Professional Documents
Culture Documents
M.M.S (I Semester) : Presented by Prof. Rama Mantha
M.M.S (I Semester) : Presented by Prof. Rama Mantha
S (I SEMESTER)
PRESENTED BY
PROF. RAMA MANTHA
INTRODUCTION
THE PROCESS:
Ability to Listen
Along with speaking, a great salesperson knows when to stop talking and listen. They never
cut someone off while they are talking, because in doing so they would fail to hear a key
element in identifying what that person's needs might be.
Asks Great Questions
Salespeople are naturally inquisitive and know that in order to isolate what the real need or
desire is in the buyer, they need to ask questions that will lead them to the answer. They
naturally ask questions because they have a desire to help solve their problem.
Problem Solver
Another natural skill is the desire and ability to solve problems. Great salespeople are always
solving problems. The ability to hone in on what the buyer's problem is and offering
suggestions that will effectively solve the problem with respect to what products or services
you sell, generally results with a sale.
Well Organized
I am not necessarily speaking of your personal surroundings, but more with your thoughts and
methods of planning. Sales people have a keen ability to break things down into smaller steps
and organize a plan of action. They know how to analyze what their goal is and in what order
the steps need to be in in order to reach that goal.
Self-Starter and Self-Finisher
A successful sales person moves forward on their own. They never need anyone to tell them
when it is time to go to work because they know that if they do not work they will not earn.
They are also very persistent to finish what they start. They achieve their goals, even if they
are small ones.
Positive Self Image
Having the attitude that they can do just about anything that they put their mind to is usually
very common among sales people. They do not cower from meeting or talking to people or
trying something new. They rarely allow negatives that are either spoken to them or about
them to effect what they are trying to accomplish because they know who they are and what
they are capable of doing.
Well Mannered and Courteous
The best sales people are very well mannered. You may not realize it, but good manners is a
way of showing respect for others. People are attracted to those that respect them and mutual
respect is fundamental in building lasting relationships with people..including buyers.
Naturally Persuasive
Another very common inherent skill with great salespeople is that they are very persuasive or
know how to get what they want. They focus on what they want and they are persistent to
keep chipping away until they get what they want. They almost never give up or give in.
Person of Integrity
A salesperson without integrity will have many struggles which will often include hopping from
job to job. Honesty in sales is so important and it is almost impossible for this skill to be
taught. You or the person you are looking to hire is either a person of integrity or are not. Be
as analytical as possible on the evaluation of this skill.
To qualify fast you must have a set of criteria describing who you will and will not sell
to. You want to sell to the prospects likely to buy your products, and drop the prospects
unlikely to buy (so that you can find more good prospects). Sounds simple, but too many
salespeople let sludge buildup in their pipeline, constricting the total revenue that flows
out.
KEY TIP: Develop a list of sales qualifying criteria that prospect's must meet in order
for you to invest your sales time with them.
Products sold by professional salespeople are more complex and offer more value than
commodity products offered through stores, catalogs and brokers. Prospects generally do
not know they need such products, until they first discover that they have a problem. This
process can take seconds or years depending on the nature of the problem (and the
prospect!). Prospects get motivated to work with you when you help them to discover
that you solve their problem better than anyone does
else.
KEY TIP: Determine which problems that you eliminate or solve for your prospects.
Plan and ask questions to uncover and agitate those problems.
You can't afford to look away and ignore people that you don't have natural rapport with.
The good news is that people like people like themselves. All you have to do to gain
rapport is stretch your behavior outside or your comfort zone until you become like
another person.
KEY TIP: Match speech patterns with people to gain rapport outside of your typical
sports or weather conversation.
Although you will never get even close to getting every voicemail returned, you can get a
significant number of your messages returned when treat them as a one-on-one
commercials.
KEY TIP: Prepare 3-5 separate benefit-focused voicemail messages that you can leave
over a period of days or weeks for a single decision-maker before you give up on her.
Each message should focus on a single unique customer-focused benefit.
Sales Skill #5: Delivering "I Gotta Have That"
Presentations
Let's face it, a lot of business presentations are really boring. Salespeople talk about why
their product is great, why their company is great, and the history of their company.
Prospects don't relate to this. That's why they look so bored.
Great presentations get the prospect's imagination involved. The best way to involve the
imagination is through storytelling. Stories rich in descriptive detail get the prospect
picturing them using your product and evoke that "I Gotta Have That" reaction.
KEY TIP: Study 1-3 of your best customers and develop detailed customer success
stories that will put emotional power into your presentations.
Learn the power of asking for incremental commitments from the beginning of your sales
cycle. It is not an easy shift to make. First you got to get the prospect to show you what
they most want (Hint: See Skill #2 above). Then you can negotiate incremental
commitments in return for more of your time, information or resources.
KEY TIP: Practice asking for simple commitments once someone has expressed a clear
want, pain, or desire.
Take the pressure off yourself to close and instead focus on qualifying and motivating
your prospects.
KEY TIP: Shift the responsibility back to the prospect to solve his own problems, and
the pressure to make the sale will be gone. Focus on selling at your best only to qualified
prospects and you'll close more and have fun doing it.
Bonus Sales Tip
When you are giving a presentation, selling on the telephone or one-on-one in your
prospect's office, picture your prospect as having the words SO WHAT stamped on his
forehead. Imagine that for everything you say, the prospect is asking "so what, why
should I care?".
Remember, prospects only care about how what you are selling can eliminate a problem
that they have or help make their business or life better. The answer to this question is
always what your product does for them (benefits), not what your product is (features).
COLD CALLS
Most salespeople don't like cold calling, and do as little of it as possible. There are a
number of reasons why most of us don't like it. One reason is the way we view cold
calling. People who don't like cold calling view each call as do or die. They think of cold
calling as a war in which they have to win most of the battles in order to win the war. A
sales rep good at cold calling is considered a sales god. A sales rep who is poor at cold
calling is a sniveling wimp.
The reality about cold calling is much different. You don't have to win all nor even most
of the battles to win the war. Cold calling is the reconnaissance before any battle begins.
Cold calling is not where the sale happens. Cold calling is simply advertising done by
sales reps.
Yes, I said that you are doing advertising when you are cold calling.
Cold calling is a means of identifying potential prospects for your sales efforts. And the
purpose of advertising is to identify or attract potential prospects - in other words to
generate leads.
Think of cold calling this way. Every time you make a cold call, it is as if you grabbed
your prospect by the shirt, shoved a billboard ad for your product in their face, and said
"Do you want to buy this?"
Obviously, real cold calling is more involved than pressing their nose up to your ad.
Specifically, cold calling should be mostly about asking questions rather than a sales
pitch monologue.
Just like a newspaper ad or a billboard, all you are trying to do when cold calling is to get
someone's attention. And if they don't want or need what you are offering right now,
that's OK.
With your new view of cold calling as advertising in mind, you should focus your cold
calling goals a little differently. One of the surest ways to get frustrated in sales (and an
ulcer) is to take responsibility for things that are beyond your control as a sales rep. You
really cannot control whether the person you are cold calling needs or wants your
product.
What you can control is how many cold calls you make, and the quality of your
techniques while cold calling.
Set your cold calling targets and define your success criteria around the number of calls
or dials that you will make. Judge the quality of your calls by how well you stick to a
cold calling formula that you have defined in advance.
If your cold calling goal is set as "To Make $300,000 in Sales Next Month", you are just
setting yourself up. This kind of cold calling goal might be useful if you are a tele*sales*
person responsible for actually closing business by phone. But in professional business-
to-business selling, cold calling is too far removed from the actual close to directly
influence such a goal.
Instead, you can backwards plan how many cold calling "advertisements" you need to run
in order to make $300,000 in sales next month. Use your own or other sales reps activity
numbers to figure out how many sales will result *on average* if you make 1000 dials
when cold calling. Then you can determine the time period needed to make 1000 dials
worth of cold calling advertisements in order to make your sales goals.
Look at cold calling as one-to-one advertising and focus on the number of dials you have
to make and you'll find cold calling a lot easier to do.
Negotiation Skills
There are many reasons why you may want to negotiate and there are several ways to
approach it. We all have our own point of views. And these viewpoints form the basis of
our goals and objectives. Each time you communicate with a potential client, vendor or
employee, you exchange ideas and information. However, your goals are likely to differ.
Negotiation, in essence, is the art of compromise. Negotiation skills are vital to the
success or failure of your interactions, and ultimately, your goals. Negotiating is one of
the key tools you can use to accomplish your goals.
The Seven Pillars of Negotiation Wisdom
1. Relationship
What impact will this negotiation have on our personal relationship with other negotiators
or our constituents, the parties who stand to gain or lose depending on the negotiation's
outcome?
2. Interests
What are the reasons that drive our pursuit of particular objectives, and can another
party's ideas or resources help serve our interests better than what we bring to the table?
3. BATNA
Our Best Alternative To a Negotiated Agreement (BATNA) may be derived from
resources we control or influence. We may have choices of parties with whom to
negotiate or may be better off relying on ourselves. BATNAs can change during
negotiation each time we learn a new piece of information.
4. Creativity
Are we to be governed by standard operating procedure, or can our interests be better
served by thinking out of the box? If our ideas are the only ones worth taking seriously, it
is hard to justify bringing additional parties into a negotiation-- the decision-making
process.
5. Fairness
Do we feel as if we are being treated fairly? How do other parties feel? If a negotiator
feels he or she is not being dealt with in a fair manner, he or she may agree for purposes
of bringing the bargaining to a close, but may walk away without having bought into the
agreement.
6. Commitment
Negotiations can only be called successful if they lead to agreements the parties are
committed to fulfill. Learn whether the people at the bargaining table have the capacity to
keep the promises they make.
Communication
Information is the fundamental asset in negotiation. We communicate best by listening.
We should keep asking ourselves whether the negotiation process is being used as a
successful way of communicating information. By considering which of these deserves
more attention in a given negotiation before the negotiation process begins, we are likely
to do a better job. The recent past may have presented some shocks, but to be a good
negotiator, you have to accept that things may not always go the way you expect. Keep
the “seven pillars” in mind, and you should be able to respond wisely to the
circumstances you face.
Speaking
Negotiation begins with a clear, concise explanation of the problem as each person sees
it. Facts and feelings are presented in a rational manner from the individual's perspective,
using "I" statements. Communication between people will go more smoothly when
statements such as "I become very upset when you " are used rather than more aggressive
statements such as "You make me mad when you," which blames the other person and
puts him or her in a defensive position. Shared concerns rather than individual issues
remain the focus of discussion throughout negotiation. The negotiation process will be
most effective when people take time to think through what they will say. When possible,
plan ahead to meet at a time and place convenient to everyone. A quiet, neutral spot
where there are few distractions or interruptions is perfect for open discussion.
Listening
Listening is an active process of concentrating all of one's attention on the other person.
Encouraging the other person to share thoughts and feelings, giving feedback on what has
been heard, and maintaining eye contact are skills that show you are interested in
understanding what he or she has to say. Active listening assures the other person that he
or she is heard, accepted and respected. The ability to listen actively supports open,
ongoing negotiation.
Thinking ahead or anticipating the course of the discussion are distractions that
interferewith listening. Poor attention and listening can lead to misunderstandings,
inappropriate solutions and continuing conflict.
Understanding
Before two sides can look for solutions, a common understanding should be reached. If
two people do not understand each other's problems and concerns, then the process of
negotiation will either be broken off or will end with solutions that do not work. Active
listening encourages understanding. It is important to pay close attention to what
someone says as well as to how he or she behaves. Body language, including facial
expressions, hand gestures and degree of eye contact, can provide clues about the other
person's thoughts and feelings.
Show Respect
Success rests in accepting the other person despite differences in values, beliefs,
educational experiences, ethnic backgrounds or perspectives. Negotiation permits you to
examine a problem from all sides, and to promote understanding and interest in the other
person without necessarily agreeing to his or her viewpoint. Taking time to listen and to
ask questions makes it easier to learn more about someone's perspectives. Considering
different perspectives will increase the range and variety of possible solutions. Genuine
interest in other people and in their contribution to finding solutions builds trust. Trust
Brainstorming
It is one way to gather many creative ideas rapidly. This process allows everyone to
openly make suggestions without the fear of criticism. At this stage, every suggestion has
value and is accepted. After all suggestions have been shared, they are reviewed to
determine whether they might coincide or overlap with each other. Negotiation then
becomes a matter of choosing a solution to which no one has an objection. Remember,
personal goals should not take priority over shared goals.
Summary
As life becomes more complex and the world more diverse, your ability to use
negotiation skills becomes more important. Negotiation requires time and patience. By
practicing the negotiation strategies and skills suggested in this lesson, you can make
conflict resolution a regular part of your approach to managing relationships at home, at
work and in the community. Negotiation can serve not only to preserve relationships, but
also to continually strengthen and improve them.
Negotiation Questionnaire
1. Successful negotiators usually set very high goals.
True False
2. Most negotiation issues boil down to the price of the object or service to be
performed.
True False
3. The person doing the selling or persuading has the distinct advantage over the buyer
in most negotiation situations.
True False
4. Concessions are normally viewed as a sign of weakness in the party making them.
True False
5. Ultimatums should be used only as a last resort.
True False
6. The personal needs of the negotiators are as important as the "objective" issues.
True False
7. Negotiations should be left to highly experienced personnel.
True False
8. It is always best to negotiate on your own "territory."
True False
9. There are certain items, such as merchandise in a one-price store, which cannot be
negotiated.
True False
10. As a negotiator, you can never go wrong by assuming the other party is out to get the
best possible deal for himself at your expense.
True False
11. In all negotiation situations, someone wins and someone loses.
True False
12. Deadlocks and impasses are sure-fire signs that one or both parties are being
unreasonable.
True False
13. Negotiators often mean something different from what they say.
True False
14. It is always best to keep a negotiation on a rational, issue-oriented level.
True False
15. Establishing the agenda of the negotiation is probably the most routine phase of the
negotiation process.
True False
16. The effective negotiator spends more time listening than talking during negotiations.
True False
17. Negotiators usually overdo their sensitivity to cues.
True False
18. The negotiator who asks a lot of questions is demonstrating that he or she hasn’t done
his or her homework thoroughly.
True False
19. In negotiations, the more I know about you than you know about me, the better I can
control the negotiation.
True False
20. You should develop a negotiation strategy and stick to it.
True False
21. When there is a lot of competitive negotiation taking place in an organization, the
organization always loses.
True False
22. Knowing what your options are is essential to effective negotiations.
True False
23. When a written document is necessary to finalize an agreement, it is best for you to
write it.
True False
24. I have a distinct advantage if I know your deadline and you don’t know mine.
True False
25. Deadlocks are to be avoided at all costs.
True False
26. Managers demonstrate weakness when they negotiate with subordinates.
True False
27. It is best to keep the number of people to minimum in a major contract negotiation.
True False
28. In labor relations, negotiating activity should be confined to the bargaining table in
order to preserve confidentiality.
True False
29. Probably the best test of a successful negotiator is his skill in employing a wide
variety of negotiation tactics.
True False
Answers
1. T, 2. F, 3. Either, 4. F, 5. T, 6. T, 7. F, 8. T,
9. F, 10. F, 11. F, 12. F, 13. T, 14. T, 15. F,
16. T, 17. F, 18. F, 19. T, 20. Either, 21. T,
22. T, 23. T, 24. T, 25. F, 26. F, 27. Either, 28. F, 29. F
Give yourself one point for each response that matches those provided by professional
negotiators. The higher your score, the more you reflect the mindset and behavioral
patterns of professional negotiators.
Problem
We have a product team that does high quality work. Everyone in the team is competent
and highly committed to the success of the company. Yet, some issues have developed
over time and there are repeated conflicts among a few of the members. There has been
arguing and heated debate. I am afraid that the recurring conflicts will cause morale to
drop, and subsequently result in decreased commitment and productivity.
Challenge
Can you get the team to manage conflict more effectively so that morale and productivity
are not affected?
TYPES OF NEGOTIATION IN ORGANIZATIONS
Depending upon the situation and time, the way the negotiations are to be conducted
differs. The skills of negotiations depends and differs widely from one situation to the
other. Basically the types can be divided into three broad categories.
Such types of negotiations are done within the organization and are related to the internal
problems in the organization. It is in regards to the working relationship between the
groups of employees. Usually, the manager needs to interact with the members at
different levels in the organization structure. For conducting the day-to-day business,
internally, the superior needs to allot job responsibilities, maintain a flow of information,
direct the record keeping and many more activities for smooth functioning. All this
requires entering into negotiations with the parties internal to the organization.
2. Commercial Negotiations
Such types of negotiations are conducted with external parties. The driving forces behind
such negotiations are usually financial gains. They are based on a give-and-take
relationship. Commercial negotiations successfully end up into contracts. It relates to
foregoing of one resource to get the other.
3. Legal Negotiations
These negotiations are usually formal and legally binding. Disputes over precedents can
become as significant as the main issue. They are also contractual in nature and relate to
gaining legal ground.
IS NEGOTIATION NECESSARY ?
Alternatively, there are cases in which the best response to a request or a claim is to
concede it without argument. Why waste time negotiating if the other party has a good
case and there are no adverse consequences in conceding ? Unnecessary negotiation,
followed, perhaps, by a grudging concession of the other party’s claim, will lose all the
advantage that might be gained with a quick unexpected yes.
NEGOTIATION SKILLS
WHAT NEGOTIATION IS AND WHY IT IS IMPORTANT
Effect on Profits
During the negotiation course, we will explore why negotiating skills are important
for you to be successful in business and in life. The importance of negotiation to your
business is vital and the impact of good or bad negotiating can be shown as follows:
COMPANY A COMPANY B
SALES £10m £10m
COSTS 8m 8m
PROFITS £2m £2m
Assume Company A has sales people and buyers who by improved negotiating
techniques increase sales by 5% and reduce costs by 5%.
COMPANY A COMPANY B
SALES £10.5m £10m
COSTS 7.6m 8m
PROFITS £2.9m £2m
By achieving relatively modest improvements in buyers. and sellers. performance,
the effect is an increase in profits of £0.9m. This represents a 45% increase over the
previous profit figure.
Effect on Customers
Successful negotiations can lead to increased profits, but can also lead to greater
customer satisfaction. For example, you are buying a second car and you see a car
advertised in the paper for £14,500. You decide to make an ambitious offer to see how
they react. You offer £11,000 and they accept your offer immediately. How do you feel?
Most people feel two things in quick succession:
1. I could have done better
2. There must be something wrong with the car
Think of this next time you are negotiating for your business with a customer or supplier.
Are you .being fair. by offering your best price first time? What impact has your action
had on the way the other side feels?
The objective of successful negotiation is not necessarily to charge the highest possible
prices for your products, or to pay the minimum price possible for your supplies, but to
creatively put together solutions to problems that ensure:
! The best possible outcome for your business.
! Clients and suppliers who are happy to do business with you.
! A reputation for being a tough negotiator while earning the respect of those
with whom you negotiate.
STYLES OF NEGOTIATION.
Our style of negotiation will be influenced by the style of the other party. If both sides are
adversarial, there will be little trust between the two parties, however, if one side decides
to be co-operative, there is a danger the other side will use this apparent sign of weakness
to their advantage. Co-operative bargaining has the advantage of being a more efficient
style of negotiation, however certain rules have to be followed by both parties, for it to
work. Let us look at the 2 styles of bargaining and their features:
Objectives
Before entering into the negotiation, you need to have a clear idea of your objectives
and try to work out those of the other side. Ask yourself the following questions:
1. What exactly do I wish to achieve from this negotiation?
2. Which of my objectives:
a. Must I achieve?
b. Do I intend to achieve?
c. Would I like to achieve?
3. What options or alternatives would be acceptable to me?
4. What are the other sides. objectives?
5. How does the other side see the negotiation?
Information
It has often been said that information is power. In any negotiation, there will be 4
types of information that is important to the final outcome.
1. What information do I have that the other side has also?
2. What information do I have that the other side does not have?
3. What information do I need to have before negotiating with the other side?
4. What information does the other side need before it can negotiate with me?
This can be particularly important when negotiating with people who concentrate
on price issues. What other things are important to this person? What pressures does
he have on him to conclude the deal? How well is his company doing at the moment?
How important is it that he deals with my company? etc. The early phases of negotiation
consist of both sides finding out more information
before talking about a specific deal or set of alternatives. For example, if you find out
the other side has a time deadline that only your company can meet, it may give you
the chance to negotiate on more favourable price. If you know that the other side
has recently expanded their production capacity, you may be able to negotiate more
favourable terms in return for a commitment to buy certain volumes over an agreed
time period.
By spending time as part of your preparation in listing what you already know and
what you need to know, you will give yourself a better chance to negotiate well on
your company.s behalf.
Concessions
Negotiating is a process of bargaining by which agreement is reached between two
or more parties. It is rare in negotiation for agreement to be reached immediately or
for each side to have identical objectives. More often than not, agreements have to
be worked out where concessions are given and received and this is the area where
the profitability of the final outcome will be decided.
When preparing for negotiation, it is advisable to write down a realistic assessment
of how you perceive the final outcome. Find out the limits of your authority within
the negotiation and decide what you are willing and able to concede in order to
arrive at an agreement, which satisfies all parties.
Concessions have two elements; cost and value. It is possible during negotiations to
concede issues that have little cost to you but have great value to the other side. This
is the best type of concession to make. Avoid, however, conceding on issues that
have a high cost to you irrespective of their value to the other side.
8
When preparing for negotiations, ask yourself the following questions:
1. What is the best deal I could realistically achieve in this negotiation?
2. What is the likely outcome of the negotiation?
3. What is the limit of my authority? At which point should I walk away?
4. What concessions are available to me? What is the cost of each concession and
what value does each have to either side?
Strategy
Planning your strategy is important in negotiation. Once you know your objectives,
you need to work out how you are going to achieve them. It is also useful to try and
see the negotiation from the other side and try and work out what their strategy will
be.
During the negotiation there will be opportunities to use various tactics and you
need to decide on which of these you feel comfortable with and recognise the tactics
being used by the other side. Ask yourself the following questions:
1. How am I going to achieve my objectives in this negotiation?
2. What is the strategy of the other side likely to be?
3. What tactics should I use within the negotiation?
4. What tactics are the other side likely to use?
Tasks
If you go into negotiation with a colleague or colleagues, you need to decide during
the preparation phase:
1. What role will each team member take in the negotiation?
2. How can we work together in the most effective way?
Some teams of negotiators appoint team leaders, note takers, observers and
specialists, each with their own clearly defined authority and roles to perform.
Having a clear understanding of roles within the negotiation will make the team
approach much more effective.
9
PREPARATION CHECKLIST
Questions to ask prior to entering into negotiations
Objectives
1. What exactly do I wish to achieve from this negotiation?
2. Which of my objectives:
a. Would I like to achieve?
b. Do I intend to achieve?
c. Must I achieve?
3. What options would be acceptable to me?
4. What are the other sides. objectives?
5. How does the other side see the negotiation?
Information
1. What information do I need to know about this negotiation?
2. What information does the other side need to find out?
3. What information does each side have that will influence the outcome of the
negotiation?
Concessions
1. What is the best deal I could realistically achieve in this negotiation?
2. What is the likely outcome of the negotiation?
3. What is the limit of my authority? At what point should I walk away?
4. What concessions are available to me, what is the cost of each concession and
what value does each concession have to either side?
10
Strategy
1. How am I going to achieve my objectives in this negotiation?
2. What is the strategy of the other side likely to be?
3. What tactics should I use within the negotiation?
4. What tactics are the other side likely to use?
Tasks (Team Negotiations Only)
1. What role should each team member take in the negotiation?
2. How can we work together in the most effective way?
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PREPARING FOR NEGOTIATIONS.
LIKE, INTEND AND MUST POSITIONS
The best deal, like:
1 7
2 8
3 9
4 10
5 11
6 12
1 7
2 8
3 9
4 10
5 11
6 12
2 8
3 9
4 10
5 11
6 12
Suggested answers
1. Despite the asking price looking good, beware of agreeing to the asking price.
A negotiator should and will always challenge an opening bid, however
tempting it may appear. Look at it from Sr. Franconi.s point of view. He must
have a reason for wanting to sell the business and is likely to have some leeway
on price.
Some people fear annoying, or upsetting the other party by challenging their
opening bid. They worry it may cause deadlock. A skilled negotiator can
challenge the other side.s terms and conditions without antagonising the other
side. That is part of the skill of negotiating.
2. There are no right and wrong answers to this question. If agreement is reached
and both parties are satisfied, then a win-win outcome is the result. However,
the first step in the planning process is to identify the issues being negotiated.
What are they?
Issues are likely to include:
Overall asking price
Valuation of stock
Valuation of fixtures and fittings (Kitchen and restaurant)
Goodwill
Timing of the purchase
Payment terms
Non-competition clause
Your must position is probably where you would agree to pay the asking price, financed
by yourself, accepting Sr. Franconi.s valuations. You may be willing to forget the non-
competition clause and seek to close the deal within a month. Your like position could be
an offer of £168,000, financed by paying £84,000 up front and the balance over 4 years at
£21,000 per year. This would include a non-competition clause whereby Sr. Franconi
agrees not to open up a similar restaurant locally within the 4-year period. Agreement
could be reached to speed up the timing of the deal, depending on the necessary legal
requirements being met. Your intend position, will be somewhere between the must and
like positions. It could be, say, an agreed price of £172,000, financed by paying £86,000
up front and the balance over 2 years at £43,000 per year. There may be scope for
a shorter non-competition clause of say 2 years and some flexibility on the timing of the
deal.
3. Information would need to include:
How long the business has been up for sale
The reasons for Sr. Franconi.s decision to sell what appears to be a profitable
business
The physical state of the premises, stock and fixtures
The costs of any necessary repairs
How valuations on stock and fixtures were calculated
Any local development plans that could affect future revenue and profit
The quality and accuracy of the financial information on the business?
How quickly Sr. Franconi needs to complete the sale
What interest other potential purchasers have shown
Sr. Franconi.s attitude to part funding the purchase
4. Concessions relate to the key issues being negotiated. Likely concessions will
include:
Price
Payment structure
Timing of purchase
Non-competition clause
5. Your strategy is your decision. If you are looking for Sr. Franconi.s help with
financing the business it is probably best to approach the negotiation in a positive,
\friendly way. Do your homework prior to your meeting and prepare your list of
questions carefully. You may wish to visit, or have the restaurant visited by someone else
to get a feel for the quality of service and food and possibly feedback from other
customers. Find out more about the location and future development plans. Prepare your
opening bid and the arguments you need to back it up.
Information power
Information power comes from having knowledge that will influence the outcome of
the negotiation. Planning and research can increase our information power, as can asking
the right questions before we reach the bargaining phase of the negotiation.
Reward power
Reward power comes from having the ability to reward the other party to the negotiation.
It could be the power a buyer has to give place an order for goods and services, or the
power a salesperson has to give good service and solve problems
Coercive power
Coercive power is the power to punish. This is seen most commonly in the buyerseller
relationship, but can be a feature of other types of negotiation.
Situation power
Situation power is the power that comes from being in the right place at the right time. A
customer is desperate to place an order and you are the only source ofsupply in the short
term. Having an effective network and keeping in touch with what is happening can
increase your situation power.
Expertise power
Expertise power comes from having a particular skill which you can apply and which
can influence the outcome of the negotiation. Improving negotiation skills helps you
win better deals. Other areas of expertise could also help the outcome of the
negotiation.
Referent power
Referent power comes from being consistent over time. If people see you as having a
clear consistent strategy as a negotiator, you will increase your referent power.
Having standards that you stick to and being consistent will help to increase your
referent power. In the eighties, Margaret Thatcher wasn.t universally popular, but
was respected by many for being consistent in her views and behaviour. In the end
she failed because her approach was too rigid and she was unable to adapt to
changing circumstances.
DEVELOPMENT EXERCISE 2.
PERSONAL POWER
Looking at the sources of power, above, write down where you feel you have strengths in
your negotiating relationships and write down your areas of weakness. Having done this,
write down ways you can maximise your strengths and minimise
your weaknesses.
STRENGTHS
WEAKNESSES
BEHAVIOURAL ANALYSIS
People negotiate differently and behave differently during the negotiation process.
We can observe different styles of negotiation and how different types of behaviour
can affect the outcome of negotiations.
In commercial negotiations, some people negotiate quickly and take risks, others
take their time and try to avoid risk. Some buyers are very loyal, others will
automatically shop around. Some negotiators can be quite intimidating to the point
of being rude; others are quite passive and easily manipulated.
This makes selling and negotiating a real challenge. To negotiate with all these
different buyer types we need to be able to adapt our behaviour and be flexible in
our approach.
To begin this process we will look at 2 aspects of buyer behaviour; assertiveness and
responsiveness.
People who are assertive are confident and know what they want. They are not
afraid to put forward opinions and are willing to listen to the opinions of others.
They are not afraid of conflict and will be more than happy to argue their case.
People who are highly assertive can be seen as being aggressive while people who
lack assertiveness are often passive and get taken advantage of. There are times
when it is appropriate to be more or less assertive and we need to recognise when
these times are.
Responsiveness means the extent to which people are willing to respond to us and
our questions. Some people are highly responsive and will give lots of information
about themselves, their problems and needs. Others are unwilling or unable to
respond in this way and we see these people often as being negative or difficult.
We are all different and some of us are naturally assertive and some of us are not.
Salespeople tend to be quite responsive, but sometimes we lack assertion. An
example of this is during negotiations.
When customers put us under pressure to reduce prices or give discounts we find it
difficult and uncomfortable and worry about damaging the relationship with the
buyer.
There are four basic styles of behaviour and these are determined by the way, in
which people relate to one another.
Low High
ANALYTICAL DRIVER
High
AMIABLE EXPRESSIVE
low
ANALYTICALS
! Take action rather than words to demonstrate helpfulness and willingness.
! Stick to specifics . analyticals expect salesmen to overstate.
! Their decisions are based on facts and logic and they avoid risk.
! They can often be very co-operative, but established relationships take time.
! Consider telling them what the product won.t do . they will respect you for it,
and they will have spotted the deficiencies anyway.
! Discuss reasons and ask .why?. questions.
! Become less responsive and less assertive yourself.
DEVELOPMENT EXERCISE 3. BEHAVIOURAL STYLES
1. Analyse each behavioural style and for each, answer the following questions:
! How would you recognise each behavioural style?
! How would you sell to them?
2. You may refer back to your notes during the exercise
NEGOTIATING TACTICS
Most successful negotiators recognise that the way people involved in negotiations
behave does not always reflect their true feelings or intentions. We are going to look
at negotiating tactics that may be used by you or on you. Whether or not you choose
to use these tactics, it is vital to understand 3 things:
! these tactics work
! they can be being used on you, and can be used by you
! once they are recognised as tactics, their effects are reduced, or eliminated
You may feel that there is no need in your particular case to negotiate or resort to
.tactics. in negotiation. This is a matter of personal choice.
In general, tactics are used to gain a short-term advantage during the negotiation
and are designed to lower your expectations of reaching a successful conclusion.
There are many tactics available to negotiators. Here are some you may recognise.
Pre-conditioning
This can begin before you even get together, or start your negotiations with the
other party. Let us take a sales example:
You telephone for the appointment and the other side says, aggressively:
Don.t bother coming if you are going to tell me about price increases. You.ll
be wasting your time and I will be forced to speak to your competitors.
When you do arrive you are kept waiting in reception for half an hour, without
being told why. As you walk through the door into the other person.s office they
indicate for you to sit down, but don.t look up. Instead, they sit leafing through your
competitor.s brochure, in silence, ignoring your efforts to make conversation.
You are given an uncomfortable low chair to sit in that happens to be directly in line
with the sun, shining into the office. At this stage, how confident do you feel?
The monkey on the back
Some negotiators have the irritating habit of handing their problems to you so that
they become your problems. This is the monkey on their back that they want you to
carry around for them.
A classic example is the person who says I have only got £10,000 in my budget. This
is often used tactically to force a price reduction. Here is what you can do.
When one side says I have only £10,000 in budget, look worried. Say something like:
That is a problem. As you are no doubt aware, the cost of our systems
can be anything up to £20,000 and I really want to help you choose
the best system that meets your needs. Does that mean that if one
of our systems has everything you are looking for, but costs £20,000,
you would rather I didn.t show it to you?
The monkey is now on the other person.s back and they have to make a choice. If
the objection is genuine and the budget figure is correct, you must try to look for an
alternative that meets your needs as well as theirs.
If they genuinely can only spend £10,000 that is not a tactic but the truth. In dealing
with tactics the first decision you must make is whether it is a tactic or a genuine
situation. If it is genuine, you have a problem to solve, rather than a tactic to
overcome.
The use of higher authority
This can be a most effective way to reduce pressure in the negotiation by
introducing an unseen third party and can also be effective in bringing the
negotiation to a close. I need to have this agreed by my Board of Directors. If they
agree to the terms we have discussed, do we have a deal? Be careful to use this
device sparingly so that the other side does not begin to feel you have no decision .
making authority yourself.
One way of countering this tactic is to say before the bargaining begins If this
proposal meets your needs, is there any reason you would not give me your decision
today? If the other side still wishes to resort to higher authority appeal to their ego
by saying Of course, they will go along with your recommendations, won.t they? Will
you be recommending this proposal?
Nibbling
Negotiations can be a tiring process. As the point draws near when an agreement is
likely, both sides exhibit a psychological need to reach agreement and get on with
something else.
You are very vulnerable as the other side reaches for their pen to sign the order form
or contract to concede items that don.t significantly affect the final outcome. Oh, by
the way, this does include free delivery, doesn.t it? or Oh, by the way, the price of
the car does include a full tank of petrol?
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Nibbles work best when they are small and asked for at the right psychological
moment. Like peanuts, eat enough of them and they get fattening.
Good negotiators will often keep back certain items on their .want list. to the very
last minute when the other party is vulnerable. Watch out for this.
The good guy and the bad guy
You may have come across this tactic before or else seen it used in films or on
television. This is a tactic designed to soften you up in the negotiation.
For example, you are negotiating the renewal of your service contract with the
Buying Director and his Finance Director. You present your proposal and the
Buying Director suddenly gets angry and walks out in disgust muttering to himself
about how unfair you have been and how the .relationship. is well and truly over.
You pick up your briefcase and are being shown the door when the Finance Director
smiles at you sympathetically and says
I.m terribly sorry about that. He is under a lot of pressure. I would
like to help you renew your contract, but he really will not consider
the price you have suggested. Why don.t I go and talk to him for you
and see if we can agree a compromise? What is the bottom line on the
contract? If you give me your very best price, I will see what I can do.
The best way of dealing with this tactic is to recognise the game that is being played
and assess exactly what the quality of the relationship is. You may be able to say
something like:
Come off it, you are using good guy, bad guy. You.re a superb
negotiator, but let.s sit down and discuss the proposal realistically ...
If you don.t have this kind of relationship, stand firm and insist on dealing with the
bad guy, or else bluff yourself and give a figure that is within your acceptable range
of alternatives.
One way of combining .good guy, bad guy. with .higher authority. is by saying things
like
Well, I.d love to do a deal with you on that basis, but my manager refuses
to let me agree terms of this nature without referring back and he refuses
to talk to salespeople. Give me your best price and I will see what I can do ...
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Body language
It is important in negotiation to react verbally and visually when offers are made.
You may have seen the more theatrical negotiators hang their heads in despair or
accuse you of being unfair and souring a perfectly good relationship when you
present your proposal. Human nature is such that we can believe and accept these
outbursts against us and our negotiating position becomes weaker as a result.
Ensure the next time you are in a negotiation that you react to the other party.s
offer. If you show no reaction, they may be tempted to ask for more and more and
you will lose the initiative in the negotiation. Also, it is almost certain that their
opening offer is higher than the figure for which they are prepared to settle, so it is
important that you clearly signal your unwillingness to accept the opening position.
If you reach the point below which you will not go, it is important that you show
this with your body language. News readers, when they have finished reading the
news, have a habit of picking up their script and tidying up their papers. This tells
the world that they have finished their task and are preparing to leave.
Similarly, when you make your final offer, it can be very powerful to collect your
papers together and indicate with your body that it really is your final offer. Put your
pen away, sit back in your chair and remain silent. Look concerned and keep quiet.
If your voice says final offer but your body is saying let.s keep talking, the other party
will disregard what you say and keep negotiating.
The use of silence
During the negotiation, you may make a proposal and find the other party remains
silent. This can be very difficult to handle and often signals .disapproval. to the
inexperienced negotiator. Just as nature abhors a vacuum, so silence induces the
need in people to talk.
If you have a proposal to make, make it and ask the other side how he, or she feels
about it. Having asked the question, sit back and wait for the answer. Whatever you
do, don.t change your offer as this could seriously weaken your position.
The vice
A common technique used by negotiators when presented with a proposal is to say
You.ll have to do better than that. This can be a very powerful statement, especially
when used with broken record.
The most powerful way of dealing with this is to ask them to be more specific.
Whatever you do, don.t weaken your negotiating position in response to the vice by
giving anything away, too easily. This will only encourage repeat behaviour.
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The power of legitimacy
People believe what they see in writing. We all assume that if a thing is printed or
written down, it is non-negotiable. This is what can make price lists so powerful. If
you have to present a customer with a price increase or you wish to encourage an
early order to beat a price increase, show something in writing such as an office
memo from your boss announcing the increase. This will have a far greater impact
than just saying your prices are about to go up.
When presented with a price tag in a shop, ask to speak to the manager and make
him an offer. You could be surprised at the results.
The low key approach
Don.t appear too enthusiastic during negotiations. Over-enthusiasm during
negotiations can encourage skilled negotiators to review their strategy and demand
more.
If you are in a negotiation and the other side is not responding to your proposal,
recognise this could be a tactic and avoid giving concessions just to cheer them up.
Salespeople like to be liked and will often give money away in a negotiation, if the
other side appears unhappy.
For example, if you are buying a car avoid saying to the seller things like:
This is exactly what I.m looking for. I really like the alloy wheels.
Develop a low-key approach. Say things like:
Well, it may not be exactly what I.m looking for
but I may be interested if the price is right
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MOVEMENT AND CONCESSIONS
Making the First Move
Asking questions and listening effectively are important skills both in selling and
negotiating. The first phase of negotiation involves both parties in agreeing the
background to the negotiation and .fishing. for the opening demand or offer.
It is often better to present the opening demand or offer in terms of a hypothetical
question, as this allows the negotiator to retreat to his initial position if necessary.
The opening offer will probably be at or just about the level of the negotiator.s
maximum expectation, giving him room to manoeuvre, but not so high that the offer
lacks credibility. Do not attempt to .win. at this stage, but hold sufficient back so that
you are able to move, if necessary, at a later stage.
This is a difficult period in the negotiation process and a professional negotiator will
often use silence or other pressure techniques to solicit information from the other
party.
Further Movement and Concessions
During negotiations, it can be in the interest of each side to keep asking questions
and raising objections. Many excellent negotiators are low reactors who will move
very slowly in negotiation. However, given that the opening position of each party
differs, then there has to be movement and concessions if a deal is to be struck.
Negotiators will tend, at first, to discuss extra demands, trying to get the other side
to agree to these without offering anything in return. They will be reluctant to give
information or will defer decisions in order to increase the pressure on the other
person.
When an offer does come, it will often be on the basis of a quotation based on the
minimum quantity at the lowest possible price. In all this, the negotiator is
attempting to dominate the interview, pressing for maximum advantage, and trying
to force the other person to concede on a major issue.
The skilled negotiator will ask the other side for a complete list of all his, or her
requirements, and will not concede on a single issue until he knows the nature of
the whole package. He will then begin to trade concessions, starting with the
smaller, less important aspects of the package.
Negotiators should avoid making one-sided concessions which will severely weaken
his final position and could affect the overall profitability of the deal.
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When movement comes, it begins slowly, then can be very rapid as both parties
sense a deal being on the cards. Movement does tend to be discontinuous with
either party moving and the other holding up the agreement at any one time. This
leads to short periods of deadlock, which can be brought to an end in different
ways.
Some of these are:
! Period of silence. Wait for the other party to speak.
! Agree to a concession. Always trade concessions by saying If I do this,
you do that.
! Adjournment to review positions.
! Agree to leave certain issues to one side for later and concentrate on the rest.
Identify areas of common agreement.
! The use of the relationship with the other side to break the deadlock.
Signals to be aware of that could mean the other side wishes movement to take
place could include:
! Trial movement. One side uses words like What would you say if ...?
or uses hypothetical examples
! Summarises the position to date and asks Where do we go from here?
! One side calls for adjournment.
! Appeals to the other side.s better nature.
! Asks for more information.
! Uses .crowding. techniques to force movement, e.g. aggressive behaviour, sets
deadlines and time limits, threatens use of competition.
The use of concessions is a vital part of building a profitable relationship for both
parties in the negotiation. Earlier, we discussed the different .elements. that could
constitute the final deal. The use of concessions enables negotiators to build a
mutually profitable deal that is not one-sided in the other side.s favour.
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Bargaining
When it comes to bargaining try to get the other side to commit themselves first. For
example:
SCENARIO 1.
Demand: .I.m willing to reach some sort of deal, but I want a 10% discount.
Offer: .Okay, I.ll agree a 10% discount, but we.ll have to look at a
longer-term agreement.
Response: .Well, thanks for the 10% but the 1 year contract we have already
agreed will have to stand.
SCENARIO 2.
Demand: .I.m willing to reach some sort of deal, but I want a 10% discount.
Offer: .Okay, we may be able to look at our discount structure, but to
do that we.ll need to agree a 2 year contract.
Response: .Okay, well 2 years may be possible, but can we go to the full 10%?.
In the first scenario an offer of 10% was made, but what was asked for was vague.
Responding to a specific demand like this we need to be vague, but positive: Okay,
we may be able to look at our discount structure. and our counter demand needs
to be specific: but to do that we.ll need to agree a 2 year contract
Remember, when you bargain, offer vague, ask specific.
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DEALING WITH PRICE
Overcoming the price objection
Price is an issue in most negotiations. We need to deal with the price issue
confidently, but with an understanding of the needs of the other side. Here are
some notes to help you deal with price:
! Be specific. Say the exact price rather than ....well, it will be about £3,000 ....
! Keep eye contact. It makes you look confident
! Make your tone of voice confident and your body language
confident and relaxed
! Use silence. Once you have stated your price, stop talking and wait
for the other side to speak. Give them time to think
! Deal with price objections and defend your price, but don.t
over argue your case
! Close down your body language
! Focus on price and benefit differences
! Begin the bargaining phase