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Chapter 12

Chapter 12. Formal Negotiating. The Nature Of Negotiating. Negotiation- the bargaining process through which buyers and sellers resolve areas of conflict and arrive at agreements

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Chapter 12

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  1. Chapter 12 Formal Negotiating

  2. The Nature Of Negotiating Negotiation- the bargaining process through which buyers and sellers resolve areas of conflict and arrive at agreements Win-lose negotiating- the negotiator attempts to win all the important concessions and thus triumph over the opponent Win-win negotiating- the negotiator attempts to secure an agreement that satisfies both parties Negotiation Versus Non-Negotiation Selling • Salespeople have price books and procedural manuals • With negotiations, buyers expect policies, procedures, and prices to be negotiable • Formal negotiations generally are for large or important prospective buyers

  3. Continued What Can Be Negotiated? (See Exhibit 12.1, P. 315) • Customers which are large or important enough can negotiate almost anything • Lists of prioritized issues help determine where disagreements exist Are You A Good Negotiator? • A good negotiator must have patience, endurance, take risks and the ability to tolerate ambiguity • Successful salespeople do not always make great negotiators • Must not fear conflict • Different cultures, different emphasis on skills

  4. Planning For The Negotiation Session Location • Choose a neutral site free from distraction • Preferences generally are the morning and the middle of the week Time Allocation • Time pressures tend to have negative outcomes • With a win-win perspective, high outcomes are achieved regardless of time pressures Negotiation Objectives • Power is a critical element when developing objectives • The seller will almost certainly have to make concessions in the negotiation session

  5. Continued Negotiation Objectives (Contd.) Target position- what your company hopes to achieve at the negotiation session Minimum position- the absolute minimumlevel you will accept Opening position- the initial proposal • The opening position should reflect higher expectations than the target position Mini-max strategy- helps sellers understand and prepare for the trade-offs that will undoubtedly occur in the negotiations Adaptive planning- development of alternative paths to the same goal Brainstorming session- meeting in which people are allowed to creatively explore various methods of achieving goals

  6. Continued Team Selection and Management • Positive sides of teams: tend to be more creative and avoid mistakes • Negative sides of teams: more timely or address an issue outside their area of expertise • Generally, teams should be the same size • Each member should have a defined role • The leader will manage negotiations and delegate who will answer what • Practice

  7. Individual Behavior Patterns (See P. 322-323 – Exhibit 12.5) • Competing mode- resolving conflict in an assertive and uncooperative manner (win-loose agreement) • Accommodating mode- resolving conflict by being unassertive and highly cooperative; often neglect their own needs and desires to satisfy the concerns of the other party • Avoiding mode- resolving conflict in an unassertive and uncooperative manner; no attempt to solve their own needs or the needs of others • Compromising mode- resolving conflict by being somewhat cooperative and somewhat assertive; quick mutually acceptable solution, partially satisfying both parties • Collaborating mode- resolving conflict by seeking to maximize the satisfaction of both parties, reaching a win-win solution

  8. Continued Information Control • Don’t give everyone access to all the information • Keeping certain details from the buyer could be very beneficial

  9. The Negotiation Meeting Ambush negotiating (sneak attack)- a win-lose tactic used by a buyer at the beginning of, or prior to, negotiations when the seller does not expect this approach • Discuss the important topics and eventually arrive at a decision Preliminaries • Break the ice and ensure a comfortable environment • The selling team should establish a win-win environment Agenda- listing of what will be discussed and in what sequence

  10. Continued General Guidelines • It is important for the team leader to keep track of what has and has not been discussed • Negotiators must understand cultural issues (Translator ?) • Negotiators need to save face if not strengthen their identity Deadline With Win-Lose Negotiators Good Guy-Bad Guy Routine • Strategy where one team member acts as a “good guy” and another team member acts as a “bad guy” • Goal is to accept the good guy’s proposal; avoid the consequences of the bad guy’s proposal

  11. Continued Lowballing Definition: strategy in which one party voices agreement and then raises the cost of that agreement in some way Nibbling- the buyer requests a small extra or add-on after the deal has been closed Emotional Outbursts Definition: strategy in which one party attempts to gain concessions by resorting to a display of strong emotion Budget Limitation Tactic Definition: (a.k.a.-budget bogey) strategy in which one side claims that the budget does not allow for the solution proposed

  12. Continued Browbeating Definition: strategy in which buyers attempt to alter the selling team’s enthusiasm and self-respect by making unflattering comments Negotiation jujitsu- response in which the attacked person or team steps away from the opponent’s attack and then directs the opponent back to the issues being discussed

  13. Other Win-Lose Tactics • Limited authority • True or not? Get decision maker into the room! • Red herring • Small problem or minor point to distract conversation away from the bigger issues • Trail balloons • Floating an idea without really offering it as a concession

  14. Continued Making Concessions Concession- when a party agrees to change a position in some fashion Guidelines To Making Concessions Effectively • Never make concessions before probing the buyer • Never make concessions unless you get one in return • Concessions should gradually decrease in size • Don’t be afraid to say no if objectives aren’t met • All concessions are tentative until finalization • Don’t give concessions carelessly • Don’t accept first concessions • Help buyer see value of concessions

  15. Continued Recap Of A Successful Negotiation Meeting • Set the proper environment • Develop an agenda • Work for win-win negotiations • Get agreements in writing • Summarize agreements • Be friendly, levelheaded, courteous, and honest (Beneficial for long-term partnerships)

  16. Questions?

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