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
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
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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
Continued
What Can Be Negotiated? (See Exhibit 12.1, P. 315)
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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?
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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
Planning For The
Negotiation Session
Location
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Choose a neutral site free from distraction
Preferences generally are the morning and the middle of the week
Time Allocation
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Time pressures tend to have negative outcomes
With a win-win perspective, high outcomes are achieved
regardless of time pressures
Negotiation Objectives
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Power is a critical element when developing objectives
The seller will almost certainly have to make concessions in the
negotiation session
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
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
Individual Behavior Patterns
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(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
Continued
Information Control

Don’t give everyone access to all the information

Keeping certain details from the buyer could be very
beneficial
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
Continued
General Guidelines
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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
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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
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
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
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
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
Continued
Recap Of A Successful Negotiation Meeting
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Set the proper environment
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Develop an agenda
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Work for win-win negotiations
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Get agreements in writing
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Summarize agreements
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Be friendly, levelheaded, courteous, and honest
(Beneficial for long-term partnerships)