Chapter 6: Negotiation Tactics Flashcards
What are 5 distributive strategy tactics?
- Focus on other party’s BATNA and reservation value
- Avoid making unilateral concessions
- Be comfortable with silence
- Label your concessions
- Make contingent concessions
Why is it important to ‘focus on the other party’s BATNA and reservation value’ (2)
- This way you can estimate the ZOPA
- Negotiators who focus on the other party’s BATNA tend to aim higher and capture more value
Why is it important to ‘avoid making unilateral concessions’ (2)
- Once each party has made an initial order avoid the trap of making another concession before you have received one from the other party
- If the other party does not offer a concession it could be time to bow out of the negotiation and exercise your BATNA
Why is it important to ‘be comfortable with silence’ (3)
- Negotiators are often inclined to make undue concessions or retract their offer when their counterpart seems to be taking too long to respond
- Keep in mind that silence may be strategic and designed to make you uncomfortable
- When you speak when it’s their turn to do so “you will be paying by the word” (negotiation genius)
Why is it important to ‘label your concessions’ (3)
- you might feel the need to reciprocate gifts and concessions received and mirror their behavior
- to escape this feeling of obligation you can undervalue or overlook someone’s concessions
- Draw attention to the concession by ‘labeling’ them, clarify how much it costs you
Why is it important to make contingent concessions (3)
- To further reduce the ambiguity of your concessions, you might explicitly tie your concession to specific actions by the other party
- Make it clear that you will only make your concession if the other party meets the expectations
- Contingent concessions can not only secure commitments from your counterpart but also broaden the number of issues up for discussion.
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Why should you “collect all possible information about the other party” (5)
- In order to identify value generation
- To see who can sell to that customer in what conditions
- To see how important your product is to the other party
- To see what importance your product has in the cost mix
- To estimate why you meet here and now
What should you keep in mind when you think of “Always keep a mindset of preserving our value” (3)
- Do not think that the other party is better or more valuable than you or your product
- Talk more about the product, and less about the price
- The more your product is valued, the more the client respects you, do not devalue your product by making concessions
What are issues that can be negotiated? (7)
- Marketing contributions
- Volume discounts
- Requested delivery time
- Storage in consignment
- What real consumption will you have of my product
- Exclusivity./ committed volume
- How long should we keep that price
In which 2 situations should you assess the price within the negotiation?
- Are the prices right, if all our bids turn into sales
- Are the prices right when no sales are done
Why should you set goals in advance for each stage of the negotiation? (3)
- They help to know where we should direct our efforts
- Update as we exchange information
- The objective must consider both parties
Why is it important to ‘try and delay your decision a certain time’ (4)
- We tend to agree to worse conditions when in front of the customer
- Using the information collected in the meeting
- A little time helps to consider all factors best
- A high delegation of price or other commercial conditions to the frontline people, doesn’t usually work out.
