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Chapter 12 - Formal Negotiating
CHAPTER 12
FORMAL NEGOTIATING
Outline of Chapter
I. The nature of negotiation
A. Negotiation versus non-negotiation selling
II. Planning for the negotiation session
A. Location
B. Time allotment
III. The Negotiation meeting
A. Preliminaries
B. General guidelines
C. Dealing with win-lose negotiators
1. Good guy-bad guy routine
2. Lowballing
D. Making concessions
E. Recap of a successful negotiation meeting
Chapter 12 - Formal Negotiating
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
You might also want to discuss the student’s work on Exercise 12-1 if you had already assigned
it.
2. Talk about the differences between negotiation versus non-negotiation selling. An effective way to
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
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
Chapter 12 - Formal Negotiating
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 would you use?”
Help students to understand that team members should possess the traits of good negotiators,
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
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 should you?”
This is a real world issue that salespeople must deal with practically everyday. Although we stress
Chapter 12 - Formal Negotiating
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
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 both parties. The only way for each party to reach its target position is to
engage in giving and receiving concessions.
10. You might want to use Exercise 12-3 at this point for students 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.
Chapter 12 - Formal Negotiating
Suggested Answers to Ethics Problems
1. “Try to get a big concession from your opponent by giving away a small, insignificant concession
yourself.” Comment.
This quote actually came from a book on how to negotiate. It is important to realize that buyers
are not stupid. They can generally spot when you are giving away a small insignificant
2. “If your opponent begins to use an unethical tactic, walk out of the room.” Comment on this
statement.
This would certainly show that you do not approve of their actions and that you don’t intend to
negotiate with anyone you can’t trust. On the other hand, this behavior may end the session and
the possibility of the business. Perhaps a better approach would be to follow the suggested steps
Suggested Answers to Questions and Problems
1. Based on the situations described in “From the Buyer’s Seat 12.1,” list three things salespeople
should do to ensure successful negotiations.
2. Suppose you’re a salesperson with a local milk producer and you’re negotiating with a
regional grocer over the number of deliveries you will make to their stores in a given week. Your
maximum is six times a week, your opening is three times a week, and your target is five times a
Chapter 12 - Formal Negotiating
week. After negotiating for some time, the grocer states, “Look, we’re not willing to accept
anything less than 14 times a week.” What do you do now?
3. Assume you’re a salesperson who is known for your excellent negotiating skills. You’re 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 three months to set up this meeting, and your team of five,
including your vice president, is assembled and ready to walk into the meeting. You are your
team’s designated leader. Your cell phone rings, and it’s a relative, telling you that a close loved
one has passed away unexpectedly. With the news comes a desire to just quit everything. What do
you do now?
4. In “Sales Technology 12.1,” you learned how salespeople are using Skype to prepare for
upcoming negotiation sessions. What are some potential problems with using this technology
in this way?
5. According to the text, engaging in friendly conversation to break the ice before getting down to
business is usually a good idea. When would it not be a good idea?
6. Assume you are going to have your fourth and final job interview with Fastenal, a distributor of
fasteners and other construction-related materials, next Friday. Knowledgeable friends have told
you that because you passed the first three interviews, you will be offered the job during the
fourth interview. Also, you know that Fastenal 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).
Chapter 12 - Formal Negotiating
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. Fastenal 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
7. Stephanie Bolen, a salesperson for Nestlé, is preparing for an important negotiation session with
Cub Foods, a large national food 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 get angry, is norganized,and tries to resolve conflict by talking
nonstop and thus wearing down the buyer team with fatigue. Her boss definitely has a win–lose
negotiating philosophy. What should Stephanie do?
This is an extremely difficult and touchy situation. Since Stephanie knew ahead of time the
characteristics of her boss, she should have developed a plan to either exclude him from the
Chapter 12 - Formal Negotiating
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.
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 $15,000.00 each. That’s our bottom line—take it or leave it!
The salesperson could ask that this issue be postponed until later in the agenda while several other
b. Come on, you’ve got to do better than that!
The salesperson should respond by probing the buyer’s team (e.g. “What do you mean by better?
Chapter 12 - Formal Negotiating
c. You know, we’re going to have to get anything we decide here today approved by our
international headquarters before we can sign any kind of a contract.
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
d. One of our buyers can’t make it here for another hour. But let’s go ahead and get started 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
e. Tell you what, we need to see a detailed cost breakdown for each individual item in your
proposal.
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
10. “As a salesperson negotiator, my buyer’s problem becomes my problem.” Comment.
It is true that solving your opponent’s problem is your problem if you are attempting to engage in
Chapter 12 - Formal Negotiating
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.
Case 12-2: Identifying Conflict-Handling Modes
This case requires students to identify a person they know that exhibits the conflict handling style of
“competing.” They are to do the same for 4 other persons, each who exhibits one of the other 4 conflict
handling styles.
Chapter 12 - Formal Negotiating
End of Chapter Role Play
To the Instructor:
This role play is just intended for your students to learn what it is like to negotiate. Don’t expect
them to do extremely well, since they won’t have had time to practice or prepare. The key is that
Chapter 12 - Formal Negotiating
EXERCISE 12-1 NEGOTIATIONS: VIEWS FROM A SALESPERSON AND A BUYER
Visit with a salesperson and a buyer (separately) and learn about how they negotiate formal
agreements. Find out what things are negotiated, how they plan for an upcoming negotiation
meeting, what strategies and tactics they use, and how they gain and give concessions.
