© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
CHAPTER 13
Formal Negotiating
Some questions answered in this chapter are:
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What is negotiation selling? How does it differ from nonnegotiation
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?
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?
13-2
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“When you understand the way
another person feels comfortable
communicating, you can change
your own communication style to
make them feel more comfortable.”
~Joaquin Azanza
13-3
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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The Nature of Negotiation
• Negotiation versus nonnegotiation
selling
• What can be negotiated?
• Are you a good negotiator?
13-4
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Items That Are Often Negotiated Between
Buyers and Sellers
13-5
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Planning For the Negotiation Session
• Location
– Neutral site
– Middle of the work week
– Mornings
• Time allotment depends
on:
– Negotiation objectives
– Desire of a win-win session
from both parties
13-6
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Negotiation Objectives
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Power
Concessions
Target position
Minimum position
Opening position
– Should reflect higher expectations than the
target position
– Must be able to support with solid information
• Identify and prioritize issues that could
arise
13-7
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Comparing Buyer and Seller Positions
13-8
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Negotiation Objectives (continued)
• Anticipate and evaluate positions
• Create a plan to achieve objectives
– Develop alternative paths
• Brainstorming sessions
• Consider cultural
differences
13-9
Brainstorming
session
Meeting in which
people are allowed
to creatively explore
various methods of
achieving goals.
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Using a Team to Negotiate
• Pros
– More creative than one individual
– Help one another reduce the chances of
making a mistake
• Cons
– More participants = more time
– Different opinions
– Rogue members
13-10
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Team Selection and Management
• Seller team size = buyer team
size
– Less is more
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Defined roles
Team leader
Rules and signals
Practice
13-11
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Individual Behavior Patterns – ConflictHandling Behavior Modes
13-12
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Individual Behavior Patterns (continued)
• One person can exhibit different modes in
different situations
13-13
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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
13-14
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The Negotiation Meeting
• Preliminaries
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Break the ice
Ensure a comfortable environment
Establish a win-win environment
Prepare an agenda
• General guidelines
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Listen carefully
Keep track of issues discussed or resolved
Consider cultural differences
Remember people need to save face
13-15
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The Negotiation Meeting
• Dealing with win-lose negotiators
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Good guy-bad guy routine
Lowballing
Emotional outbursts
Budget limitation tactic
Browbeating
13-16
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What to Do When the Buyer Turns to WinLose Strategies
• Detach yourself
• Acknowledge their position and then
respond
• Build them a bridge
• Warn, but don’t threaten
13-17
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Making Concessions
• Never make concessions until you know all
of the buyer’s demands and opening
position.
• Never make a concession unless you get
one in return.
• Concessions should gradually decrease in
size.
• Don’t be afraid to say no.
• All concessions are tentative until the final
agreement is reached and signed.
13-18
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Making Concessions (continued)
• Be confident and secure in your position
and don’t give concessions carelessly.
• Don’t accept the buyer’s first attempt at a
concession.
• Help the buyer to see the value of any
concessions you agree to.
• Start the negotiation without preconceived
notions.
• If you realize you have made a mistake, tell
the buyer and begin negotiating that issue
again.
13-19
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Making Concessions (continued)
• Don’t automatically agree to a “let’s
just split the difference” offer.
• Remain noncommittal when customer
asks for a bottom line price.
• Know when to stop.
• Use silence effectively.
• Plan the session well.
13-20
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Recap of a Successful
Negotiation Meeting
• Be sure to get any negotiated
agreements in writing
• Do post-negotiation evaluation and
learn from your mistakes
• More cooperation exists if both sides
expect future interactions
– Your goal is to develop a long-term
partnership with your buyer
• Don’t be greedy or pushy
13-21
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Summary
• Almost anything can be negotiated.
• A successful salesperson is not
necessarily a good negotiator.
• Careful planning counts.
• Preliminaries are important in sales
negotiation sessions.
• Concessions will occur in every
negotiation.
13-22
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.