MKTG 4390 Exam 3 Butler

Limited Authority

"Sorry, but we don't have the authority to make that decision here today." Solution: Verify the truth of that statement. If true, get the person with authority to the table.

Red Herring

(bringing up a minor point first to distract the other side from considering the main issue): "We're going to have to have Saturday delivery in our agreement." Solution: Ask to set it aside temporarily until more substantive issues are dealt with.

Trial Balloons

(floating an idea without really offering it as a concession or agreement; the goal is just to get information): "So have you considered going to a deferred shipping plan?" Solution: Don't just supply the information; ask "Well, if we did, what would your offer be?"

Dealing with win-lose negotiators

- Good guy-bad guy routine - Lowballing - Nibbling - Emotional responses - Budget limitation tactic - Browbeating

Generating Repeat Orders

-Be present at buying time -Help to service the product -Provide expert guidance - Offer customers non-selling-related ideas

Relational Partnerships

-Buyer and seller have a close personal relationship -Marked by open, and honest communication -Partners trust each other and worry about small details -Not necessarily strategic but provides flexibility

Traditional emphasis on getting the sale no matter what effects:

-Damages trust -Insults the buyer's intelligence -Raises the possibility of losing commitment

Items Negotiated Between Buyers and Sellers

-Inventory levels the buyer must maintain -Inventory levels the seller must keep on hand to be able to restock the buyer quickly -Details about the design of the product or service -Web page development -How the product will be manufactured -Display allowances for resellers

Strategic Partnerships

-Long-term business relationships -Partners make significant investments to improve the profitability of both parties -Partners have gone beyond trusting each other -Partnerships get a strategic advantage -Created for uncovering and exploiting joint opportunities

How to Successfully Obtain Commitment

-Maintain a positive attitude -Let the customer set the pace -Be assertive, not aggressive

Cash Discounts

-Most US sales are made on a credit basis -Price discount given for early payment, and is the last discount taken -Important in capital equipment sales -Easy credit terms help salespeople close sales -Common Discounts: --2/10, n/30: deducting 2 percent from the bill if paid within 10 days of invoice, otherwise paying full amount in 30 days -- 2/10, EOM discount: 10 day period begins at the end of the month, and if isn't paid by the 10th of the next month must be paid in full

Responsibilities After Commitment is Obtained

-No Surprises -Confirm the customer's choice -Get the signature -Show appreciation -Cultivate for future calls -Review the actions to be taken

Negotiation vs. Non-Negotiation Selling

-Regular sales call are constrained i.e. not open to change or negotiation -Negotiations differ from regular sales calls ---More intensive planning ---Larger number of people from the selling firm -Formal negotiations involve very large or important prospective buyers

Importance of Securing Commitment

-Tells the salesperson what to do next -Defines the status of the client -Results in financial rewards for the salesperson -Failing to obtain commitment results in: taking longer to obtain sale, affecting the requirements of the prospect

Poor negotiators

-fear conflict and are closed minded, unorganized, and dishonest -downright belligerent

Traits necessary to successfully negotiate

-patience and endurance -willingness to take risks and the ability to tolerate ambiguity

Factors affecting successful negotiation

-situation -parties involved -cultural differences

Trial Order

A small order placed by a buyer to see if the product will work Based on the idea that once a product taken home, one might not want to give it up Suggestions to us: -Set a specific time for training and make sure the user is comfortable with the product -Document that the decision criteria are concrete and that the trial is needed to achieve those criteria -Agree on when a decision will be made

Minimum Position

Absolute minimum level of acceptance. -should be established by the team

Follow-Up

Activity that a salesperson performs after commitment is achieved.

Team members can be categorized as:

Analyticals Amiables Expressives Drivers

Compromising Mode

Applies to people in the middle, in terms of cooperativeness and assertiveness. -Attempts to arrive at a win-win solution

Direct Request Method

Asking the buyer for commitment

Complaceny

Assuming that the business is yours and will always be yours. Failing to continue to work hard to keep the business like you initially did at the beginning of the relationship

Browbeating

Attempt to alter the selling team's enthusiasm and self-respect.

Electronic Data Interchange

Automatic placement of orders by having one's computers talk to customers' computers Used during exploration

Electronic Data Interchange (EDI)

Automatic placement of orders by having one's computers talk to customers' computers .

Negotiation

Bargaining process through which buyers and sellers resolve areas of conflict and arrive at agreements.

Win-Win Relationship

Both parties are concerned about each other's welfare.

Free on Board Destination shipping costs

Buyer takes responsibility for the goods once they reach the buyer's location, the seller pays the freight

Customer Satisfaction

Buyer's expectations are met and needs are fulfilled.

Ambush Negotiating (Sneak Attack)

Buyers engaging in a win-lose tactic of negotiating when the other party does not expect it. Occurs: -prior to the negotiation meeting -during installation of the new product

Follow up

Call to thank customer and check whether product is working properly Stay in touch to monitor changing needs Can be carried out regularly by: -Personal visit - Most productive -Telephone - Efficient -E-mail and real mail Creates a functional relationship

Soft Savings to gain preferred supplier status

Commercial - Minority-owned vendors Global initiatives - Access to new markets Improve process - Safety and environmental procedures Quality and innovation - Training Supply chain management - Bar coding, reduces shipment processing time

Closing

Common term for obtaining commitment, which usually refers only to asking for the buyer's business.

Relationship Marketing

Companies' attempts to develop stronger relationships with their customers -accomplished through building loyalty -creating the type of relationship that best suits the customer's needs

Conflict-Handling Behavior Modes

Competing Accommodating Avoiding Compromising Collaborating

Requirements

Conditions that must be satisfied before a purchase can take place. Ex: -We need a cash discount for a supply order like this. -We need to get this in weekly shipments.

Preliminaries

Conversations to break the ice and ensure a comfortable environment.

Upgrading (upselling)

Convincing the customer to use a higher-quality product or newer product

Handling Customer Complaints

Critical to maintain goodwill Customers can be disappointed due to following -Product performs poorly -Product is being used improperly -Terms of the sales contract were not met Personal visit is an effective method Encourage buyers to state their grievances

Scope of Change

Degree to which the change affects the organization.

What to do when the buyer turns to win-lose strategies

Detach yourself Acknowledge their position and then respond Build them a bridge Warn, but don't threaten

Adaptive Planning

Development of alternative paths to the same goal.

Effective Methods of Obtaining Commitment

Direct Request Method Benefit Summary Method Balance Sheet Method Probing Method Trial Offers

Attitudinal Loyalty

Emotional attachment to a brand, company, or salesperson.

Tools for Expansion

Generating repeat orders Upgrading (upsetting) Full-line selling Cross-selling

Balance Sheet Method

Helping prospects who cannot make a decision, even when the reason for their behavior is not apparent

Nonverbal Cues

Important indicators of the customer's state of mind and are evident through: -Facial expressions -Actions

Other Win-Lose Tactics

Limited Authority Red Herring Trial Balloons Total silence by the buyer after you make an offer

Factors Responsible for Dissolution

Limited personal relationships - Advocate a 3-by-3 strategy (make sure you have three personal relationships at three levels of the organization (at least nine relationships total)) Failure to monitor competitor's actions or the industry Falling into complacency

Agenda

Listing of what will be discussed and in what sequence.

Functional Relationships

Long-term market exchanges characterized by behavioral loyalty.

Brainstorming Session

Meeting in which people are allowed to creatively explore various methods of achieving goals.

Budget Limitation Tactic (Budget Bogey)

Negotiation strategy in which one side claims that the budget does not allow for the solution proposed. -Sometimes true, but sometimes fabricated to get a lower cost -a ploy to try to get a lower price -best defense is to do homework before going into the negotiation session

Good Guy-Bad Guy Routine

Negotiation strategy in which one team member acts as the "good guy" while another team member acts as the "bad guy." The goal of the strategy is to have the opposing team accept the good guy's proposal to avoid the consequences of the bad guy's proposal. -Works on the hurt and rescue principle

Win-Win Negotiating

Negotiator attempts to secure an agreement that satisfies both parties.

Win-Lose Negotiating

Negotiator attempts to win all the important concessions and thus triumph over the opponent. -resembles almost every competitive sport

Closing Cues (Buying Signals)

Nonverbal Cues given by the buyer that indicates the buyer may be ready to commit.

Lowballing

Occurs when one party intentionally underestimates or understates a cost. -Car dealers do it often. Claim the price is 25,000, but when purchase is made, it ends up being 29,000 due to "extra costs"

Concession

One of the involved parties agrees to change a position in some fashion Guidelines to make concessions effective -Never make concessions unless: --All of the buyer's demands and opening position are known --One is given in return and do not feel guilty about receiving a concession -Concessions should gradually decrease in size

Preferred Supplier

One who is assured of a large percentage of the buyer's business.

Hard Savings to gain preferred supplier status

Payment terms - Cash discounts Improve process - Cycle time reduction (shorter order/delivery cycles) Vendor inventory management Quality and innovation Supply chain management - Optimum packaging that reduces shipping costs

Champions (Internal Salespeople)

Person who works for the buying firm in the areas most affected by the proposed change and works with the salesperson for the success of the proposal.

Behavioral Loyalty

Purchase of the same product from the same vendor over time.

Cummulative Discount

Quantity Discount for purchases over a period of time; the buyer is allowed to add up all the purchases to determine the total quantity and the total quantity discount. Ex: company might offer a 10% discount on all purchases over a one-year period, provided the customer purchases more than 5 fax machines in that year.

Trial Close

Questions the salesperson asks to take the pulse of the situation throughout a presentation.

Rate of Change

Refers to how quickly the change is made.

Avoiding Mode

Refers to individuals who do not attempt to fulfill their own needs or the needs of others. -Do not strive for a win-win agreement or any agreement

Benefit Statements

Reflect strong feelings in support of the purchase

Types of win-win relationships

Relational Partnerships Strategic Partnerships

Benefit Summary Method

Reminding the buyer of the agreed-on benefits of the proposal

Accomodating Mode

Resolving conflict by being unassertive and highly cooperative. When using this approach, people often neglect their own needs and desires to satisfy the concerns of the other party.

Collaborating Mode

Resolving conflict by seeking to maximize the satisfaction of both parties and hence truly reach a win-win solution. -individuals who are both assertive and cooperative

Competing Mode

Resolving conflict in an assertive and noncooperative manner. -pursuing own goals and objectives at the expense of the other party

Assertive

Sales manner that stresses responding to customer needs while being self-confident and positive.

Agressiveness

Sales style that controls the sales interaction but often does not gain commitment because it ignores the customers's needs and fails to probe for information.

Change Agent

Salesperson seeking change for both organizations to achieve a partnering relationship -Position the change i.e. examine specific needs and wants -Determine resources required to secure the buyer's commitment -Develop a time-based strategy

Negotiation Jujitsu

Salesperson steps away from the opponent's attack. -directs the opponent back to the issues being discussed -goal: to calm the buyer while helping the seller maintain control of her own emotions

Cross-selling

Selling additional products that are not directly associated with the initial products Less expensive than acquiring a new client

Full-line selling

Selling an entire line of associated products Make the buyer realize the synergy of owning all the products in a line

Submissiveness

Selling style of salespeople who are often excellent socializers and like to spend a lot of time talking about nonbusiness activities. These people are usually reluctant to attempt to obtain commitment.

Presenting Price

Set the price for buyer after studying: -competitor's offerings -value delivered by the product or service -cost of providing the product or service Should be discussed at the end

Buyer Questions

Signal readiness to buy if the question concerns implementing the purchase and points toward when purchase is implemented

Quantity Discounts

Single-order discount and Cumulative discount

Nibbling

Small extra, or add-on, the buyer requests after the deal has been closed. -variation of lowballing -asking for a discount from the salesperson, usually works

Solo Exchanges and Functional Relationships

Solo Exchanges: Both the buyer and the seller pursue their own self-interests because they do not plan on doing business together again Functional Relationships: are long-term market exchanges characterized by behavioral loyalty; the buyer purchases the same product out of habit or routine. Buyers in this type of relationship tend to have the same orientation as they do in solo exchanges, but the previous purchase influences the next purchase.

Free on Board (FOB) shipping costs

The buyer assumes responsibility for both the goods and the costs of shipping them

Customer Lifetime Value (CLV)

The estimated value of the customer over the lifetime of the relationship between the organization and the customer.

Opening Position

The initial proposal of a negotiating session. Should: -reflect higher expectations than the target position to allow concessions -be supported with solid information

Buyer's Remorse (Postpurchase Dissonance)

The insecurity a buyer feels about whether the choice was a wise one.

Free on Board Installed shipping costs

Title and responsibility do not transfer until the equipment is installed and operating properly

Market Exchanges

Transaction between a buyer and a seller in which each party is concerned only about its own benefit. Types: solo exchanges and functional relationships

Types of Relationships with suppliers

Transactional: solo exchange; market exchange Coordinative: may involve an annual contract; market exchange Selective partnership: suppliers are integrated into product development processes Strategic Partnership:integration of departments across the two companies

Emotional Outburst Tactic

Used by buyers to make seller feel uncomfortable ,so as give in to their demands. Ex: "I can't believe it's come to this. You know we can't afford that price. And we've been good partners all these years. I don't know what to say."

Probing Method

Using a series of probing questions to discover the reason for the hesitation

Corporate Culture

Values and beliefs held by senior management. -Shapes attitudes and actions of employees -Influences the development of policies and programs -Culture of the organizations should fit each other

Target Position

What a company hopes to achieve at the negotiation session.

Suggestions for dealing with rejection

maintain proper perspective, recommend other sources, good manners are important

Buyer's Remorse (Post purchase Dissonance)

the insecurity a buyer feels about whether the choice was a wise one