Negotiation: Power and Perception

04/03/2023by dang tin0

Power and Perception

POWER IS ALL about perception. It is not the power you have but the power the other person thinks you have that counts.

A good friend of mine, once worth many millions of dollars, lost all his money in the Great Recession. He was forced to cut back in every area, including selling his large yacht and his home in the exclusive Hamptons. But he never told anyone.

Today, he is on his way back. He is buying and selling, negotiating and trading, expanding one company and selling another. Because everyone believes that he is still wealthy, he carries himself as though he has the same financial clout that he had a few years ago. Perception is everything. The importance of perception applies to the types of power used in negotiating, as described in the previous chapter. Here are some other ways that perceived power can influence negotiations.

The Power of Scarcity

Often people don’t know how much they want to acquire a product or service until it appears that they won’t be able to get it at all. The perception that you have something scarce that other people need, and that other people want and are prepared to buy immediately, gives you excellent bargaining power in a negotiation.

The Power of Indifference

You cultivate an attitude of indifference by remaining calm and unemotional during the negotiation, thereby creating the perception that you don’t really care whether you buy or sell the product. This is often called a “poker face.”
When you watch the poker champions on TV, you will notice that their faces remain calm and they appear almost bored throughout the game. It is even better if the other party is eager to make the deal, one way or another. If you are indifferent and the other person is not, you are going to get a better deal.

The Power of Courage

You demonstrate courage in your willingness to take a strong position on a deal, to make a clear and unequivocal offer or demand, to risk the failure of the negotiation, and to walk away from a deal if necessary. When the other party sees that you are completely confident in what you are doing and what you are offering, it often intimidates them into giving you a better price or terms.

The Power of Commitment

If the other party sees that you are totally committed to concluding the transaction and making the deal, and that you will do whatever is necessary to achieve it, you develop the perception of power.

During World War II, the British Army had 80,000 troops in Singapore and was well supplied to fight off an invasion. Yet, with fewer forces, the Japanese took Singapore from the British. They convinced the British that they were so committed to victory that they would overrun the island and kill everyone on it, including civilians. Because the Japanese had already overrun all of Malaysia, causing large casualties, the British had no reason to doubt their commitment to overrun Singapore. This perception of Japan’s determination caused the British to capitulate.

The Power of Knowledge and Expertise

The party with the greatest perceived knowledge or expertise has tremendous power in a negotiation. If you are selling a complex or sophisticated product or service, your command of background data or technology gives you a distinct advantage over a buyer with a lower level of knowledge about the product or service. The most successful retail businesses in the world are the Apple stores. While Tiffany & Co. of New York has an average sale of about $2,000 per square foot, the average sale in an Apple store is $4,600 per square foot. Why? Because the people who work at Apple stores are so incredibly knowledgeable about the products and services they sell that people pay hundreds and thousands of dollars to buy products that they never even knew they wanted when they walked in the door.

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