Negotiation – Understanding Movement, Concessions And Bargaining

Asking questions and listening effectively are important skills both in selling and
negotiating. The first phase of negotiation involves both parties agreeing the
background to the negotiation and fishing for the opening demand or offer.

It is often better to present the opening demand or offer in terms of a hypothetical
question, as this allows the negotiator to retreat to his initial position if necessary.

The opening offer will probably be at or just about the level of the negotiator’s
maximum expectation, giving him room to manoeuvre, but not so high that the offer
lacks credibility. Do not attempt to win. at this stage, but hold sufficient back so that
you are able to move, if necessary, at a later stage.

This is a difficult period in the negotiation process and a professional negotiator will
often use silence or other pressure techniques to solicit information from the other
party.

Further Movement and Concessions:

During negotiations, it can be in the interest of each side to keep asking questions
and raising objections. Many excellent negotiators are low reactors who will proceed
very slowly. However, given that the opening position of each party differs, then there has to be movement and concessions if a deal is to be struck.

Negotiators will tend, at first, to discuss extra demands, trying to get the other side
to agree to these without offering anything in return. They will be reluctant to give
information or will defer decisions in order to increase the pressure on the other
person.

When an offer does come, it will often be on the basis of a quotation based on the
minimum quantity at the lowest possible price. In all this, the negotiator is
attempting to dominate the interview, pressing for maximum advantage, and trying
to force the other person to concede on a major issue.

The skilled negotiator will ask the other side for a complete list of all his, or her
requirements, and will not concede on a single issue until he knows the nature of
the whole package. He will then begin to trade concessions, starting with the
smaller, less important aspects of the package.

Negotiators should avoid making one-sided concessions which will severely weaken
their final position and could affect the overall profitability of the deal.

When movement comes, it begins slowly, and then can be very rapid as both parties
sense a deal is on the cards. Movement does tend to be discontinuous with
either party moving and the other holding up the agreement at any one time. This
leads to short periods of deadlock, which can be brought to an end in different
ways.

Some of these are:

o Period of silence. Wait for the other party to speak.

o Agree to a concession. Always trade concessions by saying“If I do this, will you do that”?

o Adjournment to review positions.

o Agree to leave certain issues to one side for later and concentrate on the rest.

Identify areas of common agreement.

o The use of the relationship with the other side to break the deadlock.

Signals to be aware of that could mean the other side wishes movement to take
place could include:

o Trial movement. One side uses words like “What would you say if …?”
or uses hypothetical examples.

o Summarises the position to date and asks “Where do we go from here?”

o One side calls for adjournment.

o Appeals to the other side’s better nature.

o Asks for more information.

o Uses “crowding” techniques to force movement, e.g. aggressive behaviour, sets
deadlines and time limits, threatens use of the competition.

The use of concessions is a vital part of building a profitable relationship for both
parties in the negotiation. Earlier, we discussed the different elements that could
constitute the final deal. The use of concessions enables negotiators to build a
mutually profitable deal that is not one-sided in the other side’s favour i.e. It results in a “win-win” outcome.

And Finally – Bargaining:

When it comes to bargaining try to get the other side to commit themselves first. For
example:

Scenario 1.

Buyer: “I’m willing to reach some sort of deal, but I want a 10% discount”.

Salesperson: “Okay, I’ll agree a 10% discount, but we’ll have to look at a
longer-term agreement”.

Buyer: “Well, thanks for the 10% but the 1 year contract we have already
agreed will have to stand”.

Scenario 2.

Buyer: “I’m willing to reach some sort of deal, but I want a 10% discount”.

Salesperson: “Okay, we may be able to look at our discount structure, but to
do that we’ll need to agree a 2 year contract”.

Buyer: “Okay, well 2 years may be possible, but can we go to the full 10%?”

In the first scenario an offer of 10% was made, but what was asked for was vague.
Responding to a specific demand like this we need to be vague, but positive: “Okay, we may be able to look at our discount structure”. and our counter demand needs to be specific: “But to do that we’ll need to agree a 2 year contract”

Remember, when you bargain, offer vague, ask specific.

Copyright © 2007 Jonathan Farrington. All rights reserved