Okay. We're going to jump into a little example here. Again, remember these
examples are helping us to see the most commonly used vocabulary and words to
get us into the context, and give us a little simple example to understand the
situation. So we're going to look at somebody getting ready for a meeting
beforehand. And so here, we have Fred and Jane. And Fred and Jane are going to be
getting ready or planning for a meeting. This is a key to plan beforehand. If you
don't plan, you're not going to be very successful. So let's take a look at how
Fred and Jane approached this. Fred says, "I'm going to ask my boss for a raise
tomorrow." Ok, so there we go. Pretty common, I think everybody wants a raise. I would
like a raise to. "How much you're going to ask for?" Jane inquires. So here, we begin.
What's your goal? Fred says, "Well, the more, the better." Jane responds by pointing out,
"If you want to be persuasive, you need to have an exact amount in mind and then
convince your boss you are worth that amount." Right? There's a really key point.
So here, right here, this, this sentence here from Jane is the key point of what
we're looking at today. If you want to be persuasive, you're going to have to have
a number and attach a value to that number. Fred says, "Okay. I won't give in
until I have at least a 15-percent increase in my compensation. I'll
convince my boss I'm worth it by emphasizing the work I did last month on
that job. I made a big profit for our company." So Fred changes his direction a
little bit by saying I've got a specific goal, fifteen percent, and I'm going to
value that based on last month's project. So here we attach a value. We can judge
our success or failure by that. And we also can convince our boss.
"Hey that value is a good value for you too. You can give me this. I get my value
You get your value." So it's all about that valuation concept, which I like that
idea a lot. Ok. Let's go on here. So let's jump over to a meeting now. So we've got
an actual meeting going on, and here, we see Fred is going to actually talk with
Bill to prepare for another negotiation. Fred says, "We cannot assume the Zeno
products we purchase will be successful in the market." Bill says, Our marketing
department predicts strong demand for this product. The implication is that
Zeno will try to ask for a higher supply price." So here, we have Fred and Bill.
They're planning for a negotiation. This is before the negotiation, not after
the negotiation, not during the negotiation. It's before the negotiation.
The key point, what is it they're talking about? They're talking about the company
hey're going to bargain with, they're going to negotiation with. And what is
that company's name? Zeno. And what's the key point they're coming to? They're
trying to figure out what's the value, what's the value? We want to buy a
product from Zeno company. How much should we pay? How much should we give in
to what their demands are? and how much should we demand? Well, this depends,
doesn't it? If we buy the product from Zeno, and we try to sell it in the market,
and it does not sell well, then, we should pay less. Shouldn't we? We should take
less risk, right? If the product we buy from Zeno sells very well, and we make
profit on that, increases our sales volume, then, we should be willing to pay
more, and we should be willing, maybe, to take more risk upfront because we have
more pay off in the back end. So, here, we really need to plan ahead. And that's
what they're doing Fred says, "Forecasts are not always reliable. We don't want to
pay too high and sell low." Bill says, "This is
going to be a tough negotiation." And Fred says, "Before the negotiation, we need to
be clear on what our goals are." And Bill says, "Any price over 120 USD we will have
to reject." So here, we come into a very clear goal. And I think that's the goal
of this class is to learn about those goals. 120 USD is our goal. Ok, let's
continue on with this talk here. Fred says, "That is our upper limit. I
understand, but we also need to emphasize production cannot be delayed." So we've
got kind of a main idea here. 120 is the price, USD. And we also need to talk about
the timing of the delivery or the production cannot be too late. "What is
the latest date we can accept?" Bill asked. What is our latest date for that
delivery. And Fred says, 'We cannot postpone christmas sales." Because
christmas is a fixed date, very big retailing time. So if we want to get the
product into the market in time for christmas, we're going to have to take
delivery earlier than that. And "Supplies", Fred says, "must be delivered at least two
months before Christmas season." At least two months, before Christmas season. Bill
says, "Give me an exact date." So here I really like this. We're making the goals
clearer and clearer, trying to be more and more specific, less and less general.
And Fred says, "We need to take delivery of the goods before september first." So
now, we're very specific.
Bill says, "We should consider stressing a price of 100 USD. If Zeno threatens to
withdraw, we can suggest they guarantee delivery in time in return for a price
of 110." Now remember the goal was 120. Now, we're going to go lower on the price
100, why? Because then we can give up a little bit. What will we give up? Give up
ten dollars, up to 110. And that way pressure zeno to make sure we get
delivery on time. Fred says, "They may accept that if we are persuasive about
our ability to increase their sales with the implication we would cooperate with them
in the future." So if we can convince them, persuasive, they may do that, but we also
maybe have to guarantee future purchases, a future relationship, so that they feel
we'll sell more for them. Right? This is where things get interesting. It's never
the case that a business works totally on its own. If I'm buying from Zeno, they
want to sell to me. They want me to succeed to sell more. If I sell more, I
make more. They make more, so in this way, we create a relationship. But it's not
just that simple because they don't know that i'll sell more. It's a risk for them.
I don't know that their product will sell well. It's a risk for me, so everyone
is carefully measuring their risk, and they're trying to get the biggest payoff
upfront. And that's really what Fred and Bill here are talking about. They're
trying to see how can we minimize our risk, maximize our payoff upfront, and
maybe create a long-term payoff. Bill says, "Of course, but we must test their
lowest price.." We must test their lowest price. Try to get the lowest... "Let's put
off the delivery issue and first deal with the price issue. After we test their
price, we can submit the delivery proposal." Okay, so now we've gotten very
specific. What are our price targets? 120. We want to start out at one. We're
willing to jump up to 110, and that way, we can pressure for the
delivery time, for the production time. However, which one should come first? what
should come second? First should be price. Let's talk about price first.
If we talk about price, we can test how willing are they to go down on that
price. Then, we get a feeling for that, we can bring up the delivery. So, maybe, we
can push on price. If we get the low price, if we get 100, hey, great! That's
good for us. Our target was 120. Maybe we get 110. If they're very hard to push to
100, they resist. Then, maybe we are willing to pay more, because remember our
targets 120. But we can give up something, like 10 more dollars, and then get back
on the delivery. Use the delivery. So we don't want to give everything up front.
We want to, step by step, give up a little bit, and test a little bit. So where do we
begin? We're going to begin by testing on their price?
Fred says, That all sounds good, but we need a fallback plan." I like that idea of
a fallback plan. So what we've done here is we've gotten our targets. We've gotten
our order. Now, we need to say, hey what happens if things don't go right? what do
we do? And bill says, "Yeah; I've seen Zeno people negotiate before, and they are
tough." So here's a really key point. Who is your counterpart in the negotiation?
Who are you negotiating with? who's on the other side? If you know something
about them, if you have some experience, or you can talk to someone with some
experience, this may help you to understand. This will help you to get
ready for the negotiation beforehand. And Bill says he's seen the xeno company
negotiators and they can be very tough, meaning they hold on. They don't give up
any dollars easily. They don't give up any any concessions easily. And
Fred says, "Zeno negotiators often renegotiate points that were
already settled." That's a strategy. We're going to learn about the strategy later,
but this strategy of renegotiating means up front, they may say, "Yeah, yeah, okay we
agree." But then later, they say, "You know, we don't want to do that. We're gonna
have to change." So maybe at the beginning they say, 'Yeah we'll give you 110." But
then later they say, "110, we can't give you 110. I talked to my boss. He refuses."
So this is renegotiate. so this makes it hard. Because when you try to test their
price, they say yes, but then later they say no. That's a kind of strategy. In this
case, we just call it renegotiating. Bill says, "Tomorrow we will have a meeting
with all the people in the negotiation team. At that time, we can brainstorm and
come up with a good fallback plan." So in this case, we've got a really good
example, here, two examples. One example is very simple and straightforward, and that
example is I want to negotiate for a raise. How do you begin? Target. What's
your next step? Value. How is this raise related to the value you get? so I can
convince you what you're paying me is a good value for you. Good for you and, of
course, good for me, but equally good for everybody. You're getting something.
That's my goal. Whether or not it's true, is a totally different matter. We're
not talking about what's true. We're not talking about what's right or wrong.
We're just talking about how to get the other side to give the concessions you
need, which in this case was pay, very simple. The next example, a little bit
more complicated, but very common: getting ready for a business negotiation. In this
case, it may be complicated. It involves prices, product, shipping quality. How do
you get ready beforehand? Set your goals clearly.
you