Discuss about the Negotiation for Celebrity Endorsement Contract.
My client has set the bar too low that can make it difficult for negotiation. However, my reservation value is better than the celebrity. For example, the BATNA offered by the company is $25 million. This is a good offer because the celebrity involved has an exceptional brand and commands a significant following from the public. Based on this BATNA, the celebrity who will not be able to accept this amount would be refused. However, my client has also considered the reservation value at $20 million annually. According to Ellis (2011), by setting a reservation cost price, the company must have examined the premium to the offered BATNA because of the diversity in the fields. Indeed, the ticket value is the worst or least fair deal regarding the price. It is nearly the walkway point or bottom line.
At the prenegotiation stage, it is important to consider different factors to avoid future misunderstanding and conflicts regarding the contract. The most important factor to look for in a celebrity is the experience. In fact, experience in negotiating contracts makes the problem half-solved. As a representative of the company at the negotiation table, translating the talks into working and the binding document is necessary (Ellis 2011). With the Turnkey approach, nothing will be left out of the legal document. As such, it will save the time used in the negotiation. Given the significant of the celebrity endorsement on the brand, the party should rush into the process. In this process, the broker or the lead negotiation team from the company will be acting as an agent (Kandell 2013). In any negotiation involving officials, the deal must go through. The BATNA of the other is that the cost of the endorsement should be as high as $50 million annually. The lowest BATNA needs to be $30 million in the same period.
A typical celebrity broker will charge about 10-15 percent of the payments. To this effect, the agent would try to maximize the extremely high end. Based on this figure, the broker will earn about $300,000-500,000 for successfully breaking the impasse. The Brokers of the celebrity also have relevant experience to conclude the celebrity endorsement deals efficiently (Kandell 2013). With the assistance of the legal teams trained in the negotiation, they try to protect the interest of the clients. The lawyers are liable and answerable to their client their failure to advise the clients legally can break the relationships. Based on this position or the BATNA of the customer, the reservation value stood at $300,000
The ZOPA range is critical in defining the terms of engagement in the celebrity endorsement negotiation. It is either the value lower than the reservation value or higher than the BATNA. The most important factors in the process could focus on the domain name, social media, e-commerce, the Internet, promotions, advertising, marketing, privacy matters, copyright, and trademark (Ellis 2011). As an active negotiator, I have the zeal to represent my client in the issues revolving around promotion and protection of the party’s intellectual property online. Without a doubt, the brick-and-mortar market requires the capacity to utilize the counsel and create respect in addressing the client-specific strategies thus protecting the copyrights and trademarks as well as the intellectual property rights. Indisputably, it stands out that the best deal will focus on protecting the interest of the parties. Although in a negotiation, the possibility of a win-lose situation is a mischief, win-win for all makes great sense in the celebrity endorsement.
The payoff can be higher than the investment, but the reality is that the long-term goal must remain in sight. Conversely, reservation price can make a positive change because it rarely assumes the knowledge and power of the negotiators. For the company to gain big, it must play hard to get so that the celebrity can also realize that the negotiation is beneficial for both parties. In fact, both the celebrity and the company have strong brand images that can create results. Therefore, the best strategy for the company to scoop the highest proportion in the negotiation is by investing in marketing and quality. To advocate for these factors, it would be possible for the firm to increase its earnings.
The endorsement contract negotiation is tough because every throws barbs at everything and anything. Given the situation at hand, I would articulate the interest of my client based on the BATNA and reservation value. In entering these negotiations, the toughness of the position taken can be unmanageable. At the negotiation, together with the counterpart, it is possible to assess the BATNA. This has, to begin with listing the alternatives, evaluating them, establishing the BATNA, and calculating the reservation value. Since I have identified my partner, calculating the BATNA will be easy. I will have to calculate the ticket value that I can accept. If the proposal of the counterpart is lower than my reservation value, it would be prudent to reject it and pursue the BATNA.
Before I obtained the BATNA, I had to seek relevant information from the counsel. As such, I found it easy to estimate ligation costs and the likely of winning any litigation. Upon determining the possibility of winning a litigation, it is possible to calculate the actual value to make the BATNA. At some point, the negotiation has hit a snag or impasses. Nevertheless, I boast of various outside option. Therefore, evaluating the BATNA would be the best alternative to facilitate the negotiation. Since I understand the position of my client, I will have to translate the BATNA to the current deal. For instance, my counterpart knows that a celebrity without a brand name can never perform without partnering with companies. Therefore, my business offers the celebrity an opportunity to earn more profits as the markets my product.
As an implication, upon exchanging notes and position of each party, both parties took the time to translate the process explicitly. It ensured any aspects of giving up is out of the equation. Therefore, using the market checks and comparing them with other contracts, both parties struck an acceptable deal of $25 million annually.
The negotiation was set to take two months (60 days) so that both sides could come to an agreement. This timeframe is the maximum extendable duration for both parties to agree and consult. Given the experience in negotiation, the best way to overcome the ZOPA is by resorting to aspirational target thus avoids the cognitive bias as explained by Harvard Law School (n.d). For instance, I had to maintain the reservation value during the negotiation. However, when the deal is better than the BATNA, it is prudent to think about before entering it blindly. This is the secret of becoming a successful negotiator. For instance, good deals are unsustainable thus making a promise that will kill the business is unethical. Therefore, the only way an organization will stick to the negotiation terms is based on the BATNA, Reservation value, and ZOPA principles. The negotiation outcome will see the celebrity offered $25 million in royalty while the company boosts its earnings.
The celebrity endorsement is important for the company as it will help in building the brand quickly. This is because; they provide powerful endorsements that have taken advantage of the obsessions of consumers with some of the stars they idolize and follow. It critical to note that celebrity-driven campaigns have generated mixed results because some have failed while others have given an incredible effect (Orvis 2016). It rarely matters the name of the celebrity, the execution framework adopted by the company will be critical as it will allow the firm to exceed the objectives. It is worth noting that marketers have had trouble with celebrities, especially when the marketers are informed of what they needed to do or even skip celebrity marketing campaign.
Based on the negotiation, it is essential for the company to create a method that can allow for a proper execution of the celebrity marketing campaign successfully. For example, the use of Burns Method is a perfect campaign tool to facilitate the marketing. With the celebrity marketing workshops, the brand marketers will access the tools required for them to lead and manage the marketing campaign confidently (Williams n.d). For the celebrity, an integrated agency team model is essential in maximizing the marketing campaign. Since the marketers and celebrity are professionals, they understood the negotiation thus fun the work. It is indisputable that consultation process puts the party in an awkward situation. Nevertheless, the Burn method ensured the parties identified the new celebrities thus determining the best celebrity campaign (Harvard Law School n.d). Therefore, the development from the negotiation was fruitful because it addressed all the concerns required in a celebrity endorsement campaign. Nothing is as good as winning the contract and getting the signature of the celebrity. The company will permanently improve its revenue and reputation.
Ellis, C. (2011) ‘Negotiation theory and practice’, Blogspot, September, 22. (Available at https://negotiatewithchad.blogspot.co.ke/2011/09/how-does-your-reservation-value-relate.html)
Harvard Law School. (n.d) ‘BATNA basics: boost your power at the bargaining table’, Management Report, (Available at https://www.bc.edu/content/dam/files/centers/cwf/individuals/pdf/BANTABasics.pdf)
Kandell, E. F. (2013) ‘Know your negotiation strategy’, Disclosures, May/June. (Available at https://www.alternativeresolutions.net/wp-content/uploads/2013/09/Negotiation%20VaCPAs%20MJ%202013%20final.pdf)
Orvis, G. (2016) “Forget celebrity endorsements: why retailers should engage microinfluencers”, Shopify Blogs, September 15. (Available at https://www.shopify.com/retail/move-over-celebrities-why-micro-influencers-are-the-latest-force-in-influencer-marketing-for-retail)
Williams, B. (n.d) “Celebrity marketing workshop”, The Brand Agent. (Available at https://celeb-brand-agent.com/celebrity-marketing-workshop/)
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