enegotiation

Negotiation

Salespeople are frequently involved in negotiations with customers (and sometimes with people within their own organizations). Negotiation is a special type of interpersonal communication process in which the parties attempt to reach an agreement on a number of different issues. Let's begin with the definition of some negotiation terminology.

1. Issues- are the topics or dimensions under consideration, they are the decision to be made, any issue has 2 or more options. They are the terms of the negotiation. Example: In negotiating the terms of a lease for an apartment, the issues might be: the monthly rent, the amount of the deposit, the length of the lease, the amount of notice to be given, etc.

2. Position- is party's stance on an issue. It is one option. Your position might that you want a 3 month term for your lease, but your landlord wants 12 months (her position).

3. Outcomes- are the results of the negotiation. There are four basic possibilities.

A. You Lose-Customer Wins

B. You Win-Customer Loses

C. You Win-Customer Wins

D. You Lose-Customer Loses

4. Negotiation Strategies

A negotiation is part of a broader category of conflict management strategies. Conflict basically is a disagreement or difference of opinion between two parties. Many academics have settled on five basic strategies of handling conflicts based on dual concern theory: Concern for Self & Concern for Others.

Five Strategies:

1. High concern for self and high concern for other = Integrative or Problem Solving

2. High concern for self and low concern for other = Aggressive or Dominating

3. Low concern for self and high concern for other = Obliging or Accommodating

4. Low concern for self and low concern for other = Avoiding (doesn't apply to negotiations)

5. Moderate levels of self and other = Compromising

Distributive vs. Integrative Bargaining

A. Distributive (positional)-is what we normally think of in the collective bargaining model.

Zero Sum Game- There are winner and losers. One party's gain comes at the other party's expense.

B. Integrative (Problem Solving, Principled)

Integrative bargaining tries to find solutions to problems so that both parties interests are protected in the negotiation. Hence, both parties feels that their interests are protected and both feel like winners.

C. Negotiation Strategies in Sales

Research shows that there are three common negotiation styles used in sales.

1. Aggressive-(Distributive/Hard)-attempt to achieve unilateral concessions which result in winners and losers.

2. Compromising-(Distributive/Soft)-attempt to find a middle ground but does not require parties to reveal their goals and priorities.

3. Problem Solving (Integrative)-focus on finding solutions that meet the requirements of both parties.

The questions is how do you know which style to use. Start by thinking about the problems with distribution (Positional) bargaining.

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Negotiating Win-Win Outcomes (Fisher and Ury 1983)

1. Problems with Negotiating Positions (Distributive)

a. Positional Bargaining Defined
Each side takes a position on each issue, the negotiation is a sequence of positions.

b. The Problems it creates

    1. Locked In to Positions-defend
    2. Ego Identified with position-you need to save face, not be weak
    3. Takes a lot of Time-there is an incentive to drag your feet
    4. Threatens Relationships-the negotiation is a contest of will, people get mad.
    5. Is Worse when there are more people-it is harder to move because you have to justify it to others.

c. Which game to play- Hard or Soft

2. Suggestions/ Alternative to Positional Bargaining

* Separate the People from the Problem

* Focus on Interests not Positions

* Invent Options for Mutual Gain

* Use Objective Criteria

A. Separate the People from the Problem

1. The Substance and the Relationship
There are two important things, the content of the negotiation and the process.

2. Issues & Outcomes/ the Process

a. Deal with Perceptions

                      1. Put Yourself in their shoes
                      2. Make Perceptions Explicit
                    3. Change their Perceptions

b. Deal with Emotions

                      1. Acknowledge Emotions
                      2. Let Them Blow off Steam
                    3. Don't Over React

c. Communication

1. Talk AND LISTEN
2. Acknowledge what's been said

B. Focus on Interests not Positions

* The Librarian

* We tend to think in terms of Positions

We tend to think in terms of these are the issues and this is what I would like to have on each issue.

* The Problem lies in Interests not Positions

We need to think more globally, what is really important to us.

* A Position is something your decide

Your interests cause you to decide

* For every interest there are a # of positions

A position is only one option

* Shared & Conflicting Interests/More Shared

1. What are the underlying interests?

2. Ask Why & Why Not

3. What Do People Really Want?

The most common are basic human needs, security, respect, control, recognition, etc.

4. Be hard on the problem but soft on the People

Tell them your interests, make them legitimate, strongly advocate your interests. Attack the problem, not the other person.

C. Invent Options for Mutual Gain

In distributive bargaining, you see you job as splitting the pie.

Mistakes

1. Search for a single answer-on each issue you see your job as narrowing the gap.

2. Assume a fixed Pie-don't assume a fixed pie. There are multiple issues, who values what. What do you have to have and what don't you have to have. Look for more options that will satisfy both parties interests.

D. Use Objective Criteria

1. Fair Standards

2. Fair Procedures

Win-Win Outcomes are:

* Wise

* Efficient

* Don't Damage the Relationship

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Why don't we see more integrative bargaining?

Conditions-Integrative bargaining requires:

1. Open and Frank exchange of information-disclosure of interests.

2. Sensitivity to other's needs. Caring about their interests.

3. Ability (willingness) to trust. Laying your cards on the table.

4. Flexibility. Motivation and effort.

Context

The character of negotiations depends on the context. From a Dual Concern theory perspective, it would factors that would influence concern for self and concern for others. What are some major conditions that determine the context.

1. Mixed Motive Setting-What is the tendency and strength of motivations to be Cooperative vs Competitive

2. Power

3. Importance of Issues

4. Relationships

1. Discrete versus Relational Exchange (Global)

A. Time Perspective

1. This negotiation is a stand-alone event.

2. This negotiation has a past and a future.

B. Extent of Coordination/Joint Planning

                  How much information needs to be exchanged
                  How much integration has to occur
                  How much dependency is created

C. Level of Trust and Commitment

Group Processes

Most of what we talk about in this course deals with one-on-one selling. The negotiation we will do in class involves group selling. There are a number of additional considerations with groups.

1. The in-group vs out-group negotiation. Before buying and selling teams get together to negotiate, they have already negotiated internally to decide on the strategy. The result of the within-group negotiation can affect the negotiation with the other party.

2. Research shows that a competitive in-group negotiation leads to a more competitive out-group negotiation.

3. Groups in general tend to be more competitive in negotiating than are individuals.

4. Teams tend to be better problem solvers in negotiations than do individuals.