1. © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

2. Formal Negotiating 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? Some questions answered in this chapter are: 13-2 CHAPTER 13 McGraw-Hill/Irwin

3. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 13-3 McGraw-Hill/Irwin “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

4. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. The Nature of Negotiation Negotiation versus nonnegotiation selling What can be negotiated? Are you a good negotiator? 13-4 McGraw-Hill/Irwin

5. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 13-5 Items That Are Often Negotiated Between Buyers and Sellers McGraw-Hill/Irwin

6. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 McGraw-Hill/Irwin

7. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Negotiation Objectives McGraw-Hill/Irwin

8. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 13-8 Comparing Buyer and Seller Positions McGraw-Hill/Irwin

9. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Anticipate and evaluate positions Create a plan to achieve objectives –Develop alternative paths Brainstorming sessions Consider cultural differences 13-9 Negotiation Objectives (continued) McGraw-Hill/Irwin Brainstorming session Meeting in which people are allowed to creatively explore various methods of achieving goals.

10. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Using a Team to Negotiate McGraw-Hill/Irwin

11. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Team Selection and Management Seller team size = buyer team size –Less is more Defined roles Team leader Rules and signals Practice 13-11 McGraw-Hill/Irwin

12. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 13-12 Individual Behavior Patterns – Conflict- Handling Behavior Modes McGraw-Hill/Irwin

13. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Individual Behavior Patterns (continued) One person can exhibit different modes in different situations 13-13 McGraw-Hill/Irwin

14. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Information Control McGraw-Hill/Irwin

15. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Preliminaries –Break the ice –Ensure a comfortable environment –Establish a win-win environment –Prepare an agenda General guidelines –Listen carefully –Keep track of issues discussed or resolved –Consider cultural differences –Remember people need to save face 13-15 The Negotiation Meeting McGraw-Hill/Irwin

16. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. The Negotiation Meeting Dealing with win-lose negotiators –Good guy-bad guy routine –Lowballing –Emotional outbursts –Budget limitation tactic –Browbeating 13-16 McGraw-Hill/Irwin

17. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Detach yourself Acknowledge their position and then respond Build them a bridge Warn, but don’t threaten 13-17 What to Do When the Buyer Turns to Win- Lose Strategies McGraw-Hill/Irwin

18. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Making Concessions McGraw-Hill/Irwin

19. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Making Concessions (continued) McGraw-Hill/Irwin

20. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Making Concessions (continued) McGraw-Hill/Irwin

21. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Recap of a Successful Negotiation Meeting McGraw-Hill/Irwin

22. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. 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 Summary McGraw-Hill/Irwin