BARGAINING

Definition
Bargaining or haggling is a type of negotiation in which the buyer and seller of a good
or service dispute the price which will be paid and the exact nature of the transaction that will
take place, and eventually come to an agreement.

Bargaining is an alternative pricing strategy to fixed prices. Optimally, if it cots the

retailer nothing to engage and allow bargaining, he can divine the buyers willingness to
spend. It allows for capturing more costumer surplus as it allows price discrimination, a
process where by a seller can charge a higher price to one buyer who is more eager ( by being
richer or more desperate ). Haggling has largely disappeared in parts of the world where the
cost to haggle exceeds the gain to retailers for most common retail items. However, for
expensive goods sold to uninformed buyers such as automobiles, bargaining can remain
common place.

If the bargaining produces agreement in terms, the transaction takes place. Bargaining
is an alternative pricing strategyto fixed price.

Positional Bargaining
What is Positional Bargaining ?
Positional bargaining is a negotiation strategy that involves holding on to a
fixed idea, or position, of what you want and arguing for it and it alone, regardless of
any underlying interests. The classic example of positional bargaining is the haggling
that takes place between proprietor and costumer over the price of an item. The
costumer has a maximum amount she will pay and the proprietor will only sell
something over a certain minimum amount. Each side starts with an extreme position,
which in this case is a monetary value, and proceeds from there to negotiate and make
concessions.
For example, a man offers a vendor at he flea market $10 for a rug he has for
sale. The vendor asks for $30, so the costumer offers $15. The merchant then says he
will accept $25, but the costumer says the highest he will go is $20. The vendor agrees
that $20is acceptable and the sale is made at $20. So the costumer pays $10 more that
he originally wanted and the vendor receives $10 less.

Why is Positional Bargaining Important?

Positional bargaining tends to be the fist strategy people adopt when entering a
negotiation. This is often problematic, because as the negotiation advances, the
negotiation become more and more committed to their positions, continually restating
 and defending them. A strong commitment to defending a position usually leads to a
lack of attention to both parties underlying interests.

Can Positional Bargaining Be Good?

Despite criticism of positional bargaining, supporters of this negotiation
strategy do exist.

It has been argued that consideration of all underlying interests in a

negotiation process in unnecessary. In fact it may sometimes be counter productive.
This is because of the distinction and relationship between aech party in a conflict.
Interests, on the other hand, are specific to each party: what the buyer of the rug in the
market wants is a bargain, what the seller wants is profit.

How to Make Bargaining

1. Know the situations is which it is appropriate to bargaining.
Not all situations call for bargaining, for example: the traditional market.
2. Finds out what locals pay.
In most places where haggling or bargaining is common, theres a double
standard when it comes to the price tag.
3. Determine what the item is worth to you.
This a tried and true shopping rule that applies to buying things is general.
But, it especially applies to bargaining.
4. Have cash in hand.
In many places where its common to bargain, cash is king. Vendors either
wont accept credit card or will be displeased about them.
5. Start 25% to 30% lower than the listed offer or the first offer.
A good rule of thumb is to take whatever the first offer is, quarter it, and begin
the bargaining process there.
6. Be prepared to spend a long time bargaining.
Its not unheard of to spend hours haggling about price.
7. When the seller announces his final offer, dont take the bait ( optional ).
This usually isnt the final offer. They may be trying convince you that is as
low as theyll go.
8. When the vendor gets to a price you like, stop!
Dont push it, or youll ruin the whole deal. Take your item and go.
9. Get a friend or spouse to work with you.
This trick works better than you might think at delivering the message that
lifes other responsibilities could easily get in the way of the sale.
Key Point to Bargaining
There are several key factors that increase the bargaining power of customers.
1. Costumers are more concentrated than seller.
2. Switching costs for costumers are low.
3. Costumers is well educated regarding the product.
4. Costumers is price sensitive.
5. A large portion of a sellers sales is made up of costumers purchases.
6. The costumers own product or service is affected.
7. There is a little differentiation between product.
8. The treat of backward integration is high.
 ENGLISH ECONOMY II
BARGAINING

GROUP 7
Name :

1. Dora Hardina
2. Ratu Anisa
3. Rd. Irma Rahmalia Dwi Cahya
4. Rokhmah
5. Umayah

Class : 3H - Accounting

Lecturer : Dewi Surani, S.S, M.pd

SEKOLAH TINGGI ILMU EKONOMI

BINA BANGSA BANTEN

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