Author: Manuel Blunier
It is a fact that in all wealthy European countries (UNDP, Human Development Index, 2011) price negotiations are not traditionally prevalent. Surprisingly enough, that most multinational trading company are situated exactly in these regions of Europe.
In my personal sales career most negotiations have led to a price reduction but rarely to a price increase. However, I hear again and again how important it is to have well trained negotiation skills. The question must be: what characterizes a successful negotiation?
You would be surprised how many books are available on Amazon about negotiation skills. I found 20’702 different titles! I personally read dozens of them and all claim to know the only truth. However negotiation techniques are not a real science. This means that all these rules and tricks which might lead to a beneficial agreement are just personal opinions of the authors. Wouldn’t it be more effective just to come to an agreement instead of negotiating?
In international sales price negotiations are part of the sales process and cannot be avoided. If you do not negotiate you simply will not get any business. But more important than negotiations skills are clearly defined goals. You must therefore prepare yourself properly in order to avoid an improvised bargaining. This is the key to every negotiation success in sales.
Furthermore, when preparing a meeting we should not only think about our positions but also need to ask ourselves questions about the other person. What is important to them in making their decision? Where will they seek to negotiate? Which combination of factors is likely to be important: cost, quantities, deliveries (How to negotiate effectively, David Oliver, 2003) etc.?
This brings us to the conclusions that good negotiations are an interaction of well-trained negotiation skills, clear defined goals and last but not least to know the demands of our negotiation partner.
Sure, agree with you on the 3 mentioned points that are helping when it comes to negotiations. And yes, preparation is key. But let’s not forget the cultural background of the negotiation partner. It could tell you more about his goals and actions/reactions than any book talking about negociation techniques. Don’ t you think?
I would not rate the cultural background that high.
A deep knowledge of your negotation partner’s business is key. When you’re at the point by knowing the partners business from inside (for example the margin, profit targets by checking annual fiscal reports,…) you will be able to understand how far your negotiation partner will be able to go and therefore meet the expectations of both parties.
And being charming helps as well!…the author of this blog being the best example for it.
Since setting a higher price in order to avoid losing money during negotiations is probably no option, I think that all of you are right. It’s the right mixture of all the ingredients that make negotiations successful. You need to know the business, the cultural background as well as the business environment of your business partner, have excellent negotiation skills and keep in mind what goals you have set.
Hence, to bring together all this information you have to prepare yourself properly.