Formal
Negotiating
chapter 12
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Some Questions Answered in this
Chapter Are:
• What is negotiation selling? How does it
differ from non-negotiation selling?
• What items can be negotiated in selling?
• What type of planning needs to occur prior
to a negotiation meeting? How should a
seller set objectives?
12-2
Some Questions Answered in this
Chapter Are:
• How can the negotiation session be
effectively opened? What role does friendly
conversation play?
• Which negotiation strategies and tactics do
buyers use? How should negotiators
respond?
• What are the salesperson’s guidelines for
offering and requesting concessions?
12-3
“The earlier in the sales cycle you start
uncovering the prospect’s needs through
strategic questioning techniques, the more you
are prepared to complete a successful
negotiation. Remember the 5Ps: proper
preparation prevents poor performance.”
Alex Tagansky
Docuforms, Inc.
12-4
The Nature of Negotiation
• Win–lose negotiating
• Win–win negotiating,
– the negotiator
attempts to win all the
important concessions
and thus triumph over
the opponent.
– the negotiator
attempts to secure an
agreement that
satisfies both parties.
12-5
The Nature of Negotiation
• Negotiation versus nonnegotiation selling
• What can be negotiated?
• Are you a good negotiator?
12-6
Items That Are Often Negotiated
between Buyers and Sellers
Exhibit 12.1
12-7
Negotiation Skills Self-Inventory
Exhibit 12.2
12-8
Planning For the Negotiation
Session
• Location
– Neutral site
– Middle of the work week
– Mornings
– Online
• Time allotment depends on:
– Negotiation objectives
– Desire of a win-win session from both parties
12-9
Negotiation Objectives
•
•
•
•
•
Power
Concessions
Target position
Minimum position
Opening position
– Should reflect higher expectations than the
target position
• Identify and prioritize issues that could arise
12-10
Comparing Buyer and
Seller Price Positions
Exhibit 12.3
12-11
Negotiation Objectives
• Anticipate and evaluate positions
• Create a plan to achieve objectives
– Develop alternative paths
• Brainstorming sessions
• Consider cultural differences
12-12
Team Selection and Management
• Pros
– More creative than
one individual
– Help one another
reduce the chances of
making a mistake
• Cons
– More participants =
more time
– Different opinions
12-13
Team Selection and Management
•
•
•
•
•
Seller team size = buyer team size
Defined roles
Team leader
Rules and signals
Practice
12-14
People Who May Serve on the
Selling Negotiation Team
Exhibit 12.4
12-15
Individual Behavior Patterns
• Team leader needs to consider the
personality style of each member of both
teams to spot any problems and plan
accordingly
12-16
Conflict-Handling Behavior Modes
Exhibit 12.5
12-17
Information Control
• Buying teams also prepare
• Buyers gather information to gain position
– Selling team leaders need to emphasize the need
for security
– Many team members do not need all the facts
• It pays to control the flow of information
12-18
The Negotiation Meeting
• Preliminaries
– Break the ice
– Ensure a comfortable environment
– Establish a win-win environment
– Prepare an agenda
12-19
The Negotiation Meeting
• General guidelines
– Listen carefully
– Keep track of issues discussed or resolved
– Consider cultural differences
– Remember people need to save face
12-20
Preliminary Negotiating Session
Agenda
Exhibit 12.6
12-21
Dealing with Win-Lose Negotiators
Good guy-bad guy routine
Lowballing
Emotional outbursts
Budget limitation tactic
Browbeating
12-22
What to Do When the Buyer Turns
to Win-Lose Strategies
Exhibit 12.7
12-23
Other Win-Lose Tactics
•
•
•
•
Limited authority
Red herring
Trial balloons
Total silence by the
buyer
12-24
Making Concessions
1. Never make concessions until you know all of
the buyer’s demands and opening position.
2. Never make a concession unless you get one in
return.
3. Concessions should gradually decrease in size.
4. Don’t be afraid to say no.
5. All concessions are tentative until the final
agreement is reached and signed.
12-25
Making Concessions
6. Be confident and secure in your position and don’t
give concessions carelessly.
7. Don’t accept the buyer’s first attempt at a
concession.
8. Help the buyer to see the value of any concessions
you agree to.
9. Start the negotiation without preconceived
notions.
10. If you realize you have made a mistake, tell the
buyer and begin negotiating that issue again.
12-26
Making Concessions
11.Don’t automatically agree to a “let’s just
split the difference” offer.
12.Remain noncommittal when customer asks
for a bottom line price.
13.Know when to stop.
14.Use silence effectively.
15.Plan the session well.
12-27
Recap of a Successful
Negotiation Meeting
• Be sure to get any negotiated agreements in
writing
• Do post-negotiation evaluation and learn
from your mistakes
• Your goal is to develop a long-term
partnership with your buyer
• Don’t be greedy or pushy
12-28