Negotiation is an important sales skill that involves getting what you want from another person through discussion. It is important for salespeople to negotiate with customers to overcome objections, indifference, skepticism or lack of acceptance towards products and services. Effective negotiation requires preparation, understanding customer needs, illustrating benefits, being patient, listening, making adjustments where possible, and thanking the customer for their time whether a sale is made or not. Common mistakes include lack of preparation, intimidating behavior, impatience, arguing instead of influencing, and not listening.

1. Pricing in a competitive world
Stuart Hartley

2. Price is a key marketing tool
−It is the odd one out in the marketing mix
−It’s a revenue earner rather than a cost
−Setting prices is therefore an essential skill
−Too higher price might lead to lost sales
−Too lower price losing margin
−Price however should not be set in isolation
−It should be set with other aspects of the marketing mix to achieve overall superior customer
value

3. Cost and value
− Knowing the difference between cost and value is important
The cost of your product or service is the amount you spend to produce or deliver it
The price is your financial reward for providing the product or service
The value is what your customers believe the product or service is worth

4. Creating value

5. Price and Quality relationship
• Price often sends quality cues to customers
High
High
Low
Low Price
Quality

6. Price and Quality relationship
High
High
Low
Low Price
Quality
Aldi
Asda
Tesco
Sainsbury
M&S
Waitrose

7. How have you set the
prices for your
products / services?

8. How do we price?
Pricing
methods
Cost
MarketingCompetition

9. • Cost Orientated Pricing
− Full cost pricing
−A way of including all the costs
that are directly and indirectly
associated with the product or
service
−Increase cost with decreasing
sales!
−Sales are estimated before a
price is set
−Focuses on internal costs rather
than customers and customer
value
−It does however give an
indication to the minimum cost
to make a profit
Year 1
Direct costs £2
Fixed costs £200,000
Expected Sales 100,000
Cost per unit
Direct costs £2
Fixed costs £2
Full costs £4
Mark Up 10%
Price plus profit £4.40
Year 2
Expected sales 50,000
Cost per unit
Direct costs £2
Fixed costs £4
Full costs £6
Mark up 10%
Price plus profit £6.60

10. Direct cost pricing
− Price does not cover full cost
− Therefore a company could be making a loss when selling a product
− More useful when selling a service which cannot be stored
−E.g. hotel rooms or flight seats – if they are unused that income is lost
−Therefore getting any contribution towards the general overhead is sensible.
−The risk to this is that the customer becomes used to purchasing in this way or those that have paid the
full price complain.
− Direct costs indicate the lowest possible price at which its sensible to take business if the alternative is to
leave rooms or seats empty
− Can only be used in the short term as there is no way of recovering in direct costs in the long term

11. Competitor orientated pricing
− Focus on the competitor rather than the costs
− Going rate pricing
−In situations where there is little product differentiation a producer may have to look at going rate
pricing.
−Goes against traditional marketing theory which seeks to deploy differential advantage, such as delivery
time, after sales service and price accordingly.
− Competitive bidding
−Sealed unseen bids from other companies
−Used in both public (price plus quality) and private (usually just price) sectors

12. Competition
• At the very least you should know who your competitors are and what they charge
Immediate competitors,
e.g. Blockbusters
Technically similar
products
Secondary competitors,
eg. Lovefilm / Netflix
Different products
solving the same
problem in a different
way
Tertiary competitors e.g.
Sky Movies
Different products
solving or eliminating the
problem in a
different way

13. Market orientated pricing
− Much more difficult that cost or competitor orientated
pricing as it takes into account a wider range of factors
Market
Orientated
pricing
Marketing
strategy
Price /
quality
relationships
Product line
pricing
Negotiating
margins
Costs
Competition
Explicability
Value to
customer

14. Market orientated pricing
• Marketing strategy
− The price should be set in line with marketing strategy
− Danger is that price is set in isolation with no reference to other marketing decisions – product benefits,
positioning – the general marketing mix
• Value to customer
− Price should be accurately keyed to the value to the customer
− The more value that the product or service gives over the competition the higher the price that can be
charged
− Think about how you might be able to demonstrate and communicate this value to the customer
• Price – quality relationships
− Previously considered
− As price increases there is a perception that quality should increase and vice versa

15. Market orientated pricing
• Product line pricing
− Where will a new product fit into the existing products that a company offers
−Range Rover launching Evoque needed to price position it against existing Range Rover, Freelander,
Discovery
• Explicability
− How easy is it to justify a higher price?
− How easy is it to explain and demonstrate the differential benefits?

16. Negotiating margins
− In some instances customers expect a price reduction
− Price paid is therefore very different from list price
− The difference can be accounted for by
−Order size
−Competitive discount
−Fast payment discount
−Promotional allowances
− Many organisations therefore build in a negotiating margin

17. Pricing new products or services
−Positioning – the choice of target market and the creation of differential advantage will have a
major impact on the price
−Each target market will have a different value offering and therefore a different potential price
−Where there are multiple attractive target markets modified versions of the product and / or service
should be offered with different value statements and different marketing; and most importantly different
prices
−Launch strategies
−Should be used with other elements of the marketing mix

18. Positioning
• Positioning is the choice of:
− Target market – where we want to
compete
− Differential advantage – how we want
to compete
• The objective is to create and maintain a
distinctive place in the market for a
company or its products
Successful
positioning
Consistency
Credibility
Clarity
Competitiveness

19. • Clarity
− The positioning idea must be clear in terms of target market and differential advantage
−simple messages are clear and memorable

20. • Consistency
− People are bombarded with messages daily
− To break through this noise a consistent message is required
− This includes ensuring benefits, language used, brand, colours are all consistent

21. • Credibility
− The differential advantage chosen must be credible in the minds of the customer
−Attempting to position a Lada as an exciting sports car by showing it charging through dirt tracks failed
because of the lack of support between the image and reality

22. • Competitiveness
− The differential advantage must
have a competitive edge
− Offer something to the customer
that the competition is failing to
supply
− For example
−When Apple launched its first
Ipod the ease of use and the
design of the product where
its competitive edge
−When competitors made
lower cost units Apple then
launched the Ipod shuffle to
compete – it still competed on
design and ease of use
however it was positioned to
directly compete with lower
cost competition

23. Pricing new products or services
High
High
Low
Low
Promotion
Price
Rapid Skimming
Rapid
Penetration
Slow Skimming
Slow
Penetration
Premium products
Gradual entry
Premium products
Quick entry

24. Pricing Tip
Complicated price points
and conditional discounts
lead to consumer confusion,
anger and loss of business.
If a prospect cannot
understand your pricing
they will likely walk away
Be simple and clear

25. • Technology allows for
− Dynamic pricing
− Easier and closely monitored promotional pricing campaigns
−Orange Wednesday, Pizza Express
− Loyalty cards / loyalty bonus
− Contactless payments / mobile payments
• Non technology based
− For example
−Promotional pricing
− Boots 3 for 2, Waterstones
−Psychological pricing
−Referral bonuses
−Subscriptions
Innovation in Pricing

26. • No matter what pricing tactic you use you are establishing your basis of value to the customer and your
competitors.
• The customer has to see the relative value of the product or service and the price needs to match that
relative value.
• You therefore need to make sure you are not charging too much or indeed not charging too little

27. High Price versus Low Price
High Price Segments Low Price Segments
Product provides high value Only feasible alternative to charge low –
customers are not cash, no differentiation
Customers have high ability to pay Requirement to achieve market presence or
domination
Consumer and bill payer are different Can afford to make money later
Lack of competition Can make money elsewhere
High pressure to buy There are barriers to market entry

28. Pricing Checklist
Know your real costs
for each product /
service
Work out the
minimum at which its
worth selling at all
Find out from your
customers what each
product or service is
worth to them
Check your
competitors prices
If their price is lower
than your worth
selling at price
THINK AGAIN
Be prepared to make
range and pricing
changes
Keep checking that
you price is right

29. SALES

30. Sales and Selling
People don’t buy
products – they buy
solutions to their
problems
You have nothing to
sell but benefits

31. Awareness
Interest
Desire
Action
Attract
Engage
Nurture
Engage
Remember the journey
ModernVsTraditional
Customer doesn’t
know me
Customer has
heard of me
Customer starts to
listen
Customer buys

32. How to sell anything
Be Clear
about the
benefits
Plan your
selling
before the
meeting
Ask
questions
and listen
Empathise
with the
customer
Welcome
objections
Ask for the
sale
Leave as
soon as you
can after
closing a
sale

33. Do we know what we are selling?
Features Promises
Business Pain Benefits

34. Features
Specific details about
the product or service

35. Promises
Promises can be made
about what benefits
the features could
deliver

36. Business Pain
The quantifiable
business drivers that
relate to issues such
as cost, income, profit
margin, reputation etc

37. Benefits
Specific benefits from
the promise list that
relate to the prospect
and their business
pain

38. Features Advantages Benefits
Buy groceries online Saves going out to supermarket • Makes supermarket shopping possible
• Don’t face the ordeal of shopping with
toddlers
• Keep your limited leisure time for
yourselves
Twenty four hours a day seven days
a week
Can shop outside of normal hours • Shop when feel like it
• Concentrate when kids are asleep
• Sort out at weekend with no pressure
Remembers your previous list Can make amendments rather that
starting from a blank sheet
• Tend to need the same things
• Head start to make the job quicker
• Save lists for different occasions
Total price clear before getting to till Useful for budgeting • Save money –limited income
• Possible to delete a few treats
• Know exactly what’s going on the credit
card
Selling the benefits

39. What are your
features and benefits?

40. Plan your meeting / phone call
• Research the customer both themselves and the business they are from
• Think about the balance of “power”
− Does the customer need the product more than you need to sell it?
• What do you want to achieve from the meeting?
• What are you prepared to give away?

41. Ask questions and listen
• A good sales person is a great active listener
• Listen for buying signals
− How much is it
− How long will it take
• Listen for objections
− Its too expensive
− I don’t understand how it can help
• Ask the right questions to find out what specific benefits may matter to the customer

42. Ask for the sale
• More often that not a nervous seller will miss buying signals.
• As soon as you start hearing buying signals consider how you can frame a question which asks for the
sale:
− Shall I put you down for a dozen?
− When are can we start?
• If they are happy DO Not continue with your sales presentation.

43. Sales Pitch
Prospect Pain / Capability Gap
• Many Companies are trying to grow and are experiencing difficulties with lack of finance, ability to
innovate or the internal capacity to deliver
What’s my role
• My role is to help companies to overcome these barriers by providing the support they need either in the
form of workshops or one to one coaching
Why it’s unique
• What’s different about this is we work with a wide variety of high quality coaches with a number of
different specialisms

44. Try it!!!
Try and sell your
services

45. Self reflection
• After every sales visit ask
− Did I achieve my objective?
− What have I learned about this customer that could be useful if a subsequent visit?
− What have I learned from this customer that has nothing to do with his business?
− Even if successful, how could I have made this visit better?

46. NEGOTIATION

47. What is negotiation?
•Simply put...
−the process of getting what you want from another person.
•The truth is we negotiate every day, everyone in their every day lives is a
negotiator.
−Children negotiate with their parents for things they want.
−Spouses negotiate with each other over things they should buy or do this weekend eg.
go to the funeral, the wedding or take the children to their friend’s party?
−Subordinates negotiate with their bosses over deadlines.
−Workers negotiate with their clients over services they can offer them.

48. Sales negotiation
•Sales negotiation can be a formal event at a specific time and date or it can
be ongoing at different points in the sales process.
•As a sales staff you are seeking a mutually beneficial relationship with your
prospects and clients, not something that benefits only you or them.
Why do you
need to
negotiate with
customers in
the first place?

49. Because of Customer Attitudes
• A customer’s attitude toward your product or service generally falls into one of four
categories.....
− Objection
− Indifference
− Skepticism
− Acceptance

50. Customer Attitudes
Acceptance :
Customer
agrees with
your benefits
and has no
negative
feelings toward
your product
Skepticism :
Customer is
interested in a
particular
benefit, but
doubts whether
your product
can really
provide the
benefit
Objection :
Customer
displays
opposition to
your product
Indifference:
Customer
shows a lack of
interest in your
product
because of no
perceived need
for its benefits

51. S0 why do you need negotiation skills?...
To win more Customers and improve
profits for your organisation.

52. Before negotiation begins...
• Avoid negotiating unless you have had an
opportunity to fully present your products and
services
• Understand the objections raised by your
prospect and identify what your prospect or
customer’s main points of interest may be
based on these objections
• Be prepared to illustrate how your offering will
benefit them and quantify the value they will
get (if possible)
• Be prepared to be patient (which can lead to
higher trust between you and your prospect)
• Be confident in the value your product or
service will provide your prospect
• Be prepared to work toward a solution that
works for both you and your prospect
• Know in advance at what point the negotiation
is no longer beneficial to you and your
organisation and be prepared to walk away

53. During negotiation...
• Use open ended questions to confirm your
understanding of their needs.
• Be prepared for tactical responses from
prospects and customers – such as
exclamations after you explain the terms of
your service (eh, aba! etc) or silence – don’t
react and instead respond with more questions
• Don’t rush to fill pauses with more talk – be
comfortable with moments of silence
• Listen
• Be prepared to make slight adjustments for
your prospect if possible eg. Adjust the
product/service offering, loan payment terms
etc.
• Try to identify small things you have both
agreed on to help develop positive momentum
– summarize these agreements periodically

54. After the negotiation...
• If you are able to make a sale…
− Summarize verbally and/or in writing the details
of what you and the customer have agreed on as
the terms of the service.
− Thank the customer/ prospect for their time and
reinforce the purchase decision
− For your next negotiation, review the points that
seemed to help move the negotiation process
forward – study them, know them, use them
• If you did not make a sale…
− Sincerely thank the prospect for their time
− Avoid appearing annoyed or disappointed
− Give the prospect an “out” or an opening for them
to come back to you/your organisation in the
future (have this statement prepared)
− For your next negotiation, review the points that
seemed to prevent the negotiation process from
moving forward – study them, know them, and
act accordingly

55. Common mistakes to be avoided in negotiation
• Inadequate preparation
• Use of intimidating behavior
• Impatience
• Loss of temper
• Talking too much, listening too little, and remaining indifferent to body language.
• Arguing instead of influencing.