Exhibit 13.4 Bargaining tactics Acceptable bargaining tactics Tactic Description/ Purpose When To Use When Used Against You, Your Best Response Auction Create an auction of competitive bids for a scarce resource – either a buyer for an advertising budget or a seller for a product. When you have strong leverage – inventory or a product in high demand. Create a fear of losing in the side. Focus on your HLE, never go lower than your and signal to the other side that you will walk away and not get into a competitive auction. Pick only the best, most desirable elements of a product or package. To pick apart a package offering; to negotiate for the most desirable individual elements separately, not as a whole. When a buyer tries to you, show high prices for the individual units and a lower price for the overall package. Crunch Respond to an offer by saying, “It’s not good enough,” but do not give a number. Objective is to get the other side to respond with a number that is than you hoped for because of the other side’s fear of losing. In response to a low offer. The rule is, “Whoever gives a number first, loses.” Don’t give a number. If a buyer says, “You’re too high,” without giving a number, you respond with, “What number do you have in mind?” Flinch A sudden, physical reaction In response to a lowball offer. Remain calm. Do away,
that tries to elicit a feeling of guilt, like, “You’ve got to be kidding!” response to an offer. Only use occasionally. not The other side is trying to get a rise, to shock you. Do not respond. Good guy/bad guy (Good cop/bad cop) The bad guy makes highly unreasonable demands and threats; the good guy’s low requests seem reasonable in contract principle at work. In major, complex negotiations. Use your lawyers or management as bad guys (that is what they get paid for); as a salesperson, you be the good guy and offer a reasonable solution. Make the right comparison. Don’t compare the good guy’s offer to the bad guy’s offer; compare the good guy’s offer to your HLE. Keep focused on your HLE. Limited authority To indicate that a negotiator has limited authority, cannot make a final decision, and has to check with a higher authority – a hint of a pullback in order to gain further concessions. Use to stall for time, to think over an offer, and craft a counteroffer, even if you have the final authority. Agree to a break in the negotiating process while the other side checks with their higher authority and say, ”That’s a good idea. I have to check with my boss, too, because I may have gone too far.” Hint at a pullback. Nibble A negotiator will indicate a strong readiness to settle, but will ask for just one more very small concession…then another, then another. In the last stages of negotiations after many agreements and the other side is overcommitted, nibble at the Stop the nibbling with a close. “I can’t give you an additional 2% discount,
Silence To respond to an offer with silence. Silence, like a crunch, is an attempt to get the other side to respond with concessions – bigger ones than you might have asked for. The rule is: The first one to talk loses. Respond to silence with silence. Split the difference To to settle at the mid-point. To get a quick settlement when the two sides are not far apart. Split the difference sounds like a fair offer, even if it is not. Often buyers will make a lowball offer and then offer to split the difference. Never split the difference when it is in the other side’s favor or is not close to your HLE. Have patience and keep negotiating. An ultimatum and refusal to continue negotiations. Forces the side to make a yes/no decision. To signal a offer; often used with the phrase, “A fair, final offer. Take it or leave it.” Leave it unless it is above your walk-away, which it usually is not. Often a take-it-or leave-it offer is a bluff, so always call the bluff. Issues, terms, conditions, and added value that are part of an initial offer but are intended as concessions later in a negotiation. Always have throw-aways in complex negotiations. Throw-aways should be issues, terms, conditions, and added value that are of Do not fall into reciprocity traps and give away something important to you when the other side makes
relatively low importance – elements that you would normally give up. By including them in your initial offer, you set them up as concessions later to get the other side to give you concessions you want – the reciprocity principle at work. a concession of minor importance to you. Always work on the fairness principle – trade concessions of similar value or importance. Unacceptable Bargaining Tactics Tactic Description/ Purpose When To Use When Used Against You, Your Best Response Big bait Make a large initial offer in an attempt to find your bottom and walk-aways. because it is a hollow bluff or a lie. Users of big bait have no intention of making good on their initial, implied promise, but are just looking for the other side’s rock bottom. Recognize the tactic and name it. Call the other side’s bluff. Say, “This sounds like a big bait to me. Are you willing to sign a firm, contract for the full amount?” Blackmail A threat meant to instill fear of loss. Usually a bluff. Never, because it is unethical. Recognize the tactic and name it. Call the bluff. Never give in, because it will make
you vulnerable to future blackmail and larger and larger demands. Blackmail will continue regardless of what the other side promises. By giving in, you train the other side to blackmail you. Change of pace Bring someone close to an agreement with a false promise, then back off, then promise again and to get the other side so frustrated it will say yes to anything just to get closure. Never, because it is unethical. Recognize the tactic and name it. Have patience. Remain confident in the fairness of your proposal and in your HLE. Never respond with anger. Deliver garbage Insult the other side, its product, its management, and everything to instill a fear of losing on the other side. Lowers confidence and expectations. Never, because it is too competitive and destroys relationships. Do not catch the garbage. Pay no attention to it. Do not respond, and most important, do not lower your confidence or HLE. Smile and remain silent.
the negotiating. A threat is like blackmail, often a bluff. fair negotiations. never give in because it will lead to more, larger threats. Walk-out To walk out of a negotiation before an agreement is reached; to refuse to negotiate further. Usually accompanied with an accusation of not being fair. Used to instill fear of losing. Invariably a bluff. Never, because it destroys trust and prolongs negotiations unnecessarily. Recognize the tactic and name it. Call the Let the other side walk out. Do not respond emotionally. The other side would not resort to this tactic if it did not want a deal; therefore, increase your HLE after a with confidence. There are several rules suggested in the bargaining tactics in Exhibit 13.4. Rule #14: Never split the difference when it is in the other side’s favor or is not close to your HLE; have patience and continue negotiating. Rule #15: When faced with unacceptable and unethical bargaining tactics, name them and tell the other side the names so the other side knows you are not fooled. Rule #16: Never respond emotionally; respond calmly, politely, and firmly. After you have done the following: (1) assessed the situation, (2) assessed both side’s negotiating styles, (3) identified interests, set objectives, and determined your targets, (4) assessed both side’s leverage, (5) estimated the ballpark and committed to
than price, buyers will generally pay more for guarantees. When you get agreement on a deal, compliment them on being such good, smart negotiators. Got a discount. To people who crave discounts, the actual price is not as important as the perception that they got a discount. Goods on sale appeal to these people; they will buy more than they need because they cannot resist a “50 percent discount.” Going in to a negotiation, raise the price on your initial offer by 20 percent, negotiate, and then as a clincher close, offer a 20 percent discount. When you make the sale, compliment them on being such a good negotiator and being able to get such a large discount. Got something else free thrown in. There are some people who love to get something for nothing, something free. They will pass up a “50 percent discount” offer, often feeling that is damaged or undesirable goods, and snap up an offer of “buy one and get one free.” Same price, different frame. With people who you have identified as those who like something else free thrown in, like with those who crave discounts, planning is the key. During negotiations, do not concede on price, even though you are willing to come down 15 percent but as a clincher close,