually reach."(Lewicki, Barry & Saunders, 2021)

The ShampooHeads team were calm and concise in their opening pitch, using clear, factual evidence in support of their brand. They led with a clear, calm 'ask' for investment and continued with concise statements about their business (such as where the brand was registered, and the ownership of domain names), resisting the use of hyperbolic or overly emotive language.

Lewicki, Barry & Saunders suggest that communication early in the negotiations a strong impact on the opening party's success in the negotiation. In particular, it has been shown that use of hyperbolic or emphatic language can hinder success (Lewicki, Barry & Saunders, 2021).

Communication

Once the ShampooHeads team had framed themselves and their brand through communication, influence and referent power, the negotiation began on an excellent foundation.

The negotiation

• The negotiation allowed both sides to achieve their objectives and the goals were not mutually exclusive
• The Dragons wanted to make a lucrative investment
• ShampooHeads wanted expertise from the Dragons to progress their business
• There was a free-flow of information
• ShampooHeads did not appear to attempt to conceal information for their own benefit
• Extensive efforts were made by the Dragons to discuss and explore ShampooHeads interests to uncover opportunities for collaboration

The ShampooHeads Negotiation had many elements of an Integrative Negotiation, namely:

Integrative Negotiation

4. Evaluate and select alternatives

2. Surface interests and needs

3. Generate alternative solutions

1. Identify and define the problem

Stages of an Integrative NegotiationSource: Lewicki, Barry & Saunders (2021)

“Instead of talking the other out of his or her needs or failing to acknowledge them as important, negotiators must be willing to work for both their own needs and the other's needs to find the best joint arrangement."(Lewicki, Barry and Saunders, 2021)

For ShampooHeads, the identification of the problem came in the form of their Pitch, where they identified the 'problem' through their ask to the investors - a £75,000 investment for a 15% stake in their company. ShampooHeads further defined the problem by explaining that they would like to bring on-board expertise from the Dragons to help progress their company.

Lewicki, Barry & Saunders suggest that Integrative Negotiations follow a key set of stages, shown in the diagram in the previous slide. The ShampooHeads negotiation followed all of these stages, albeit in a condensed form due to the time contraints imposed by the televised format of the negotiation. Stage one of any integrative negotiation is the identification and definition of the problem.

Stage 1:Identify and Define the Problem

Through a series of questions, covering aspects such as:

• The motivation for creation of the company
• Geoff's professional background
• The need for investment, given the success of the company

the Dragons were able to understand the underlying interest of Geoff and Collette: which was to improve the company and progress its success via bringing experienced investors on-board. In return, ShampooHeads responded to the Dragons to ask which of the panel would bring the most value to the company. This tactic was successful in surfacing the interests of the Dragons, as it stimulated a series of counter-pitches where the Dragons discussed their own reasons for wanting to partner with ShampooHeads.

After the initial problem statement, the negotiation moved into Stage 2, where the Dragons began an information finding exercise in order to uncover the interests and needs of the ShampooHeads team. This took the form of a questioning approach.

Stage 2: Surface Interests and Needs

“We know that you could help us take this as far as we want it to go...." Collette Bell (Dragon's Den, 2012)

“The actual process of dealing with each of them usually evolves into a series of one-on-one negotiations—but conducted within the view of all the other group members" (Lewicki, Barry & Saunders, 2021)

Once the pitches had been put forward, Collette and Geoff took time to consider the offers offline. Once back at the negotiation, ShampooHeads team combined the alternatives into a package by requesting a coalition between Hilary and Theo. This was an interesting strategic move as it not only provided value for themselves (increasing the expertise for their business), but also satisfied a greater number of patricipants than just selecting one Dragon. This was also a key stage in the Integrative Negotiation progress and marked the third stage of integrative negotiations - generating alternatives.

In addition to being an Integrative Negotiation, the ShampooHeads negotiation was also a Multiparty Negotiation. After the success of the Pitch, each Dragon was intent on making an offer to ShampooHeads. Thus, the negotiation became a multi-party negotiation, with each party acting as a Principle (acting on behalf of their own interests).As each Dragon pitched to ShampooHeads, Geoff and Collette had to navigate more strategic complexity - they had to consider the behaviour and needs of all parties, and their responses turned into a series of one-on-one negotiations (Lewicki, Barry & Saunders, 2021).

Multiparty Negotiation

The multi-party aspect of the negotiation introduced a number of challenges in this respect, as ShampooHeads had to take into account the public nature of their decision making, and the impact that could have on their frame of authenticity and friendliness. Strategically, they needed to be careful about creating offence, and also finding a strategy that created the most value for all players. In this instance, it was ShampooHeads team who generated alternatives and presented them to the Dragons. Their suggestion was to create a coalition between Hilary and Theo, in order to capture maximum value for ShampooHeads. They left discussion of the share proportion for further negotiation (which would take the form of subsequent one-on-one negotiations)

Once the Dragons' pitches were complete, Geoff and Collette took some time alone to deliberate and review the Dragons' suggested solutions to the problem (i.e. their individual pitches). Their discussion took into account the unanticipated beneficial position they were in, where they could choose from any of the five investors.

Stage 3:Generate alternative solutions

He used Hardball tactics by presenting the two alternatives (working with himself alone vs. a coalition) against each other to highlight the financial benefit (decreased shareholding) to ShampooHeads and attempt to lead the negotiation in his favour. ShampooHeads met this request with acknowledgement and requested Hilary's counter offer. Using silence as a tactic in response to Paphitis' offer was successful here as they did not reveal any additional information before requesting Hilary's offer.When Hilary accepted the terms of Theo's alternative and offered to match his terms, ShampooHeads agreed the deal immediately, without any negotiation on the share options or investment amount.

Once presented to the parties, the alternatives were evaluated and selected by a number of one-on-one negotiations by ShampooHeads and Theo, and ShampooHeads and Hilary, respectively. Theo Paphitis began his negotiation strategically by offering two alternatives to the ShampooHeads team, with the coalition option resulting in increased shareholdings.

Stage 4:Evaluate and select alternative solutions

First, be considerate: Do not let your excitement make your counterparts feel that they lost."(Brooks, 2015)

A notable part of the ShampooHeads negotiation is the readiness with which ShampooHeads accepted the Dragons' coalition offer without further negotiation on shareholdings. Although we must be aware of the context of the negotiation, which is that it was part of a televised series where each pitching party had a finite amount of time in which to make a deal, it should be noted that if this negotiation had been undertaken in less pressured circumstances, ShampooHeads may have wanted to reconsider how fast they accepted the Dragons' offer so as not to create doubts through 'The Winner's Curse' for the investors by accepting their offers too readily. The Winner's Curse is a phenomenon which can sometimes occur when a party feels that they have won the resource too easily, as if perhaps they could have had a better deal (Lewicki, Barry & Saunders, 2021). As Brooks acknowledges, this can sometimes be brought about by displays of excitement and readiness by the other party.

A note on the Winner's Curse

Brooks, A. (2015). Emotion and the Art of Negotiation. [online] Harvard Business Review. Available at: https://hbr.org/2015/12/emotion-and-the-art-of-negotiation.Lewicki, R.J., Barry, B., & Saunders, D.M. 2021. Essentials of Negotiation. 7th edition. International Student Edition, New York, McGraw-Hill EducationDragon's Den (2012) Kids Shampoo Idea Stuns Dragons [video] https://www.youtube.com/watch?v=KRrXRJ_vrl8 [Accessed 11th December 2023]

References