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Research Seminar: The Backend Benefits of Negotiating Open Upfront: The Impact of Information Disclosure in Sales Negotiations on Aftermarket Profits

  • Date: Friday, March 2, 2018
  • Time: 1:00 PM - 2:30 PM
  • Venue: Room N302, UCD Smurfit School
  • Location: Carysfort Avenue, Blackrock , Co. Dublin.

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Marketing subject area would like to invite you to a research seminar titled: “The Backend Benefits of Negotiating Open Upfront: The Impact of Information Disclosure in Sales Negotiations on Aftermarket Profits” by Michael Ahearne, Professor of Marketing at University of Houston. The seminar will take place this Friday (2nd of March) at N302 between 13:00 and 14:30. Below please find the abstract of the research presentation as well as presenter’s short bio. 


 Traditionally, buyer-seller negotiations were characterized by strong information asymmetry, resulting in a much higher negotiation power for sellers. However, recent evidence indicates that technology has disrupted this relationship: Today, buyers enter negotiations several steps ahead of sellers, armed with a wealth of information that were not accessible to them decades ago, resulting in higher information symmetry. We argue that this change has created a unique opportunity for sellers. Specifically, because buyers can now easily verify the accuracy of sellers’ disclosed information, we hypothesize that disclosing sensitive information at the beginning of the negotiation builds buyers’ trust. Higher trust in turn can pay off handsomely in later stages of the buyer-seller relationship (i.e., in the ‘aftermarket’), where many companies already earn the majority of their profits, but the information is still asymmetrically distributed. To test the impact of information disclosure in negotiations, we conducted one field and two lab experiments. Across all three studies, we find that information disclosure at the beginning of the negotiation leads to higher backend profits. In study 1, we recorded actual negotiations in an auto dealership where we captured the effect of information disclosure on the aftermarket profits as well as on the likelihood of returning for service in the year after the initial negotiation. Study 2 and 3 were carried out in the lab where subjects either negotiated with research assistants (Study 2) or selected aftermarket items based on a scenario from the first-stage negotiations (Study 3). The lab experiments allowed us to test the mediating role of buyer trust (Study 2 & 3) and the moderating role of buyer knowledge (Study 2 & 3), and helped us rule out alternative explanations (Study 3).

 About Michael Ahearne

 Michael Ahearne is Professor of Marketing and C.T. Bauer Chair in Marketing at the University of Houston. He is also Research Director of the Sales Excellence Institute. Mike's research has primarily focused on improving the performance of salespeople and sales organizations. He has published over 40 articles in leading journals such as Journal of Marketing, Journal of Marketing Research, Management Science, Strategic Management Journal, Journal of Applied Psychology, and Organizational Behavior and Human Decision Processes. Mike was recently recognized by the American Marketing Association as one of the 10 most research productive scholars in the field of marketing. His research has been profiled in the Wall Street Journal, Business 2.0, Business Investors Daily, Fox News, INC Magazine and many other news outlets.Mike's textbook Selling Today: Partnering to Create Customer Value is the highest grossing professional selling textbook in the world, with copies being distributed in over forty countries. Paired with the many teaching awards he has won at the MBA and undergraduate levels in Sales, Sales Management, and Key Account Management, Mike has a proven track record of excellence when it comes to disseminating knowledge in his field. He has also had a significant impact outside of the classroom based on the reach of the Sales Excellence Institute, which is widely regarded as the worldwide leader in sales education and research. Mike was recently honored as the inaugural winner of the Sales Education Foundation's Research Dissemination Award for the impact of his research on business practice.

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