MKT 353 FINAL

Buyer rejection/ demands and what to do: what to do

-React positively -Start asking questions about non-price issue -Find out why the initial offer was rejected -Prepare counteroffers to include not only price, but also non-price concessions. -DO NOT lower your price right away!!!

Making concessions in negotiations

-DO NOT make concessions too early in the game. --Inexperienced negotiators often make concessions right after the initial offer is rejected. -Find out why the initial offer was rejected before you make a concession. --What part of the initial offer was acceptable and what part was not and why. -Make a counter offer only after you have asked all the questions. -Three aspects of flexibility in concessions are --Reciprocity --Size --Pattern

Planning of Negotiation Closing

-Define the issues -Know your position -Know the other party's position -Know the competition -Know the negotiations limits -Develop strategies and tactics -Plan the negotiation meeting

Preparing for a salary negotiation

-Define the issues -Know your position -Know the other party's position -Know the competition -Know the negotiations limits -Develop strategies and tactics -Plan the negotiation meeting

Hints for Opening Negotiations

-Don't set your initial offer near your final objective. -Give yourself enough time to negotiate. -Don't assume you know what the other party wants. -Do not assume that your aspiration level is high enough. -Never accept the first offer.

Importance of having different closing methods

-Existing relationship -Cultural environments --Both national and organizational -Negotiation styles -Goal of talks -State of the discussions

What to do after salary negotiations

-Get the details about your compensation package in writing. --Especially the extras you negotiated: It should be part of the contract that you sign. --Your compensation package is between you and your employer: It is not something to openly discuss.

Steps in asking for a raise

1) Define the issues 2) Know your position 3) Know the other party's position 4) Know the competition 5) Know the negotiations limits 6) Develop strategies and tactics 7)Plan the negotiation meeting

Common concerns in opening offers

-How much information should you share about your reservation point? -Should you lie about your reservation point? -How do you catch someone who is lying? -How do you determine the reservation point of the other party? -Should you be tough or soft in your negotiations? -How fair should you be? What is fair? -When should you make the final offer?

How to prevent renegotiation

-Lock the other party in --Bond and linkage -Balance the deal --Win-win -Control the negotiation -Build in renegotiation costs

Common Price Negotiation Mistakes

-Not building value. -Starting negotiations with an already-discounted price. -Negotiating more than one price drop per deal. -Not having a "drop dead" date to agree to your price adjustment. -Not having a "walk-away" price point.

Buyer rejection/ demands and what to do: Remember

-Prices determine the total revenue, and, to a large extent, the profitability of a business" -When in a price negotiation, one should focus on the non-price issues as much, if not more, than price issues.

What to do in salary negotiations

-Remain calm and professional --The company does want you to work for them --Be ready to reinforce your positives: What can you do for the company --Present reasons why you deserve the salary you want: While being realistic in your requests -Make sure that you understand everything clearly: Write down what was decided for yourself. -Double check with employer if you feel that you need to. -Remember nothing is final until you sign the contract.

Reasons why companies need to renegotiate

-Renegotiations are more common in the international market place than they are in the domestic market place for a variety of reasons. -It is very difficult to negotiate "static "agreements --Especially internationally -Always a reason --Dimensions of the international business environment --Mechanisms for settling disputes --Involvement of governments --cultural difference

Types of Renegotiation: Preemptive

-Requires --Search for potential problems --Creating a mechanism to manage voluntary change --Establishing a mechanism to settle differences and disputes that threaten the relations between the two parties. -Problems usually are: --Late performance --Defective performance --Non-performance

Skills for Closing Negotiations

-Research Your Target -Go the Extra Mile When ----Doing Your Research -Know what the person wants/ needs? -Be a Mind Reader or Play One -Know Forces that fall into the Category of "Beyond My Control" -Know People Ask for More than They Want -Don't Keep Your Emotions In Check -Know Your Bottom Line

Things to think about before you go into salary negotiation

-Salary negotiations are usually the last stage in the job interview process. -At this point you have the job IF you and the employer can come to an agreement on your compensation package. -Remember to listen to WIIFM, your new employer is. --What's In It For Me -Go in to the negotiation prepared!!! -Look at salary ranges for your job and area. -Look at cost of living in your area. If you are moving, this is especially important -Dress appropriately, this is part of the interview process -Get to know the benefits/bonus package --Most large companies will have something on their intranet site, ask to look at it or ask for information. -Decide on your ideal and BATNA --Take into consideration any benefits and bonuses. ---Look at your personal needs and motivations --Benefits and bonuses can account for half of the total compensation package. ---Be realistic in your expectations.

Pricing Factors

-Type of Buyer -Financial Parameters -General Attractiveness of the Company -Relative Negotiation Skill and Leverage of the parties -Buyer's experience with prior acquisitions -Inherent risk factors and the buyer's tolerance of them -General market economic conditions and outlook.

Rules of Power

1) Seldom does one side have all the power 2) Power may be real or apparent 3) Power exists only to the point at which it is accepted 4) Power relationships can change over time 5) In relationships, the side with the least commitment generally holds the most power.

Planning for a future raise

1) Set the stage for a future review 2) Raise your profile within the department/ organization 3) Find a mentor in the senior management of the company 4) Do a more thorough job of tracking accomplishments/ achievements

Non-verbal Communication

1) Accenting 2) Complementing 3) Substituting 4) Contradicting 5) Regulating

Types of renegotiation: Postdeal

1) After the original agreement expires, the parties decide to renegotiate a new deal. --Similar to the first round of negotiations except the two parties are more familiar with each other. --Many of the concerns from the first round have already been dealt with and need not be addressed again. --Both parties already have investments in the relationship and may be eager to continue where they left off.

Different types of ADR and why use it

1) Arbitration 2) Binding and Non-binding 3) Mediation 4) Negotiation 5) Med-Arb or Arb-Med 6) Mini-Trails

Strategies of E-Negotiations and when to use it: Strategies

1) Be careful not to develop "screen myopia" or tunnel vision 2) Don't become obsessed with winning at all cost, especially when negotiating with several companies at once. 3) Consult others for advice 4) Don't forget the long-term consequences of your actions

Basic steps/ Hints to getting a raise

1) Be ready to prove your worth --You have to be ready to show the company that you have helped in a tangible way. 2) Research the market --Supply and demand impacts what new employees are being paid, and it may be a lot more than you are getting. 3) Time your request carefully --Your boss' mood and the stage in the budget year will influence how successful you are. 3/16/2018 3 Hints for before you go in to negotiate that raise 4) Figure out your value on the open market --Go back to sites such as salary.com and others 5) Negotiate your position, not your paycheck --Stress what you have done for the company and what you can do in the future, rather than just harping on the money. 6) Improve your skills and do your homework Make sure the skills you are working on are the ones that will help you the most 7) Sweep up projects not being done be anyone else --This shows your worth to the company 8) Do not threaten to quit unless you are willing to follow up on that threat.

Haggling Advantages

1) Buyer Affords the opportunity to get a lower price gets a feeling of control over the price --Allows for more social interaction 2) Seller Can size up the customer and change his/her tactics in order to entice an unenthusiastic customer --Allows for price flexibility, can get more customers

Where haggling takes place

1) Buying a house 2) Used car lots 3) Flea markets/Yard sales 4) Online Auctions such as 5) E-Bay, Price Line www.nextag.com 6) The Oriental Rug Market in Manhattan 7) When retailers are not having a good shopping season, they are more willing to haggle, esp. if you pay cash.

Definition of communication and importance in negotiations

1) Communications is --The transmission of information/understanding through the use of common symbols 2) Important because --Negotiations is first and foremost communications --Communication occurs at two levels ----Logical level ----Pragmatic level 3) Going international only make this process more difficult. --Should rely more on visual aids, printed materials, samples and references to facts and figures --Avoid slang and idioms like the plague.

International ADR issues

1) Companies are moving toward ADR because of biased court systems 2) In the US companies are moving toward ADR because of the clogged court system --ADR offers faster resolution of the conflict 3) Arbitration is more likely to provide an even playing field than litigation in most places 4) In China arbitrators are often more qualified than judges. 5) International arbitration is a growth industry 6) International arbitrators must pay attention to detail and process --Acceptance of outcomes by participants is more in tune with how fair they feel the process was rather than the results. 7) Business often feel that in the international market, arbitration is more fair than litigation

BATNA questions for raises

1) Does the company really need you, as opposed to someone with similar qualifications who is eager to take your job? 2) Would it take a long time to train someone to take over your position? 3) Would operations suffer in some tangible way if you were to leave? 4) Would it not be possible for the employer to hire someone else with a resume/skill/ experience set similar to yours at something like the salary you now receive? 5) Do you have very attractive job opportunities elsewhere? 6) Could you easily get another job at a better rate of pay, with comparable working conditions? 7) Would you likely be happier working somewhere else? 8) Could you easily go for an extended period without another job if you had to?

The counteroffer and when you don't get the raise: No Raise

1) Don't be afraid to ask your manager what it would take to get the raise next time you ask. 2) There may be something that the company is looking for. Ask if you can discuss this again in a set period of time. 3) Sometimes the only way to get a significant raise is to switch jobs.

Pros of E-negotiations

1) Eliminates Time Zones and Distance 2) Reduces the Role of Status 3) Erases Gender Biases 4) Increase Personal Power 5) Allows Simultaneous Multi-negotiations 6) Expands One's Audience through New Technologies 7)Inexpensive 8) User-friendly 9) Timely

Strategies of E-Negotiations and when to use it: When to use it

1) Eliminates Time Zones and Distance 2) Reduces the Role of Status Erases Gender Biases 3) Increase Personal Power 4) Allows Simultaneous Multi-negotiations 5) Expands One's Audience through New Technologies

E-Negotiation appropriate situations

1) Exchanging information 2) Clarifying key issues 3) Finalizing specific clauses in an agreement 4) Preparing arrangements for face-to-face negotiations --Making travel bookings --Finalizing the agenda --Selecting location --Agreeing to the number of people 5) Negotiating a repeat order or small transaction

Types of nonverbal behavior

1) Facial expressions 2) Eye Contact 3) Gestures 4) Body movements 5) Posture 6) Physical appearance 7) Space 8) Touch 9) Time Usage

Hints for haggling

1) Hesitate "Hmmm, I don't know..." 2) Find the right person and the right time "Help me spend my money here" 3) Use competition "Your rivals can do it for less." 4) Do not let them take advantage "I feel like I was tricked." 5) Fight for your rights "But you broke your promise."

Core of Power

1) Information and Expertise 2) Control over resources 3) Location in the organization

Advice for Haggling

1) It is always appropriate to haggle It never hurts to ask. 2) From the start, be clear that you are seriously interested, not just curious 3) Be Polite 4) You have more leverage if you are a frequent customer 5) Engage the seller in a conversation first 6) Always haggle with proprietor or decision maker. 7) Be willing to walk away 8) Pay Cash 9) Dress Down 10) Shop late in the month 11) Don't be ashamed 12) Stay cool 13) Ask when it goes on sale 14) Ask if there are any coupons you could use

When and why to use Interpreters/ Interpreters vs. Translators

1) It is better to have an interpreter rather than a translator 2) A translator simply translates the words --An interpreter interprets the word and the meanings behind them --Using the other party's language increases trust, but do not negotiate in the language unless you are fluent --An interpreter can also give you time to think about your answer

Categories of nonverbal behavior

1) Kinesics e.g. gestures, body movement, facial expressions, eye contact 2) Paralanguage (a.k.a. Vocalics) e.g. tone, volume, and sounds that are not words 3) Haptics code Anything involving touching 4) Proxemics Use of space, e.g. personal space, room set up 5) Chronemics Use of time, e.g. being "fashionably late" 6) Physical Appearance e.g. body shape and size, clothing and jewelry 7) Artifacts Objects that are associated with a person e.g. one's desk, car or books

Ways to get power

1) Know various aspects of the business 2) Know the other party 3) Know the competition 4) Develop options and alternatives 5) Set the agenda 6) Negotiate in your own environment 7) Have time to negotiate and set deadlines 8) Listen!!!! 9) Know the bottom line 10) Make decisions and commitments

Types of power

1) Legitimate 2) Expert 3) Referent/charisma 4) Reward 5) Coercion 6) Position 7) Knowledge/ Expertise 8) Character 9) Reward & punishment 10) Behavior style

Ways to improve communication in negotiations

1) Listening 2) Asking questions 3) Reversing roles 4) Ensuring clear 5) understanding

Definition of haggling and difference with negotiations

1) Means 'to bargain, to dicker, or to argue in an attempt to come to terms' 2) A social style associated with bargaining 3) It is NOT negotiation Is very time consuming, requires a certain set of personal values, preconceived notions, attitudes and motivations. 4) Depends upon both verbal and non-verbal communication skills

Types of renegotiation: Extradeal

1) Most emotionally distributing form of renegotiation 2) Essentially results in scrapping original deal and starting over --Can result in a lot of hostility --Lots of implications for both parties --Very hard to reach an agreement in these situations

Advantages of ADR

1) Most of the times it is faster than the traditional court system 2) Having an ADR clause in the contract gives the two parties greater control over how the disputes will be settled 3) Better predictive power as to when and where the dispute resolution will take place. 4) ADR typically costs less than the traditional court system. 5) Greater flexibility in the decisions that can be made 6) ADR proceedings are confidential 7) ADR proceedings tend to be less confrontational than court proceedings. 8) Able to schedule exactly when the ADR proceedings will take place 9) Finality

Reasons why haggling is or is not used

1) Much of the world is not yet "modern" and haggling is a strong part of their traditional culture 2) More risk in purchases in developing countries, the reward is a lower price 3) No return policies In developing countries, many people are illiterate, price tags are meaningless.

Cross-cultural communication barriers

1) Perceptual Bias 2) Stereotyping 3) Halo Effects 4) Selective Perception 5) Projection

Importance of Nonverbal Communication

1) Sixty to seventy percent of communications are nonverbal. --Everything is important in a negotiation setting, esp. nonverbal communication --"The unspoken dialog between two people can never be put right by anything they say" - Dag Hammarskjold- Former UN Secretary-General 1) Negotiator may intentionally use non-verbal cues to throw off the other party --The true decision maker in Japan may dress very casually and sit in the back to be ignored.

Haggling Characteristics

1) Tends to be one-on-one Bargaining between large groups or between firms will gravitate to negotiation. 2) Small shop owners are more likely to bargain than large shop owners 3) Haggling more likely in high-context cultures than in low-context cultures 4) Haggling focuses on the rights of the primary customer: Secondary customer will not step in until the primary customer finishes the transaction or quits. 5) Personal relationships important 6) There is a price range that is acceptable to both the buyer and the seller. 7) The customer has the right to handle and examine the product closely before making an offer. --Consulting with others common 8) Is often an endurance test for both sides

The counteroffer and when you don't get the raise: Unless you are in a union shop, most likely the raises are based primarily on performance.

1) The "Joe has been here longer" excuse can be counteracted by showing your greater worth to the company. 2) Same thing with the "That's the salary attached to the position" excuse. 3) The counteroffer will give you a very good idea of what you are worth. 4) Be very careful with this. 5) Presenting a counteroffer could be perceived as a threat to leave. If you start shopping, be prepared to leave. 6) Remain non-confrontational and focus on finances. Don't bring up all your issues.

Planning for E-Negotiations

1) Think through the full implications of any message you send 2) Don't feel that you have to reply to the message right away --Allow yourself time to prepare a good, well thought out message. 3) Combine e-negotiations with face-to-face discussions --F2F is still preferred by many executives, esp. is the magnitude of the deal justifies it. 3) Do not focus too much on the competitive approach in e-negotiations

Types of renegotiation: Intradeal

1) Usually because one party got in over its head. --Many small and medium sized companies going overseas for the first time are forced to resort to intradeal negotiations. 2) Good idea to have a clause in original contract to allow for renegotiation 3) Used more often in countries where the agreement is considered more of a relationship than a contact. --These countries anticipate that changes will happen and expect them to and expect the contract to change to meet them.

When to use ADR

1) When early resolution is desirable 2) When the disputing parties want to resolve their dispute and maintain their relationship 3) When adverse publicity is likely if the dispute is litigated 4) When fees and costs look like they will exceed the likely recovery 5) When animosity has arisen between the parties 6) When it become apparent that traditional litigation will not provide an appropriate remedy 7) When it appears that cultural differences between parties are an impediment to resolution

Types of renegotiation: Restarting negotiations after reaching no agreement the first time

1) When parties originally agree to end negotiations for a variety of reasons --No progress --Shifting priorities --Conflicting interests

History/ Patterns of ADR use in the US

1) While ADR has existed in various forms for centuries, it did not come into favor in the US until the early twentieth century --Business people felt that it denied them "due process of the law" --Changes in the attitude toward ADR began as a result in the changes in attitudes of legislatures during the turn of the century 2) Around 80-90% of US companies have some experience with ADR --98% of all collective bargaining agreements in the US contain arbitration clauses (Massey 2003) --Mediation is by far the most preferred type of ADR • Federal agencies tend to only use mediation, but support arbitration --Arbitration is the second most preferred method --Other types of ADR are not used often 3) ADR is more likely to be used in certain situations over others (at least in the US) --When it is a question of rights of the employee or company --When it has to do with employment, contract disputes, personal injury, and construction --And in certain industries

Sources of Power

1) While power can be real or perceived, in negotiations the perception of power is more important. 2) How the other side sees you is what counts. 3) Being well prepared will put you in a position of power and get you the optimal outcome.

Buyer rejection/ demands and what to do: Demands

1)Buyers will usually press for concessions on the following topics: -Quantity discounts -Repeat order discounts -Improved packaging and labeling at the same price ---Tight delivery deadlines, again at the same price -Free promotional materials, in their language -Free after-sales service -Replacement parts for normal wear and tear -Free training of their staff -Exclusive market access -Long-term agent agreement -Higher commission rates -Better and longer credit and payment terms

Closing Methods: Incremental

The negotiator proposes an agreement on a particular issue and then proceeds to settle other issues until accord is reached on all pending matters. This method is used when the negotiation process follows an orderly sequence of settling one issue after another

Closing Methods: Alternative

Also known as the "either-or" technique, in this approach, one party makes a final offer consisting of a choice for the other side

Closing Methods: Splitting the Difference

Both parties are close to agreement and the remaining difference is minimal. At this point, it may be preferable to split the difference rather than continue endless discussion on minor issues

Buyer rejection/ demands and what to do: Rejection

Buyer might reject first offer because... -He/she wants to get the upper hand in the negotiations -He/she wants to test the seriousness of the offer -He/she wants to find out how low you are willing to go -He/she is seeking a lower price because the brand is new to the market -He/she is not interested because the product does not meet his/her needs.

Starting high or low in negotiations

It is more effective to start negotiations with a higher price because the point of negotiating is to decrease the price. Starting negotiations with an already discounted price is a big mistake

Closing Methods: Linkage

Linking a requested concession to another concession in return. Linkage is usually most effective when both sides have already agreed on the outstanding issues and need to settle remaining ones prior to reaching concessions

Differences between salary and raise negotiations

Raise negotiation you can use your experience and stuff you've done whereas a salary you're starting at nothing

Categories of influence in negotiations

Reciprocity Consistency Social Proof Liking Authority Scarcity

Closing Methods: Concession

This method is characterized by the negotiator keeping a few concessions in reserve until the end of the talks encourage the other party to come to an agreement. It is particularly effective in situations in which concessions are expected as a sign of goodwill before final agreement is given.

Closing Methods: Summarizing

This method requires one negotiator to summarize all of the issues being discussed, to emphasize the concessions made, and to highlight the benefits the other party gains by agreeing to the proposal. As the discussion near the deadline and consensus is reached on all outstanding issues, one party summarizes the points and asks the other party to approve them

Closing Methods: Prompting

Used to obtain immediate agreement by making a final offer with special benefits if the offer is accepted immediately. The purpose of prompting is to overcome

Closing Methods: Assumption

With this method, the negotiator assumes the other side is ready to agree and to proceed with detailed discussions of delivery dates, payment schedules, and so on. Sellers use this method frequently to rush buyers into agreement. It is a useful approach when the initiating party has more than one option to offer the other side