Sales Management and Negotiation Skills

Module 4
Vasudevan M

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individual’s holistic development to make effective Love of Fellow Beings | Social
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Negotiation Skills

What is Negotiation?

Negotiation is not the same thing as bargaining.

Bargaining is the process of determining the final price of a purchase or sale.

Negotiation is communication between two or more parties to determine the

nature of future behavior.

Therefore, bargaining may be a facet of negotiation, but negotiation - because

it involves multiple issues and outcomes - is much larger than just setting a
price.

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What is negotiable and what is

not negotiable?

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WHATEVER YOU THINK IS NEGOTIABLE IS

NEGOTIABLE. AND WHATEVER YOU CONSIDER
NON-NEGOTIABLE ISN’T.

If you do not believe that you can ask for something, then
that thing is not negotiable, because it never comes up.

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Knowing when not to negotiate

• The situation is physically or psychologically dangerous.

• You are too tired, sick, distracted or confused to negotiate
effectively.
• The issues are trivial or symptomatic of larger concerns.
• Others can negotiate these issues more effectively.
• You perceive no chance of satisfying your needs.
• The other party appears incapable of thinking rationally.
• The relationship is critical to you.
• You stand to lose much more than you might gain.

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The Golden Rule of Negotiation

• People will not negotiate with you unless they believe

you can help them or hurt them.

• Conversation Between a customer care executive of a

Telecom service provider and a customer on post paid
billing issues. The customer is over charged for the
previous month.

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Three Fundamental Questions

To prepare for a negotiation, ask yourself three fundamental

questions

• What do you want?

• Why should they negotiate with you?

• What are your alternatives?

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BATNA

BATNA is a term coined by Roger Fisher and William Ury

in their 1981 bestseller, Getting to Yes: Negotiating Without
Giving In.

It stands for "Best ALTERNATIVE TO a negotiated

agreement." Said another way, it is the best you can do if the
other person refuses to negotiate with you.

It is the best you can do WITHOUT THEM

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Role Play

Acme manufacturing and supplier, Best parts company are

negotiating on an agreement under which Best parts will
make and deliver 10,000 specified widgets over a period of
six months.

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Cont…
Acme’s manager has been instructed to get the lowest
possible price, so she is pushing for Rs.8 per widget.

The company can consider closing the deal if the price is

Rs.9 per widget if they allowing a credit period of 3 months
from the date of supply unlike the usual pay back period of
1 month.

There are Rector & Co who are supplying the widgets for
Rs. 8.5 per widget with but their replenishment cycle is little
slow than Acme.
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Cont…

Best Parts sales manager is been instructed to sell the widget

for Rs.12 per piece and the company can consider closing
the deal to a minimum of Rs.9.5 per widget.

You have a competitor Pioneer & Co who supplies widgets

at a lesser price. You are quite unsure about price they offer
but you know that their replenishment cycle is lengthy than
yours.

You are concerned with the fact of not losing the customer
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Desirable Behaviors of Successful Negotiators

1. Negotiators ask questions for five different reasons

• To gather data about the other party’s thinking or

position
• To control the discussion
• To keep the other parties active and reduce their thinking
time
• To get thinking time
• To avoid direct disagreements

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Cont..

2. They test their understanding of the other party’s prior

statement and they summarize the previous discussion
points

3. They give internal information. They tend to give facts,

sources, options and other information without revealing
any emotion. Deliberately, they do not give out any
information about their position.

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Cont…

4. They explain before disagreeing. They tend to begin with

a review of events or circumstances before presenting a
statement of disagreement. This permits the other party to
hear your arguments and logic, and perhaps agree to your
position before you actually state it.

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Negotiating Styles
Two dimensions
• Concern for your self-interest
• Concern for the other party or relationship
Five Styles:
• Competing style - This focuses on your self-interest at the expense of
the other party.
• Accommodating style - This style is concerned with the relationship; it
is the opposite of the competing style.
• Collaborating style - This approach attempts to satisfy everyone’s
needs. It looks for win-win solutions.
• Avoiding style - This person tries to avoid the negotiation itself.
• Compromising style - This person wants to create partial-win, partial-
lose scenarios.

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Tactics

1. Exaggerated first offer

2. Speed-ups
3. Delay
4. Drawing lines
5. Creating competition
6. Concessions
7. Investment
8. Authority limits
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Additional tactics for your negotiation toolkit include

Silence
Playing dumb
Playing crazy
Showing off the goods
Flattery
Lowballing
Strawman
Bundling
Confederates
Good guy-bad guy
Split the difference
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Tough Negotiators

1. Hard-core toughie

This is the individual who likes to win, needs

to win and will win.

The hard-core toughie negotiating style is

aggressive-aggressive

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Cont

2. Provoked toughie

Provoked toughies do not need to win and will

actually negotiate with you until they are attacked or
threatened.

Once threatened, provoked toughies will hold their

ground. The provoked toughie negotiating
style is passive-aggressive.

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Cont…

Faux toughie

1. Who is gruff on the outside, but very soft

inside.

2. The gruff exterior masks the fear of having this

soft spot exposed. This negotiating style is
aggressive-passive.

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Negotiation Key Concepts

• BATNA

• Reservation Price

• ZOPA

• Value Creation through Trades

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Know your BATNA!

Best Alternative to a Negotiated Agreement (BATNA)

Typical example: negotiate or go to court
Improving your situation
• Improve your BATNA
• Identify the other side’s BATNA
• Weaken the other party’s BATNA

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Reservation Price

• The least favorable point at which one will accept a deal

• The “walk-away”
• Example: you are looking for larger office space. You
set your Reservation Price at Rs. 30/SF
• If owner won’t budge from Rs.35, you walk away and
take advantage of your BATNA
• BATNA may be that you will stay in your existing small
office or move outside the city to a cheaper location

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Value Creation through Trades

• Trade things you value less to the other party

• Examples:
• For a supplier the greater value may be not price but an
extended delivery time
• For a customer, extended warranty versus price
• For an employee, working at home versus salary

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Four behaviours of unsuccessful negotiators

• They defend and attack – defend your position and

attack other’s position
• Dilute opponents argument by giving lots of reasons -
• Give counter proposals – this is fighting positions with
other positions (eg - lime instead of orange)
• Employ value standards (eg –I think you can’t get a
better deal than this)

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Types of Negotiation

Negotiations can be categorized based on end result

required:
• To agree on how to share or divide a limited resource –
Distributive bargaining
• To create something new that neither party could attain
on his or her own –Integrative negotiations
• To resolve a problem or dispute between the parties –
Conflict resolution

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Distributive bargaining strategy

• Try to find the other parties target and walkaway point

• Push for settlement near opponent’s walk away point

• Get the other party to change their walk away point

• If settlement range is negative, either:

• Get the other side to change their walk away point
• Modify your own walk away point

• Convince the other party that the settlement is the best

possible
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Integrative negotiation strategy

• To create something new that neither party could attain

on his or her own –Integrative negotiations
• In integrative negotiations the goals of the parties are not
mutually exclusive.
• The fundamental structure of an integrative negotiation
situation is such that it allows both sides to achieve their
objectives.

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Five strategies for resolving disputes

• Reaching agreement on rules and procedures

• Reducing tension and synchronizing de-escalation
• Improving the accuracy of communication
• Controlling the number and size of issues
• Establishing common ground

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Key Steps in the Integrative Negotiation Process

STEP 1 - Identify and define the problem

STEP 2 - Understand the problem fully -identify interests
and needs on both sides
STEP 3 - Generate alternative solutions
STEP 4 - Evaluate and select among alternatives

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