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CHAPTER 12
FORMAL NEGOTIATING
Outline of Chapter
I. The nature of negotiation
A. Negotiation versus non-negotiation selling
B. What can be negotiated
C. Are you a good negotiator?
II. Planning for the negotiation session
A. Location
B. Time allotment
C. Negotiation objectives
D. Team selection and management
E. Individual behavior patterns
F. Information control
III. The Negotiation meeting
A. Preliminaries
B. General guidelines
C. Dealing with win-lose negotiators
1. Good guy-bad guy routine
2. Lowballing
3. Emotional outbursts
4. Budget limitation tactic
5. Browbeating
6. Other win-lose tactics
D. Making concessions
E. Recap of a successful negotiation meeting
IV. Selling Yourself
V. Summary
Teaching Suggestions
(an alternative would be to use the PowerPoint slides provided with the text)
1. In order to get the students enthusiastic about covering the material, ask them to take four or five minutes
and think of their response to the following question:
“Think of the last time you were involved in some sort of negotiation. It could be with your friends, your
parents, teachers, or anyone else you can think of. As you think about the negotiation that took place, ask
yourself if you were successful in meeting your objectives for the session. Also ask yourself if you were
effective as a negotiator, and how effective the other party was as a negotiator. In just a few minutes I will
ask several of you to relate your experiences.”
After students have had a chance to pull their thoughts together, ask for volunteers to describe their
negotiation meeting. Probe, using the questions just mentioned, but do not evaluate or be judgmental about
the manner in which the student engaged in negotiations. Explain to the class, that since everyone is
2. Talk about the differences between negotiation versus non-negotiation selling. An effective way to present
3. Help students understand that the qualities of a successful negotiator are not exactly the same qualities as
a successful salesperson. If they have not already done so, ask students to complete Exhibit 12-2 in their
4. Provide an overview of planning for the negotiation session. Note that, while it was important to plan for a
regular sales call, it is even more important to plan for an upcoming negotiation session. Also explain that
while it is difficult to make a successful sales call without engaging in planning, it is virtually impossible to
engage in a successful negotiation session without planning. Negotiators generally have the full resources
of their corporation at their disposal as they plan for a negotiation session.
Discuss the fact that setting proper objectives for a negotiation session is perhaps one of the most important
activities a salesperson can engage in. Describe the importance of setting target positions, minimum
positions, and opening positions. Make sure that students understand what these terms mean. It is usually
5. Ask students the following questions:
“If you were a salesperson preparing for an upcoming negotiation session, who from your firm would you
get involved in the planning? Also, who would you select to be a member on your team? What criteria
6. Discuss the differences in the way people handle conflict. Exhibit 12.5 provides a resource for this
discussion.
It’s probably a good idea at this point to discuss the differences between the social style matrix that the
students are familiar with (i.e. drivers, analyticals, amiables, and expressives) and the conflict handling
7. Discuss the “Thinking It Through” from the textbook:
“What if you do everything in your power to establish a win-win attitude with the buyer team, but they
insist on viewing the negotiation as a series of win-lose maneuvers? Since they won’t play by win-win rules
8. Briefly discuss the examples of win-lose negotiation strategies that are mentioned in the chapter. Most
students are familiar with lowballing, emotional outbursts, and to some extent the budget limitation tactic
9. Describe that making concessions is one of the most important activities in negotiation. Never does the
buyer team and the seller team come to the negotiation table with opening positions which are agreeable to
role play a negotiation session.
11. Summarize what was covered:
How negotiation differs from non-negotiation selling.
Characteristics of a good negotiator. Importance of planning for a negotiation session.
Setting appropriate negotiation objectives.
Effective methods of making concessions.
Suggested Answers to Ethics Problems
1. “If they are going to use win–lose negotiating, I will too. After all, I have to win!” Comment.
2. You have learned in this chapter that some members of the buying team might exhibit the accommodating
mode. Are there any ethical ramifications if you know someone on the buying team is in that mode?
Suggested Answers to Questions and Problems
1. Based on the situation described in From the Buyer’s Seat 12.1, assume you are Charlie. Assume you really
did mess up in all of the ways described in that story. Now, you really want to make amends and make
things right with the buyer. Briefly explain exactly what you would do to mend fences and establish the
start of a true partnership.
Charlie needs to fight for the buyer and try to make things right. He needs to assemble the products that he
2. Suppose you’re a salesperson of wholesale fresh fruits and vegetables, and you’re negotiating with a large
regional grocer over the number of deliveries you will make to its stores in a given week. Your maximum is
seven times a week, your opening is four times a week, and your target is five times a week. After
negotiating for some time, the grocer states, “Look, we’re not willing to accept anything less than nine
times a week, which includes two deliveries each on Saturday and Sunday, our busiest days.” What do you
do now?
First, verify that this is a fact, and try to find out why it is minimum they are willing to accept. Apparently,
3. Assume you’re a salesperson who is a true collaborator in every sense of the word. Today you’re supposed
to engage in a negotiation with an important client. It’s taken five months to set up this meeting, and your
team of four, including your vice president, is assembled and ready to walk into the meeting. You are your
team’s designated leader. The cell phone of your vice president rings, and it’s a relative, telling her that her
son was just involved in a massive automobile accident. The vice president decides to leave the meeting
and go to the hospital to be with her son. What do you do now?
4. In Sales Technology 12.1, you learned about new cloud-based software that can be used for online
negotiations. What are some potential problems of negotiating totally online with a buying team (no face-
to-face negotiating)?
5. According to the text, meeting in a neutral location is better than being on the turf of either the buyer or
seller. What if the buyer requires that the session be held on its corporate campus?
6. Assume you are going to have your fourth and final job interview next Friday with Microsoft, to become a
seller of cloud-based solutions. Knowledgeable friends have told you that because you passed the first two
interviews, you will be offered the job during the upcoming interview. Also, you know that Microsoft likes to
negotiate with its new hires.
a. Think about your own needs and desires for your first job (such as salary, expense reimbursement,
benefits, geographic location, promotion cycle).
b. For each need and desire listed, establish your target position, opening position, and minimum position.
The answers will have to be related directly to the student’s own needs and desires. An example might be
the following:
c. Microsoft has probably also developed positions that might meet each of your needs and desires.
Describe how you could discover these positions before next Friday’s meeting.
You could learn this information from a number of sources. Perhaps one of your greatest sources would be
from a professor at your university which is familiar with Microsoft (to learn what starting salaries have
7. Jillian Anderson, a salesperson for Hershey, is preparing for an important negotiation session with Kroger,
a large national retail grocery chain, regarding an upcoming promotional campaign. Her boss has strongly
suggested that he attend the meeting with her. The problem is that her boss is not a good negotiator: he
tends to be moody, is hard to predict, and tries to resolve conflict by changing the subject. What should
Jillian do?
This is an extremely difficult and touchy situation. Since Jillian knew ahead of time the characteristics of
her boss, she should have developed a plan to either exclude him from the session or include other
important, higher ranking sales managers from her firm. Assuming that she did not do this, the situation is
8. “You are the worst possible person to have to negotiate for yourself. You care too much about the
outcome. Always let someone else negotiate for you.” State your reaction to this statement. What
implications does it have in industrial sales negotiations?
This statement is generally true. It is for this reason that many people use lawyers to negotiate agreements
for them.
However, in industrial sales situations, the salesperson’s role is to engage in negotiations. This is true even
if the salesperson stands to gain in terms of compensation if the negotiation is considered to be successful.
9. During negotiation, buyers make all kinds of statements. What would be your response to the following,
assuming each occurred early in the meeting?
a. We refuse to pay more than $1,500 each. You owe us that price. Take it or leave it!
b. For all the business we've given you over the years, I hope you're going to take care of us in this
negotiation. I hope you remember how good of a customer we've been.
c. Nothing is final until our lawyers say so.
This statement may indicate that the salesperson was not successful in helping the buyer put together a
good team. All important parties should be at the table before the negotiation session begins. The
d. One of our important buyers can’t make it here today. Sorry. But let’s go ahead and see what progress
we can make.
Again, it is important for all of the players to be present during the negotiations. If the selling team were to
go ahead and start the negotiation, the absent buyer would have to be completely “brought up to speed”
e. Tell you what, we need free delivery. Period. Can you do that?
This presents a problem in many situations because the proposal may involve many trade-offs. By that I
mean that some items are greatly reduced in their cost while others are not. By allowing the buyer to see
individual breakdowns by individual components, they will undoubtedly spot that some items are greatly
10. You come to the meeting with an agenda. But the buying team also comes with an agenda, and it's very
different from yours, in terms of the order of negotiation of the various issues. What do you do now?
It is true that solving your opponent’s problem is your problem if you are attempting to engage in win-win
negotiating. If you don’t solve the buyer’s problem then you are going to, in effect, create a problem.
Suggested Answers to Case Problems
Case 12-1: Doubletree Hotels
1. Evaluate the negotiation meeting to this point. How could Julie have better
planned for the meeting?
2. What should Julie do now? Be explicit and give reasons for your answers.
Make any necessary assumptions.
She should have learned exactly what budget the company had and what prices they were expecting.
It would also have been helpful to find out how the buyer negotiates. Perhaps this is a tactic that he
uses in most of his negotiations.
It is important that Julie not just “cave in” to the company's demands. The selling team should leave the
room for a private session. Julie would be wise to listen to the advice that she could get from her senior
