Developing a Strategic Negotiation Plan: Toyota Highlander

By Luthy, Michael R.; Ryan, Mike H. et al. | Journal of the International Academy for Case Studies, May-June 2007 | Go to article overview

Developing a Strategic Negotiation Plan: Toyota Highlander


Luthy, Michael R., Ryan, Mike H., Desselle, Bettye R., Byrd, John T., Journal of the International Academy for Case Studies


CASE DESCRIPTION

The primary subject matter of this case concerns the evaluation of gathered information to develop a negotiation plan prior to a consumer's purchase of a sport utility vehicle. Secondary issues examined include the sales process and the increasing role of the Internet in consumers' information search activities. The case has a difficulty level of one (appropriate for freshman level courses) although it may be used through level five (appropriate for first year graduate level) depending on the amount and complexity of background reading assigned. The case is designed to be taught in as little as one class hour, but may be expanded to as many as three class hours depending on the amount of theoretical material discussed by the instructor, if role-play negotiations are carried out, and whether any out-of-class preparations are assigned. The case is expected to require from zero to approximately four hours of outside preparation by students.

CASE SYNOPSIS

Introducing students to the topic of sales negotiation is always challenging. While it is typically a significant part of business-to-business purchases and many higher-ticket priced consumer goods, negative word-of-mouth and uncomfortable personal experiences leave many students apprehensive. Presenting the topic in the context of purchasing an automobile, or in this case study, negotiating the purchase of two sport utility vehicles, students will draw on their own experiences, those of their friends and family members, and any assigned readings. The overall goals of the case are to defuse the anxiety many students associate with negotiation, underscore the importance of analysis and planning prior to face-to-face encounters, and better prepare students for future business and personal purchase situations where negotiation is a factor. Specifically, in this case students examine collected price and non-price information, and develop a negotiation plan. Through this task the instructor may explore various fundamental aspects of negotiation (e.g., agenda analysis, concession strategies) and the distributive bargaining model (e.g., aspiration targets, reservation points, buyer and seller surplus).

INTRODUCTION

As Michelle Tipton read through the brochure for what seemed the tenth time she found herself nodding in agreement. "The new Highlander. An unexpected bit of comfort in the rugged world of the SUV. Breaking new ground is nothing new to Toyota, but this time around, we've built a vehicle that boldly redefines everything you've come to expect from a sport utility vehicle. Highlander gives you uncommon comfort and unparalleled smoothness in an unmistakable form. It's designed for those drivers who crave the versatility and space of an SUV, but aren't willing to sacrifice a refined, comfortable ride. With exceptionally smooth handling, clean, unique styling and a spacious interior, Highlander is the civilized ride you've been looking for." (Toyota Internet Website and Highlander brochure).

After months of investigating, Michelle knew that this was the vehicle she wanted. Sifting through piles of Car and Driver, Auto Week, and Consumer Reports magazines, visiting websites for Acura, Subaru, BMW, and Honda brands among others, convinced her that this was the vehicle for her. Now the question was how to get the best deal from one of the local Toyota dealerships in the Louisville metropolitan area. Located in the city were Toyota of Louisville and Oxmoor Toyota. Just across the river in Southern Indiana was Green Tree Toyota. Because of negative comments and stories she had heard about Oxmoor Toyota, Michelle decided to limit her dealership choice to either Toyota of Louisville or Green Tree Toyota.

An unexpected twist in Michelle's deliberations came when one of her colleagues at work, Ashley Lacey, dropped by her office one day and told her that she and her husband Robert were also looking for a new sport utility vehicle for their family, which included their nine year-old daughter Alex and one good size Labrador retriever. …

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