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. 321)
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

5. 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

6. Continued Negotiation Objectives (Contd.)
Target position- what your company hopes to achieve at the negotiation session
Minimum position- the absolute minimum level 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

7. 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

8. Individual Behavior Patterns
(See P – 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

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

10. 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

11. Continued General Guidelines Deadline With Win-Lose Negotiators
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

12. Continued Emotional Outbursts Budget Limitation Tactic 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

13. 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

14. 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
Trial balloons
Floating an idea without really offering it as a concession

15. 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

16. Making Concessions
What will be the result if you don’t come to an agreement?
Best Alternative to a negotiated agreement
BATNA
Consequences of no agreement – CAN
Can take months or years

17. 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)

18. Questions?