3 negotiation for value

Negotiation For ValuePre-Reading

Version: January 2009

Sell First – Then NegotiateSelling is the unique role of CBD and Selling creates value – while Negotiation is the exchange of value. Therefore, to successfully negotiate you must first show the customer value creation opportunities by selling your proposal persuasively. As we focus on Negotiation, we cannot exclude or to minimize the importance of Selling.

As CBD people, we should be selling always and recognize that an exchange of value may be required to reach agreement, so we are always prepared to negotiate. That is what this course is about. The better we are at matching our value proposal to the value sought by the customer, in a way that drives value for the shopper/consumer/influencer and P&G, the less we will need to negotiate.

P&G Negotiation For Value | Section 1 1

Pre-work for the Course A short review of what is expected of you prior to the course. Why is CBD doing Negotiation training? A recap of the reasons why we are building a global Negotiations model.

Negotiation Policy/CBA Outline A 1-page outline of policy and practices that increase the effectiveness of negotiations.

CBD Character and Key BehaviorsA one page recap of how we will act as CBD People and key behaviors to recognize before negotiating.

CBD Selling and Negotiation Strategy A review of the six principles we use in Selling and Negotiating.

Negotiation Planning Model Overview A 1-page overview and instructions for the Negotiation Planning Model (NPM).

Negotiation Planning Model A 10-page integrated system of negotiation planning activities designed to help individuals and teams prepare for and win both simple and complex negotiations.

Negotiation Relationship-Behavior ContinuumA 2-page summary, used with section 2a of the Negotiation Planning Model, to define the primary negotiation relationship-behavior environments and how to use them in negotiations.

Negotiation TacticsA 3-page explanation, used with section 7c. of the Negotiation Planning Model, to explain useful negotiation tactics to use, and how to defend against them when they are used on you.

AppendixNegotiating Agreement without Giving InA short review of one of the key books on negotiating written by Roger Fisher and William Ury.

A Negotiaton Planning Model ExampleAn example of the Negotiation Planning Model filled out to help you understand the types of information that helps you when planning.

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2 Section 1 | P&G Negotiation For Value

Your Negotiation Pre-work

1. Please complete the attached pre-reading (sections 1-8). 2. Consider an upcoming negotiation situation. Have in mind an

upcoming negotiation that you will need to be prepared to lead. This could be an Annual Plan or some other important negotiation. Think about the issues and people you will need to influence. Just have this negotiation in mind – there is no need to do any pre-work on this negotiation.

3. Bring any questions you may have regarding the pre-reading assignments.

Please complete the pre-work as requested. It is critical. The class begins with the assumption that you have read the material.

Why is CBD doing Negotiation… Again?

• Negotiation is a CBD Skill and we seek to continually improve our capabilities.

• We have a key resource at P&G in Purchasing that provides a ready made platform for our skills. – We have learned that most of the Negotiation skills seminars and

trainings from around the world (for example, Think!, Karrass, GAP, Harvard, Wharton, Thoughtbridge) provide similar content.

• The key to changing behavior is not the course – but the planning and improving our ability to successfully negotiate and coach.


Definitions:Best Value = The combination of price, quality, new ideas/materials/systems, reliability, service, etc. that best meets current and future business needs.

Negotiation = The process of two or more parties reaching agreement through discussions--often, with each party trying to influence the other to do something they would otherwise not do.

Competitive Advantage = Knowledge, technology, products, etc. which enable selling of customer-preferred, share and profit-building ideas in the market--ahead of competition.

P&G Policy Statements:1. We conduct negotiations in ways that encourage customers to provide best value now and in the

future (i.e., in proposals related to a current negotiation/inquiry process and/or whenever customers develop “new ideas/systems” in the future).a. Our goal is to agree appropriate business solutions with customers that offer ideas which result in

competitive advantage — ahead of other suppliers.

2. We treat all competing customers fairly.a. We are clear and honest with customers in the negotiation process.

• We let all participants know the process steps and the potential outcomes.• To the extent confidentiality allows, we share similar information with all customers. • We create an open, trustful environment that removes all barriers that prevent customers from

agreeing to best value proposals.• We do not give misleading information to customers about our business needs or the competitive

situation in which we are seeking supply.

3. We are honest during all phases of the negotiation.a. We do not lie or misrepresent the facts discussed in the negotiation because we believe that over

the long term, trust will increase our ability to obtain best value.b. We do not give up proprietary or confidential information when asked. We explain that we cannot

answer — in a way that doesn’t lead to any conclusions by customers.c. We are not required to share non-essential information that weakens our bargaining power (e.g.,

our view of the competitive situation, our deadlines, etc.)d. To the extent it is appropriate and does not weaken our negotiating position, we tell the customer,

at the beginning, about the negotiation process and our desired outcomes.e. We ask any questions of customers that we feel will help us define their negotiation strategy

and goals.f. We clarify and discuss our points of agreement openly rather than assume a customer has agreed

to our point of view out of a misunderstanding.g. We make or review agreements with the customer’s decision authority to ensure there is no

confusion about what has been agreed to.

Negotiation Policy/CBD Outline


Our CBD Character

• We care about people; we value their diversity and build their capabilities

• We focus on results, not on activities• We hunger to win, to be the best• We communicate openly and persuasively (i.e. we sell)• We are strategic and street-smart• We are principled and pragmatic• We are humble, never arrogant• We are innovative, creative and collaborative• We are eager to learn about our industry; we are

shopper focused• We lead• We create value for our customers and seek to be

rewarded for it, so we can create value for P&G• We build trust with our customers, we are honest


CBD Key Behaviors

1. Always assume that documents/words you use will be seen by outside parties.a. Whatever you write could become a public document or your

discussion could be used in a court case.2. Always assume that documents/discussions will be reviewed by

people who:– Don’t understand our business– Don’t know you as a person– Will not trust your motives or values

3. All documents/discussions are subject to misinterpretation and it is impossible to “explain” bad documents after the fact.a. Focus on the facts – separate facts from opinions.b. Close the loop – significant issues raised in writing are resolved

in writing.c. State motives and objectives without using negative words –

especially about competitors.4. Always assume bad documents will turn up! Always assume

discussions that have turned bad will not help your relationship with the buyer!

5. Always avoid saying that we and the customer “agreed”. Better to say ‘We recommended and the customer decided”.


Joint Value Creation is the unique work of CBD. The objective is that both parties gain from the exchange; in fact, the gain is greater than either could have achieved by themselves. This creates indispensible partnerships in which we actively work to create, capture and commercialize value.

To create joint value we need to follow six principles:

Know your customer’s needsYou must understand your customer and know their needs. This includes how they are evaluated, measures, competitors value propositions – you must be a better expert on the customer than the customer. Only then can you know what is considered valuable by the customer.

Focus on the customer’s interests – not their positionsIt is critical to understand what is driving the motivation behind the position. Only in this way can you create new options which will lead to mutual gains. Ask why and explore the reasons for the position. Know who owns the position.

Invent and explore optionsDevelop multiple options to reach a new improved state for both parties. Your job is to create value, to build the opportunity for mutual gains. This invention is the key to identify shared interests which breaks down positions.

Know your alternativesYou must know what you will do if the buyer says no – what alternatives do you have? How will you continue to build your business in the face of opposition? This can be refereed to as a BATNA (Best Alternative to No Agreement) or simply an alternative, but the key is to know what other options you have. Without options your power is significantly reduced.

Build TrustTrust comes from being consistent and “saying what you are doing and doing what you say”. Trust can not be built in an environment of tricks. It must be built on consistent performance focused on meeting and exceeding the interests of both parties.

Plan and PrepareFor all negotiations and sales, you must prepare. You have to know all of the elements that will create value and then you must prepare you and your team to act within the plan. If you know your customer then you won’t be surprised. You cannot be caught “off guard” when the buyer calls you late in the evening seeking additional advantage.

The final position of preparation is to ensure your plan is executed completely. What happens when the circumstances change on the agreement, how will we build an agreement that is virtually self-enforcing? These are the key steps that must be put in place at the end of the negotiation.

Not every buyer will be honest and want to work in a cooperative manner. But if we focus on interests, keep trying to expand the value and stay principled we will have more success.

CBD Selling and Negotiation Strategy


PurposeThe Negotiation Planning Model that follows is a complete, integrated system of negotiation planning activities designed to help teams prepare for and win both competitive and collaborative negotiations.

General Organization• The Model’s sections are arranged in a logical, linear negotiation planning/meeting sequence:

1. Review previous negotiations and the learning from these sessions. 2. Define objectives/interests and create a desired/advantageous relationship plan.3. Identify sources of power, strengths and weaknesses—and your conclusions.4. Determine goal areas with related targets (wants) and limits (needs).5. Choose/combine strategic options/alternatives to achieve your goals and objectives.6. Develop probing questions, analyze additional leverage areas, and track negotiation action steps.7. Create a robust negotiation meeting plan, with roles and tactics, to exploit the analysis/strategies.8. Record key proposals and commitments, during the meeting, for review and follow-up.

• Many sections follow a simple 2-step process.Step 1. Brainstorm and list all possible items.Step 2. Prioritize the list to identify the key persuasive/strategic ideas.

• Instructions for data entry boxes are shaded, on the right; headings, if needed, are listed on the left.

Basic Instructions (Detailed instructions are in Negotiation Planning Model Documentation)

• Fill in each relevant section of the model to find key breakthrough options/strategies/tactics to win.• As you fill in one section, think creatively about related ideas/options/questions for other sections.

Likewise, as you negotiate with the Other Party, seek ideas/options/answers to strengthen all other sections/strategies of the model. For example, when you think of a question, add it to the question list (6). When answered, list the answer in the right model section and erase from the question list.

• Move around the model as needed. For example, as questions arise add them to section 6 or as tactics are discussed, add those to section 7.

• For multi-party negotiations, create a separate Negotiation Meeting Plan and Log for each party.• The model is designed for letter-size paper; but will print on A4 paper without page format changes.

Model Focus Areas – Based on Available Planning Time• Planning is critical and you should always plan well in advance of your negotiation. This allows you

time to gather all relevant information, role play the negotiation and adjust your plan based on the best information available. However, this is not always possible and if you are time pressed, you should focus on the following sections:

– If you have only 60 minutes to create a basic negotiation plan, prepare your interests and goals, their interests and goals, your BATNA, their BATNA, the arguments that support your best option

– If you have only 60-120 minutes, focus on all relevant model sections for your side; spend minimum time on “Optional” sections

CBD Selling and Negotiation Strategy Negotiation Planning Model Overview


1a. Background/Environment Analysis Review of previous negotiations with the Other Party

Positions • Understand the “why and how” changes occurred in previous negotiations.

Interests • Their interests previously met by our proposals

Tactics Used • List prevalent tactics (if any)

Our high value resources • What do we have that the other party has valued highly, helping to lead to agreement

Closing • How did the last negotiation close and what techniques were used

1b. Current Negotiations

You Instructions

Objective • List the negotiation objective (what)& primary interests/needs (why).(detailed goals added in section 4).

List key issues/problems that mustbe solved by this negotiation.List people/process who review,approve, concur, or are informed.List any critical dates or milestones that must be achieved.

Interests •

Issues •

Approval •

Deadlines •

Milestones •

Other Party(s): Instructions

Objective • For all items, repeat steps above.Mark items of common interest, between You and Other Party, to include in sections: 3. Strengths-Weaknesses, 4. Goals, &

Interests •

Issues •

Approval •

Deadlines •

Negotiation Planning Model

Negotiation Planning Model – Created by Larry B. Loftus


Current: Desired: Instructions

Pick/list “Current” and “Desired” relationships from the continuum at left & questions below.

1 Lose-Win Need to lose (give up top goals) now, to win (gain top goals) long-term? Need to build trust? Your strength low?

2 Win-Lose Does the Other Party have to lose for you to win? Is trust/relationship unimportant? Stronger than Other Party?

3 Win! Can you win regardless of whether the Other Party wins or loses? Is trust less important? Your strength high?

4 Win-Win Does the Other Party have to win for you to win? Is trust important & high? Your strength high/perceived high?

2a. Relationship Analysis

Low Trust High Trust

(You) Lose-Win (Other) Win-Lose Win! Win-Win

1 2 3 4

2b. (Optional) Decision Mapping

Instructions: Determine what roles at the customer you need to include and influence for decisions that will affect the negotiation. Ensure you have an owner for each relationship and timing for their support.

1 Decision Makers Owner:

Who are we influencing and negotiating with? Who is the Owner, Evaluator(s) and Implementers?

Are we in Implementation, Evaluation, Research, Concept, How It Works, Decision

Need, Funding, Business Compatibility, Product/Service Fit, Customer Relationship and/or Competition.

Evaluator(s):

Implementer(s):

Stage:

Key Factor(s):

2 What stage of the process are we in?

3 What factors do you need to influence and understand to make the sale?

Pri Action Steps Timing/Notes List key steps of the process

Pri Action Steps Timing/Notes Brainstorm/list action steps specifically required to achievethe “Desired” relationship. Rank/label/sort priority (Pri)(1,2,3,...etc.) and timing/notes


3a. Strengths-Weaknesses Analysis

YouStrengths/Opportunities Strategies to Take Advantage Instructions

1. Brainstorm/list your strengths; include Other Party’s weaknesses and all external opportunities.

2. List strategies to take advantage; focus on intensifying Other’s “desire to gain” & “fear of loss”.

3. Sort by priority..Weaknesses/Threats Strategies to Defend

Other PartyStrengths/Opportunities Strategies to Take Advantage Instructions


2. List strategies to take advantage; focus on intensifying Other’s “desire to gain” & “fear of loss”.

3. Sort by priority..Weaknesses/Threats Strategies to Defend

Conclusions – Common OpportunitiesAction Steps Timing Are there common opportunities?

Can we match key opportunities to our strengths and deliver competitive advantage for both parties?


Rating(H/M/L)

Key Influencing Factors Instructions

CompetitiveAdvantage

List and rate key factors that impact your advantage e.g. strategic importance of the negotiation, need to compete with other suppliers, extent of dependency, timing

ScarcityList and rate key resources that are in limited supply or difficult for the other party to obtain

LegitimacyPrecedents, benchmarks, justify our proposal. Seek explanation/justification for theirs

AuthorityWhat discretion will you show, what will they have? Identify suitable 3rd party if required.

ReciprocityWhat service, information will develop a mutuality feeling? What can you ask in return?

ConsistencyWhat past successes, existing commitments are there? What voluntary choices led to these?

FlexibleHow can you create an air of flexibility? How fixed will they be? Benefits / Issues of anchoring(See options sections).

StyleWhat influence style fits the situation? Persuade, assert, bridge, attract?

3b. (Optional) Power Analysis (Improving your Alternatives)


1. Your Objectives Instructions

Improve the effectiveness of the MDA spend by 15%. State your objectives of the negotiation, in words from section 1b.

Your Targets/Limits

Data / Reasons (with reality checks) 1. Brainstorm/list goal areas.2. List targets in numbers (wants)3. List “walk-away” limits in numbers

(needs). (targets/limits must be measurable).

4. List reasons for targets & limits.5. Sort by priority.

1 Maintain the number of promotions T 5 • These events will deliver the JBP

L 4 • If I need to reduce events I will work with the customer to improve volume/event.

2 Increase the use of pre-assembled displays

T 60% of promoted volume

• Pre-assembled display increase volume sold

L 40% of volume

• This maintains current level

3 Decrease the amount of MDA used per event

T 4% decline

• This will allow us to meet our goal of 15% MDA reduction

L • Maintain current spend and increase MDA Effectivness.

2. Other Party Objectives Instructions

Increase funding by 5% over previous year. State Other Party objectives from 1b.

Their Targets/Limits

Data / Reasons (with reality checks) Repeat steps 1,2,4,&5 as above +6. Mark common goals; focus on

your lower priorities that Other Party sees as high value. These are strategic trade options and potential concessions..

1 Increase the amount of funds generated

T 5% + over Previous year

• This is in line with past increases

2 Increase volume to reach JBP (Common goal)

L ??? •

T +5% • This reaches her managers agreement

L ??? •

T •

L •

T •

L •

T •

L •

3. Your BATNA Instructions

• If we cannot increase MDA Effectiveness by reducing the amount spent – then work on approaches to make each dollar support more promoted cases.

If you cannot reach agreement on this objective, what will your alternative be?

4. Their BATNA

• ??? Reduce number of promotions to match the funds??? If your buyer cannot reach agreement with you on this objective, what will their alternative(s) be?

4. Goals Analysis


5a. Value Analysis - Create Value

Value Elements Instructions

C Yours Cost to You Value to Them 1. List all individual elements of value available from your side and those from the other party.

2. Give an actual value or cost for the Value Element, or rate H/M/L

3. Mark complimentary (C) options to create possible

Note: Be sure to think about all value elements including those offered by third parties and non-traditional sources. C Theirs Cost to Them Value to You

5b. Capture and Commercialize Value

# Value elements exchangeValue Created (Amount and for whom)

Instructions

Yours Theirs 1. Review Section 5a and re-order the value elements listed above by how you intend to trade/exchange each

2. Plan the exchange of value elements to create value

3. Discuss/decide who receives which portion of the value

4. Note the value created and for which party


Your Questions Who When Instructions

1. List questions that help identify/support options which achieve your goals.

2. List who will/to ask and when.

Note: Use answers to enhance the negotiation plan; then, erase the question. You may also record answers in 8. Negotiation Log.

Plan to use Persuasive Questions to ensure your deep understanding of the situation –

– Information– Issue– Impact– Importance

6. Questions List

Other Party’s Questions Appropriate response Instructions

• 1. List expected questions from the Other Party.

2. List “counter” answers that support your goals/options.

•

•

•

•

•


Plan Comments/Support Data Instructions

Place Yours, Other’s, or neutral place?

Visual Aids Tools to communicate key points.

Agenda Your opening agenda, and agreed meeting agendaOpening

Message State your interests and ask what their interests are

Business Review Any related, supportive business review in line with customer expectations

Summary of the Situation

Develop the optimum relationship/environment. Focus on their needs and interests, and how they can achieve those

State the Idea or Proposal(s)

State clearly your ideas.

Explain how it works

Support goals with convincing data that doesn’t reveal limits, and creates bargaining room versus your targets

Negotiation exchange

Who opens?

Concessions From 5b, plan the increments of elements of value to trade. Moving towards but not beyond your limit.

Plan the frequency of concessions moving towards your limits.

Reinforce Key Benefits

Link the reason for agreeing to the buyers’ interests.

Suggest easy next steps or Proposal(s).CLOSE the agreement

Finalise deal/execution in detail, with responsibilities clear contingences if objectives / deliverables not being met. Develop self-enforcing agreements.

Breaks Circumstances for/types of breaks.

Impasse What to do if can’t achieve limits.

Authority When/how to say “I can’t decide.”How get to Other’s authorities?

7a. Negotiation Meeting Plan (For a Meeting with: _____________ on: ______)

7b. Negotiation Team Roles (as needed for our team)

Names Role Description Instructions

Leader Team leader; chief spokesperson.

SeniorManager(s)

People to justify stretching business objectives driving negotiation goals.

TechnicalExpert(s)

People to define specifications and justify technical needs/wants.

Observe/Record Person to note commitments.


Date/ Time

You:Date/Time

Other Party:

7c. Negotiation Tactics Plan (Refer to Negotiation Tactics)

Pri Your Tactics When/How to Use Instructions

1. Brainstorm/list your tactics (see “Negotiation Tactics” list).

2. List when/how to use the tactics.3. Rank/label/sort priority.

Pri Other Party’s Tactics Tactics to Defend Instructions

1. Brainstorm/list tactics the Other Party may use.

2. List tactics to defend their tactics. 3. Rank/label/sort priority.

8a. Negotiation Log (For a Negotiation with:_____________________________)

1) List date/time/content of proposals/questions.2) Detailed notes to record the offers / counter offers / acceptance 3) Highlight commitments/answers. 4) As needed, remind the Other Party of earlier commitments/answers.5) Use as a bases for future negotiations.


1. Terms of Agreement Resp. When Instructions

To improve the promotion effectiveness of our funds by 10% in FY

CBDM End of FY 1. List the specific details of the agreements reached, showing:– Our commitment(s)– What we receive in return– Clearly state conditions required

for our commitments.– Note who is responsible for

execution and when.2. Include dispute resolution clauses/

process. How and when will you decide if the agreement is not being fulfilled from either parties. How will differences be resolved?

3. How will you handle changes in people, market, and business relationship to ensure the agreement is fulfilled? Agree on action/responsibilities if they occur.

4. When would you reopen the settlement to create additional value for both parties. ‘Post settlement’ settlement –

2. Resolution of Disagreement Resp. When

We will report in writing to all Senior Leadership each quarter on progress toward s the goal.

CBDM Within one week of end of quarter

If we are not tracking to our goal each quarter we have agreed to involve the Commercial Director.

CD By the end of the month following the quarter

Commercial Director agrees to intervene with CBDM Plan in place within the month

3. “Predictable Surprises” Resp. When

Change in CD? Plan a meeting with the Customer’s Sr. Leadership confirming the direction with new CD.

CBDM Once change is announced

Change in market dynamics? Confirm the changes help the customer reach their goals.

CBDM If major changes announced.

4. “Post Settlement” Settlement Resp. When

If the program is producing better than anticipated results reopen the negotiation to include more reductions leading to improved business.

F&A Review each month

8b. Negotiation Agreement


Negotiations exist to achieve the goals of the negotiating parties The process and outcome of negotiations are determined by the relationship between the parties and each party’s behavior in achieving their individual goals. Among different negotiations, and within the same negotiation, relationships and behavior vary significantly. The various relationship-behavior environments form a continuum. The successful party will be the one who influences the relationship-behavior environment, at the critical time(s), to best support achievement of their desired goals.

The following describe primary negotiation relationship-behavior environments on the continuum—in universally understood phrases:

1. Lose/Lose – “The Rain Cloud” – Do not negotiate here; always control your emotions!A negotiation environment where both parties lose. It is characterized by adversarial behavior, often resulting in mutual destruction of both parties; or, at the very least, in rejecting an outcome that is better for both parties than the current situation. To avoid this environment, negotiators should control their emotions and remain focused on winning (achieving their goals); rather than causing their opponent to lose.

2. Lose/Win – “The Sacrifice” – Only use this type strategically!A negotiation environment where one party loses so that the other party can win. It occurs when one party believes “giving in” is better than winning. This behavior can result from positive emotions such as: respect for the other party, keeping harmony in a relationship, or sacrificing now in order to win next time. On the other hand, this behavior can result from choosing to avoid conflict with the other party, or blind obedience for their position. When the focus is on winning and/or building relationship over the long-term, a short-term loss can be strategic. However, when the focus is on conflict avoidance or blind obedience, the end result is often the destruction of the relationship and the weaker party.

3. Win/Lose – “Winner Takes All” – Be aggressive but recognize the relationship loss!A competitive negotiation environment in which one party wins and the other party loses. It occurs when parties believe winning is more important than building a relationship. It is characterized by positions, concessions, and tactics. This is a common environment in day-to-day business because the buyer’s costs and the seller’s profits are often mutually exclusive; one benefits at the other’s expense. It is most effective in winning one-time distributive negotiations (e.g., dividing a fixed pie) where the negotiable areas are fixed, options are few, and a long-term relationship is not important.

4. Win! – “Winning Focus” – Use to develop competition and some relationship!Close to Win/Lose except that total focus is on achieving the goals of one party; the other party can win or lose, it is not relevant. This environment can feel less adversarial than Win/Lose and therefore some relationship can be built. An example is a competitive bidding situation. The situation doesn’t cause competing bidders to lose; it maximizes competition so the buyer can win. If the winning bidder(s) perceive they win something too, parties can still build a relationship while keeping the long-term focus on the buyer’s goals. Note: if relationship is important, negotiators should be careful not to talk Win/Win, and act Win!

How To Use The Negotiation Planning Model


5. Win/Win – “Hand-in-Hand” – Use only when both parties are fully committed to relationship!A negotiation environment where both parties work together to find mutually beneficial (but not always equal) outcomes. It occurs only when both parties believe the relationship is at least as important as the outcome. Win-win negotiations are characterized by collaboration, cooperation, and trust. Win-Win, or integrative bargaining situations (e.g., making the pie bigger), where options and resources are many, often result in better alternatives than either party could create on their own. They are rare in day-to-day business due to both party’s short-term, exclusionary focus on immediate profit. Many negotiations are called win/win; but, are actually Win!, or Win/Lose, dressed up to look like Win/Win by one of the parties. Win/Win is the most powerful environment for creating alternatives that exceed expectations. Win/Win negotiations require skilled negotiators who can look beyond positions and personal interests to find new options which bring benefit to all parties. On the other hand, negotiators seeking Win/Win must be careful not to lose to a party pretending to collaborate; but, actually using Win/Lose behavior on them.

6. Win/Win or No Deal – “Arm-in-Arm” – Evolve to this level only after success at Win/Win!Same as Win/Win except both parties first commit that they will not agree to anything that is not Win/Win for both parties. This is the highest form of commitment to relationship ahead of results. It occurs rarely in business; usually only when both parties are mutually interdependent (e.g., legal partnership, etc.) on each other for success. Personal relationships are most satisfying when conducted in this environment.

Integrity in RelationshipsRegardless of which relationship-behavior environment exists, acting with integrity, keeping your word, doing what you say you will do, are mandatory. Whether in a fierce, adversarial encounter, or a totally collaborative negotiation, negotiators must create and maintain credibility to most effectively influence all other parties to support their goals.

Negotiation Relationship-Behavior ContinuumThe Negotiation Relationship-Behavior Continuum graphic below represents those environments most commonly used. It is used in the Negotiation Planning Model to diagnose the status of current relationships and make plans to shape the future relationship environment that will be most favorable to influence other parties to achieve desired goals.

Low Trust High Trust

(You) Lose-Win (Other) Win-Lose Win! Win-Win

1 2 3 4

Negotiation TacticsOn the next two pages you will find lists of Negotiation Tactics. Tactics can be used to move a relationship towards more positional negotiations or toward a more trusting relationship. We generally think of tactics as “tricks” and they can be – but at P&G we should think of tactics as techniques to move the relationship towards our desired point on the relationship continuum.

The tactics grid shows the common tactics, a description of the tactic and how you can “defend’ against it. In addition we show whether the tactics is used in the initial or opening portion of the negotiation or during the negotiation (I, D).

Generally, the approach is:• Do not take any tactics as personal that are designed to move the relationship towards “positional”.• Recognize the tactics for what they are.• Counter properly and ethically.

In many cases the tactics a buyer uses are similar from situation to situation – so they can be planned for.


When Used Tactic Definition Potential Response

1 IPre-emptive Strike/ Opening Offer

Make an aggressive opening offer to panic/force the Other Party to agree, or at least change expectations.

Flinch (28), Ask Why (26), Discredit (30), Silence (6): Show you are not influenced. Challenge the weakness of their offer.

2 IBuilding Block/Piecemeal/Breakdown

Request pricing for various quantities, volume levels, or breakdowns of the total product/system cost.

Linking Issues (4): Convince the Other Party that all concessions depend on the total deal in the end.

3 I Backward Negotiating Start from your desired final result or target.Building Block (2), All I Can Afford (13): Focus the discussion on your starting point.

4 I,D Linking IssuesTie 2 or more issues/outcomes together conditionally

Building Block (2): Negotiate each issue separately.

5 I,D MessengerPlay the role of a third party delivering an unpleasant request/condition from another party.

Emotion (22), All Levels (23): “This is frustrating; I must speak with the person who decided this.”

6 I,D SilenceRemain quiet in order to get the Other Party to talk more, or be nervous about something they said/did.

Emotion (22), Recess (25), Physical unpredictability (24): “If nothing more to say, let’s end our meeting.”

7 I,D DeadlinesSet artificial or real deadlines to motivate fast action.

Ask Why (26), What If (8): “Who set this and why?”

8 I,DWhat If.../Suppose... Questions

Ask hypothetical questions, without commitment or direction, to brainstorm possible ways around issues.

Ask Why (26), Deadlines (7): “Why important?” or “Please offer concrete proposals; we are out of time.”

9 I,D Exploring MeetingMake an informal meeting/contact to explore different views, proposals, positions, sensitivities, etc.

Confidentiality (38), Ask Why (26), What If (8): If unfriendly, ask why and don’t share. If friendly, get the Other Party to share first and most.

10 I,D HeroEmphasize how good it will be for the other party to agree to your proposal or solve your problem.

Problem Transfer (15), Waffle (32), Back Burner (20), Higher Authority (31): “I’d love to help but I need to solve my problem first. Will you help me?”

11 I,D Good Guy - Bad Guy

Split team into roles of good (kind/helpful) and bad (mean/hurtful) to influence the Other Party to accept good offer as a better alternative than the bad offer.

Emotion (22), Broken Record (21), Recess (25), Waffle (32): Get emotional; call out the bad behavior. Act indecisive, delay, or stop the negotiation process.

12 I,D Full DisclosureShare openly with the Other Party to get them to share openly with you; a basis for trust is needed.

Confidentiality (38), Ask Why (26), Full Disclosure (12), What If (8): If unfriendly, ask why/don’t share. If friendly, get Other Party to share first and most.

13 I,D “All I Can Afford”Establish a limit/target – artificial or real – (e.g., profit forecast) to focus on not exceeding that limit.

What If (8), Ask Why (26), All I Can Afford (13): Challenge their limit or impose your own limit.

14 I,D Trade UpGive in on a less important issue to get the Other Party to give in on a very important issue.

Back Burner (20), Broken Record (21): Label their issue as less important; repeat focus on your issues.

15 I,D Problem TransferGive your problem to the Other Party to solve.

Problem Transfer (15), Waffle (32), Back Burner (20), Higher Authority (31): “I’d love to help but I need to solve my problem first. Will you help me?”

16 I,D In WritingMake an offer in writing to show you are serious.

Exploring (9), What if (8), Ask Why (26): Confirm its real seriousness & build in your ideas and issues.

17 I,D Test & Switch Get offer for potential big concession; then ask Other Party to agree to same offer for a small concession.

Emotion (22), Recess (25): Use emotion and name the bad behavior. Threaten to leave if it continues.

18 I,D Stop Me Ask Other Party to make a better offer in order to stop you from withdrawing from negotiations.

What If (8), Ask Why (26), All I Can Afford (13): Explore other ways to meet their needs. Or, impose your own limits to test if they are bluffing.

19 D United Front Convince Other Party that no agreement to specific condition(s) will reopen other areas to re-negotiation.

What If (8), Ask Why (26), All I Can Afford (13): Explore other options/limits to test for bluffing.

Negotiation Tactics

I = Generally used in initial negotiation D = Generally used during negotiation


When Used Tactic Definition Potential Response

20 D Back BurnerPut off or delay discussion of a specific point.

Deadlines (7), United Front (19): Convince them that your point must be decided before moving on.

21 D Broken RecordContinually repeat a request or condition for emphasis

All I Can Afford (13), Ask Why (26), What If (8): Confirm your limits and explore other options.

22 D EmotionUse anger to make the Other Party change their tactic.

Silence (6), Recess (25), Emotion (22): Recess the negotiation until their negative emotion dissipates.

23 D All Levels

Use all levels of your management to work on an issue to gain additional information or influence decision-makers at all levels of the Other Party.

Personal Obligation (27), Emotion (22): Focus negotiation on your decision power. Keep internal hierarchy informed. Call out “going around you.”

24 D Physical UnpredictabilityMake an effort to disturb the Other Party, e.g., change seating/physical layout, don’t allow smoking, etc.

Emotion (22), Recess (25), Physical Unpredictability (24): “I’m not comfortable negotiating in this environment.” “Let’s change it to...”

25 D Recessing/Walk-outBreak/walk out of a negotiation to change momentum.

Deadlines (7): “Out of time; need to keep going.”

26 D Ask WhyUse to ensure understanding or to challenge.

Broken Record (21), Deadlines (7): Keep discussion focused on key issues and deadlines.

27 D Personal ObligationEmphasize your personal effort in getting agreements from an internal third party, to build obligation/trust.

Problem Transfer (15), Hero (10): “Great! You did so well, could help me with these other problems?”

28 D FlinchShow a strong negative physical reaction to a proposal to show or pretend astonishment/shock.

Silence (6), Hero (10), Broken Record (21): Ignore reaction if fake. Positively reinforce your proposal.

29 D Guilt

Make other party feel guilty for proposing something because it breaks previously agreed terms/conditions.

All I Can Afford (13), Personal Obligation (27), Original Position (35), Good Guy/Bad Guy (11): “I have no more to give; alternative is: __ (a bad one).”

30 D DiscreditUndermine the Other Party by attacking his/her facts.

Deadlines (7), Physical Unpredictability (24), Recess (25), Emotion (22): Change the discussion issue.

31 D Higher AuthorityPosition a higher level manager as the final decision-maker to buy time to think about your decision.

All Levels (23), Deadlines (7): “Let’s talk to (decision maker); we are running out of time to do this deal.”

32 D WaffleIndicate uncertainty on an issue to buy time.

Deadlines (7), Ask Why (26): “With the time so short, why are you so uncertain?”

33 D Divide and RuleFocus on the most agreeable member of Other Party.

Recess (25): Break and remove that person.

34 D DiversionPurposely create confusion in order to buy time.

Deadlines (7), Ask Why (26): “With the time short, why are you taking time for this?”

35 D Original Position

After conceding on an issue; but, still being pushed by the other party, you bluff returning to your original position in order to gain agreement to your concession

What If (8), Ask Why (26), All I Can Afford (13): “Do you really want to give up (name best concessions) in order to win this one point? I’m doing my best.”

36 D One More Thing/ NibbleAdd a small concession at the end of the negotiation to take advantage of the Other Party’s desire to close.

All I Can Afford (13), Emotion (22): “Sorry, but I am already at my limit.” “That is a deal breaker!”

37 D New FacesAdd new people to negotiation team to change focus.

Broken Record (21): Re-focus the discussion on the original issues/targets.

38 D ConfidentialityUse: “Can’t share that information; it’s confidential.”

Personal Obligation (27), Full Disclosure (12): “I’ve shared with you; you’ve got to open up a little here.”

Negotiation Tactics

I = Generally used in initial negotiation D = Generally used during negotiation


Roger Fisher and William Ury, Getting to Yes: Negotiating Agreement Without Giving In, (New York: Penguin Books, 1983). In this classic text, Fisher and Ury describe their four principles for effective negotiation. They also describe three common obstacles to negotiation and discuss ways to overcome those obstacles.

Fisher and Ury explain that a good agreement is one which is wise and efficient, and which improves the parties’ relationship. Wise agreements satisfy the parties’ interests and are fair and lasting. The authors’ goal is to develop a method for reaching good agreements. Negotiations often take the form of positional bargaining. In positional bargaining each part opens with their position on an issue. The parties then bargain from their separate opening positions to agree on one position. Haggling over a price is a typical example of positional bargaining. Fisher and Ury argue that positional bargaining does not tend to produce good agreements. It is an inefficient means of reaching agreements, and the agreements tend to neglect the parties’ interests. It encourages stubbornness and so tends to harm the parties’ relationship. Principled negotiation provides a better way of reaching good agreements. Fisher and Ury develop four principles of negotiation. Their process of principled negotiation can be used effectively on almost any type of dispute. Their four principles are 1) separate the people from the problem; 2) focus on interests rather than positions; 3) generate a variety of options before settling on an agreement; and 4) insist that the agreement be based on objective criteria.

These principles should be observed at each stage of the negotiation process. The process begins with the analysis of the situation or problem, of the other parties’ interests and perceptions, and of the existing options. The next stage is to plan ways of responding to the situation and the other parties. Finally, the parties discuss the problem trying to find a solution on which they can agree.

Separating People and Issues

Fisher and Ury’s first principle is to separate the people from the issues. People tend to become personally involved with the issues and with their side’s positions. And so they will tend to take responses to those issues and positions as personal attacks. Separating the people from the issues allows the parties to address the issues without damaging their relationship. It also helps them to get a clearer view of the substantive problem.

The authors identify three basic sorts of people problems. First are differences on perception among the parties. Since most conflicts are based in differing interpretations of the facts, it is crucial for both sides to understand the other’s viewpoint. The parties should try to put themselves in the other’s place. The parties should not simply assume that their worst fears will become the actions of the other party. Nor should one side blame the other for the problem. Each side should try to make proposals which would be appealing to the other side. The more that the parties are involved in the process, the more likely they are to be involved in and to support the outcome.

Getting To Yes: Negotiating Agreement Without Giving In Roger Fisher and William Ury


Emotions are a second source of people problems. Negotiation can be a frustrating process. People often react with fear or anger when they feel that their interests are threatened. The first step in dealing with emotions is to acknowledge them, and to try to understand their source. The parties must acknowledge the fact that certain emotions are present, even when they don’t see those feelings as reasonable. Dismissing another’s feelings as unreasonable is likely to provoke an even more intense emotional response. The parties must allow the other side to express their emotions. They must not react emotionally to emotional outbursts. Symbolic gestures such as apologies or an expression of sympathy can help to defuse strong emotions.

Communication is the third main source of people problems. Negotiators may not be speaking to each other, but may simply be grandstanding for their respective constituencies. The parties may not be listening to each other, but may instead be planning their own responses. Even when the parties are speaking to each other and are listening, misunderstandings may occur. To combat these problems, the parties should employ active listening. The listeners should give the speaker their full attention, occasionally summarizing the speaker’s points to confirm their understanding. It is important to remember that understanding the other’s case does not mean agreeing with it. Speakers should direct their speech toward the other parties and keep focused on what they are trying to communicate. Each side should avoid blaming or attacking the other, and should speak about themselves.

Generally the best way to deal with people problems is to prevent them from arising. People problems are less likely to come up if the parties have a good relationship, and think of each other as partners in negotiation rather than as adversaries.

Focus on Interests

Good agreements focus on the parties’ interests, rather than their positions. As Fisher and Ury explain, “Your position is something you have decided upon. Your interests are what caused you to so decide.” Defining a problem in terms of positions means that at least one party will “lose” the dispute. When a problem is defined in terms of the parties’ underlying interests it is often possible to find a solution which satisfies both parties’ interests.

The first step is to identify the parties’ interests regarding the issue at hand. This can be done by asking why they hold the positions they do, and by considering why they don’t hold some other possible position. Each party usually has a number of different interests underlying their positions. And interests may differ somewhat among the individual members of each side. However, all people will share certain basic interests or needs, such as the need for security and economic well-being.

Once the parties have identified their interests, they must discuss them together. If a party wants the other side to take their interests into account, that party must explain their interests clearly. The other side will be more motivated to take those interests into account if the first party shows that they are paying attention to the other side’s interests. Discussions should look forward to the desired solution, rather than focusing on past events. Parties should keep a clear focus on their interests, but remain open to different proposals and positions.


Generate Options

Fisher and Ury identify four obstacles to generating creative options for solving a problem. Parties may decide prematurely on an option and so fail to consider alternatives. The parties may be intent on narrowing their options to find the single answer. The parties may define the problem in win-lose terms, assuming that the only options are for one side to win and the other to lose. Or a party may decide that it is up to the other side to come up with a solution to the problem.

The authors also suggest four techniques for overcoming these obstacles and generating creative options. First it is important to separate the invention process from the evaluation stage. The parties should come together in an informal atmosphere and brainstorm for all possible solutions to the problem. Wild and creative proposals are encouraged. Brainstorming sessions can be made more creative and productive by encouraging the parties to shift between four types of thinking: stating the problem, analyzing the problem, considering general approaches, and considering specific actions. Parties may suggest partial solutions to the problem. Only after a variety of proposals have been made should the group turn to evaluating the ideas. Evaluation should start with the most promising proposals. The parties may also refine and improve proposals at this point.

Participants can avoid falling into a win-lose mentality by focusing on shared interests. When the parties’ interests differ, they should seek options in which those differences can be made compatible or even complementary. The key to reconciling different interests is to “look for items that are of low cost to you and high benefit to them, and vice versa.” Each side should try to make proposals that are appealing to the other side, and that the other side would find easy to agree to. To do this it is important to identify the decision makers and target proposals directly toward them. Proposals are easier to agree to when they seem legitimate, or when they are supported by precedent. Threats are usually less effective at motivating agreement than are beneficial offers.

Use Objective Criteria

When interests are directly opposed, the parties should use objective criteria to resolve their differences. Allowing such differences to spark a battle of wills will destroy relationships, is inefficient, and is not likely to produce wise agreements. Decisions based on reasonable standards makes it easier for the parties to agree and preserve their good relationship.

The first step is to develop objective criteria. Usually there are a number of different criteria which could be used. The parties must agree which criteria is best for their situation. Criteria should be both legitimate and practical. Scientific findings, professional standards, or legal precedent are possible sources of objective criteria. One way to test for objectivity is to ask if both sides would agree to be bound by those standards. Rather than agreeing in substantive criteria, the parties may create a fair procedure for resolving their dispute. For example, children may fairly divide a piece of cake by having one child cut it, and the other choose their piece.

There are three points to keep in mind when using objective criteria. First each issue should be approached as a shared search for objective criteria. Ask for the reasoning behind the other party’s suggestions. Using the other parties’ reasoning to support your own position can be a powerful way to negotiate. Second, each party must keep an open mind. They must be reasonable, and be willing to reconsider their positions when there is reason to. Third, while they should be reasonable, negotiators must never give in to pressure, threats, or bribes. When the other party stubbornly refuses to be reasonable, the first party may shift the discussion from a search for substantive criteria to a search for procedural criteria.


When the Other Party Is More Powerful

No negotiation method can completely overcome differences in power. However, Fisher and Ury suggest ways to protect the weaker party against a poor agreement, and to help the weaker party make the most of their assets.

Often negotiators will establish a “bottom line” in an attempt to protect themselves against a poor agreement. The bottom line is what the party anticipates as the worst acceptable outcome. Negotiators decide in advance of actual negotiations to reject any proposal below that line. Fisher and Ury argue against using bottom lines. Because the bottom line figure is decided upon in advance of discussions, the figure may be arbitrary or unrealistic. Having already committed oneself to a rigid bottom line also inhibits inventiveness in generating options.

Instead the weaker party should concentrate on assessing their best alternative to a negotiated agreement (BATNA). The authors note that “the reason you negotiate is to produce something better than the results you can obtain without negotiating.” The weaker party should reject agreements that would leave them worse off than their BATNA. Without a clear idea of their BATNA a party is simply negotiating blindly. The BATNA is also key to making the most of existing assets. Power in a negotiation comes from the ability to walk away from negotiations. Thus the party with the best BATNA is the more powerful party in the negotiation. Generally, the weaker party can take unilateral steps to improve their alternatives to negotiation. They must identify potential opportunities and take steps to further develop those opportunities. The weaker party will have a better understanding of the negotiation context if they also try to estimate the other side’s BATNA. Fisher and Ury conclude that “developing your BATNA thus not only enables you to determine what is a minimally acceptable agreement, it will probably raise that minimum.”

When the Other Party Won’t Use Principled Negotiation

Sometimes the other side refuses to budge from their positions, makes personal attacks, seeks only to maximize their own gains, and generally refuses to partake in principled negotiations. Fisher and Ury describe three approaches for dealing with opponents who are stuck in positional bargaining. First, one side may simply continue to use the principled approach. The authors point out that this approach is often contagious.

Second, the principled party may use “negotiation jujitsu” to bring the other party in line. The key is to refuse to respond in kind to their positional bargaining. When the other side attacks, the principles party should not counter attack, but should deflect the attack back onto the problem. Positional bargainers usually attack either by asserting their position, or by attacking the other side’s ideas or people. When they assert their position, respond by asking for the reasons behind that position. When they attack the other side’s ideas, the principle party should take it as constructive criticism and invite further feedback and advice. Personal attacks should be recast as attacks on the problem. Generally the principled party should use questions and strategic silences to draw the other party out.

When the other party remains stuck in positional bargaining, the one-text approach may be used. In this approach a third party is brought in. The third party should interview each side separately to determine what their underlying interests are. The third party then assembles a list of their interests and asks each side for their comments and criticisms of the list. She then takes those comments and draws up a proposal. The proposal is given to the parties for comments, redrafted, and returned again for more comments. This process continues until the third party feels that no further improvements can be made. At that point, the parties must decide whether to accept the refined proposal or to abandon negotiations.

26 Section 9 | P&G Negotiation Planning Model

When the Other Party Uses Dirty Tricks

Sometimes parties will use unethical or unpleasant tricks in an attempt to gain an advantage in negotiations such as good guy/bad guy routines, uncomfortable seating, and leaks to the media. The best way to respond to such tricky tactics is to explicitly raise the issue in negotiations, and to engage in principled negotiation to establish procedural ground rules for the negotiation.

Fisher and Ury identify the general types of tricky tactics. Parties may engage in deliberate deception about the facts, their authority, or their intentions. The best way to protect against being deceived is to seek verification the other side’s claims. It may help to ask them for further clarification of a claim, or to put the claim in writing. However, in doing this it is very important not to bee seen as calling the other party a liar; that is, as making a personal attack. Another common type of tactic is psychological warfare. When the tricky party uses a stressful environment, the principled party should identify the problematic element and suggest a more comfortable or fair change. Subtle personal attacks can be made less effective simply be recognizing them for what they are. Explicitly identifying them to the offending party will often put an end to suck attacks. Threats are a way to apply psychological pressure. The principled negotiator should ignore them where possible, or undertake principled negotiations on the use of threats in the proceedings.

The last class of trick tactics are positional pressure tactics which attempt to structure negotiations so that only one side can make concessions. The tricky side may refuse to negotiate, hoping to use their entry into negotiations as a bargaining chip, or they may open with extreme demands. The principled negotiator should recognize this as a bargaining tactic, and look into their interests in refusing to negotiate. They may escalate their demands for every concession they make. The principled negotiator should explicitly identify this tactic to the participants, and give the parties a chance to consider whether they want to continue negotiations under such conditions. Parties may try to make irrevocable commitments to certain positions, or to make-take-it-or-leave-it offers. The principled party may decline to recognize the commitment or the finality of the offer, instead treating them as proposals or expressed interests. Insist that any proposals be evaluated on their merits, and don’t hesitate to point out dirty tricks.

Summary by Tanya Glaser, University of Colorado

P&G Negotiation Planning Model | 29

A Negotiation

Planning Model

Example


This documentation is intended to clarify how to use each section of the Negotiation Planning Model (NPM) through more detailed explanation and examples.


Positions Use preemptive strike with demands to meet their proposal or lose all merchandising support.

List of other party opening requests and level of movement

Interests • Building profitable volume. • Understand shopper fully.

Their interests previously met by our proposals

Tactics Used Pre-emptive strike, emotion, original position List prevalent tactics

Our high value resources

Big brand share and linking to multi-event offering

What do we have that the other party has valued highly, leading to agreement

Closing Keep offering options and keep from taking a fixed position.

List techniques that close the negotiation successfully

1a. Negotiation/Other Party Historical Data

Prepare historical data of previous negotiation results with the Other Party to shape objectives/ interests and goals. Include a history of the terms, conditions, and contract fulfillment results of past (~2 years) and current contracts, divided into meaningful time periods (e.g., quarterly), for the product/service being negotiated – as well as other products/services with the Other Party.

Examples of a Review of previous negotiation with Other Party:



The purpose of this section is to identify and understand the key background/environment (i.e., What?, Why?, For Whom?, and By When?) details of your negotiation.

• Objective (What?) is the overall result you are negotiating to achieve. Test your objective with your team (see below) to make sure it is specific, measurable, actionable, and consistent with business objectives. Your objective will likely be achieved through a combination of goal areas that fulfill the overall objective. Keep the objective simple; 1-2 sentences. List and develop detailed goals in section 4.

Examples of Objectives:

• Increase the volume of Brand A by 20% by improving prime shopper basket size.

• Improve the effectiveness of the MDA spend by 15%.

• Improve the shelf space for Band B by 15% and to “block” the brand.

• Sell a three year Joint Business Plan that delivers 8% growth in Volume, 11% in NOS an holds MDA constant.



• Interests (Why?) are foundational, motivating wants and needs that drive each party’s objective and goal areas. Interests can be both broad and narrow, objective and subjective, data-based and emotional, professional and personal. The Other Party’s real interests are often hidden and must be exposed and addressed to develop the strategies necessary to win – whether the negotiation is competitive or collaborative. It is critical to list the Interests in order of importance to each party.

Examples of Interests:

• Increase the volume of Brand A by 20% by improving prime shopper basket size.

• Improve the effectiveness of the MDA spend by 15%.

• Improve the shelf space for Band B by 15% and to “block” the brand.

• Sell a three year Joint Business Plan that delivers 8% growth in Volume, 11% in NOS an holds MDA constant.

• This sale will enable me to set plans to exceed my JBP Objective..

• This sale will allow me to reach my Annual Goals.

• I want to be seen as an excellent negotiator by out-negotiating the Other Party.

• I want internal credit and/or external recognition for doing an excellent job.

• I need these terms to meet my sales and revenue quota.

• If I close this deal, I will be more valued as an employee.

• Issues (Why?) are barriers you must overcome to win your negotiation. Resolving an issue may be the purpose of the negotiation, or just one key to success. Focus only on key issues that prevent you from achieving your objective; do not spend time on process issues you would like changed; but, really don’t affect the outcome.

Examples of Issues:

• Retailer has declared this brand as not core to their business.

• Retailer knows this is a critical new item for P&G and will use this information against us

• Our profit percentage on this item is below the category average.

• The level of MDA spend is built into the buyers rewards and I need to start reducing the percentage.

• The Other Party is not giving his boss, the decision maker, correct information.

• Approval (for Whom?) refer to the people and process you must work through to get approval for the negotiated result. Follow the delegation of authority rules for your level and the terms and conditions of the products/services being negotiated. Schedule enough time to get approval, concurrence, and be able to inform all interested parties. Also, plan extra time if the agreement requires senior management approval/committee review.

Examples of Approval Team/Steps:

• Review by CBD Region Leader, Team Leader, and Legal.

• Agreement Approval by Customer’s Buying Committee.

• Inform MDO Leader of negotiation results.



• Deadlines/Milestones (by When?) refer to all timing deadlines and check points in the negotiation. Plan ahead for these so that when they get close, they do not force you to make bad concessions to meet them. Also, think about how you can use time and deadlines to push the Other Party to agree to your goals. “If you don’t manage time, it will manage you.”

Examples of Deadlines/Milestones:

By identifying and analyzing the same type of information and level of thoroughness for the Other Party, you will find areas of common interest to collaborate on, you will discover what motivates the Other Party to seek agreement with you, and you will better understand barriers and challenges in the Other Party’s environment which you may choose to take advantage of; or, help resolve to strengthen your relationship. Use section 6. Questions, to develop a list of questions/resources to get this information from the Other Party as early in the negotiation planning process as possible. As you gather this information, list answers in all relevant sections of the model to help you analyze strengths, weaknesses, goals, options, etc.

2a. Relationship Analysis (Refer to Negotiation Relationship-Behavior Continuum)The purpose of this section is to lead you to shape the relationship environment to enable you to achieve your goals. In choosing the current and desired relationship, it is more important to decide the direction of change needed in the relationship, than to define an exact spot on the continuum. If you need to strengthen the relationship, list action steps that build the relationship; if no strengthening is needed, don’t list any action steps. This section is not for general action steps related to the negotiation. Once you brainstorm the list, prioritize the top few for action, by using the priority (Pri.) column. Lastly, always remember that “relationship” is an outcome of the current negotiation that will influence all future negotiations. Think long-term!

Examples of Action Steps:

• Must be on shelf by September 15

• Negotiation with Customer during October

• Agreement Approval by November 15

Pri Action Steps Timing/Notes

1 Training session for Other Party’s people. Next month

2 Offer additional use of logistics manager to increase savings. Discuss

3 Use shopper data to build options for profitable growth. Next week

4 Top-to-Top meeting to discuss common goals. 3 weeks


2b. Decision Mapping(Optional)

The purpose of this section is to help you determine what roles at the customer you need to include and influence in order for the decision to be made. In fact, important tough corporate negotiations require us to think about the negotiation in context of the Customers Decision process.

When it comes to strategic customers, the dynamics and complexity of the relationship is often too difficult to document and manage using typical selling or planning methodologies that always seems to be “about” the team and the customer rather than “for” them. Managing a strategic account is often about managing or influencing critical decisions inside both the supplier and customer firms. If you can cause high quality decisions to be made – decisions that result in outcomes that benefit both your customer AND your company – you win.

Dialogue drives decision making, at least the big decisions that matter. Those conversations go on whether we know about them or not, and if we’re in on those conversations, we have a chance to influence the outcomes. Our opportunity to know about and influence conversations and decisions hinges on the strength of the relationships we’re able to build or enable between the two organizations.

To fully understand the Decision Mapping process you will need to be able to answer 5 questions about the decision: Scope, Roles, Stages, Factors and Action Plan. For the NPM we will simply that to 3 questions that assume you have looked at all 5 aspects using Decision Mapping tools.


2b. Decision Mapping

Instructions: Determine what roles at the customer you need to include and influence for decisions that will affect the negotiation. Ensure you have an owner for each relationship and timing for their support.

1 Decision Makers Owner: Senior VP of Merchandising

Evaluator(s): Marketing Manager and Finance VP

Implementer(s): Senior Buyer

Who are we influencing and negotiating with? Who is the Owner, Evaluator(s) and Implementers?

2 What stage of the process are we in? Stage: Research Are we in Implementation, Evaluation, Research, Concept, How It Works, Decision

3 What factors do you need to influence and understand to make the sale?

Key Factor(s): Does the customer really perceive the need, do they have the funding needed to say yes, do they have questions about your solution – are their policies and practices compatible to ours, do they understand how your product fits their need – how wiling are we to modify or negotiate the products/service, what is the relationship you have with the customer (level of trust) and what are the competitive responses or alternatives the customer has.

Need, Funding, Business Compatibility, Product/Service Fit, Customer Relationship and/or Competition

Pri Action Steps Timing/Notes List key steps of the processFocus on the issue, the feature of our product/service, translate that to organizational benefits and then to individual benefits.

1 Develop support for the proposal form the Evaluators by building common data sources.

2 weeks

2 Test the proposal from a list of options with the Senior VP or Merchandising.

4 weeks


3a. Strengths-Weaknesses Analysis

The purpose of this section is recognize and intensify your power by identifying key strategies (i.e., influential actions or data) to use your biggest strengths and defend against your biggest weaknesses. First, brainstorm as many strengths as you can; then, innovate strategies that take advantage of them, prioritizing the key ones. Next, do the same with weaknesses. It is equally important that you identify strengths and weaknesses from the viewpoint of the Other Party to ensure you understand the full negotiation landscape. That is, the Other Party’s weaknesses, if strengths to you, should be listed under your strengths – and vice-versa. While you may end up with a long list, pick the top 2-3 strengths-strategies to focus on in negotiations, and be prepared to defend the top 2-3 weaknesses vigorously.

Examples of Strengths/Opportunities – Strategies & Weaknesses/Threats – Strategies:

Strengths/Opportunities Strategies to Take Advantage Instructions

You are the Other Party’s largest supplier. • Request special pricing/other terms better than all other suppliers.


2. List strategies to take advantage; focus on intensifying Other’s “desire to gain” & “fear of loss”

3. Sort by priority

Your current share is 10% above the nearest competitor.

• Negotiate multi-year agreement leveraging the strength of the brand.

Your brands reach the prime shopper more efficiently than any other brand.

1. Ask for additional features and displays to leverage the advantage – below current fee structures.

Low interest rates. 2. Agree to pay Other Party in 180 days to generate cash for company

Weaknesses/Threats Strategies to Defend

Your margin is 10% lower than the category average.

Convince the Other Party that this investment brings in prime shoppers.

Market share is lower than competitors. Use this to create additional competition in the category – allows for more spending in the category.

One Buyer accounts for 50% of revenue and dominates terms

Ask current Buyer to sign a long-term contract to ensure consistent revenue for several years.

Action Steps TimingAre there common opportunities? Can we match key opportunities to our strengths and deliver competitive advantage for both parties?

Our brands reach the key shoppers and we can use this to drive volume.

Use SBD to understand impact

We can help understand pricing change impact on key shoppers Next 3 months

As the largest supplier to the largest retailers we have scale – need to measure this impact

Need to involve F&A on measures

CONCLUSIONS

OTHER PARTY Strengths/Opportunities Strategies to Take Advantage Instructions

You are the largest retailer in the market. • Raise prices on high demand products/services

• Eliminate special discounts..


2. List strategies to take advantage; focus on intensifying Other’s “desire to gain” & “fear of loss”

3. Sort by priority

You have better data on shoppers than your competitors.

• Use the data to extract additional discounts – focus on key sku’s only.

Weaknesses/Threats Strategies to Defend

No alternative suppliers/services. • Establish a fund/process to develop alternatives and tell the Other Party.

The supplier will move the limited supply to my competitiors.

• Develop a long term joint Business Plan.


Rating (H/M/L)

Key Influencing Factors Instructions

CompetitiveAdvantage

M • First to market opportunity• Drive multiple measures, e.g. sales, costs, profit• Differentiated solution• Innovation

List and rate key factors that impact your advantage e.g. strategic importance of the negotiation, need to compete with other suppliers, extent of dependency, timing

Scarcity M • Offer capabilities customer does not have. Unique features, exclusive information

• Big brands with high loyalty• Reliable execution – consistently deliver objectives

List and rate key resources that are in limited supply or difficult for the other party to obtain

Legitimacy H • Past performance• In line with agreed business plan

Precedents, benchmarks, justify our proposal. Seek explanation/justification for theirs

Authority L • Flexibility to agree• Industry knowledge

What discretion will you show, what will they have? Identify suitable 3rd party if required.

Reciprocity L • Be the first to give service, information• Show willingness to trade

What service, information will develop a mutuality feeling? What can you ask in return?

Consistency M • Confirm existing commitments• Start small and build

What past successes, existing commitments are there? What voluntary choices led to these?

Flexible H • Collaborate on growing the pie• Show high value to them, and create value

How can you create an air of flexibility? How fixed will they be? Benefits / Issues of anchoring(See options sections).

Style H • Strong reasoning, state expectations• Involve, find common ground, shared vision, give feedback

What influence style fits the situation – Persuade, assert, bridge, attract?

3b. Power Analysis (Optional)

The purpose of this section is to understand your proposals relative strength versus the customer. By understanding this you can work to improve your alternatives or BATNA and therefore improve the results of your negotiation.


4. Goal Analysis (“Goal areas” are sometimes called “Issues” in negotiation literature)

The purpose of this section is to define the strategic goal areas and success measures with detailed supporting reasons and data. You must decide what specific combinations of goals will enable you to achieve your objective, and then set targets and limits for each of them. Targets and limits serve different purposes and are not always interdependent (e.g., a % of each other).

• Targets are the optimum result for each goal area. They are your wants. They should be aggressive; but, appear reasonable, and fully supportable with reasons and data as to why the Other Party should agree. Always steer the negotiation discussion towards achieving your goal targets with questions like: “What prevents you from agreeing to this?”

• Limits are the minimum result for each goal area that you will accept without walking away from a deal. They are your needs. Limits should also be supportable with reasons and data. Always use your best alternative to a negotiated agreement (BATNA) to define your limits. To protect the opportunity to achieve your targets, conceal your limits from the Other Party with reasons/data that sell your targets – as if they are your limits.

Once you have set initial targets and limits, seek additional data, alternatives, or a change in the environment to strengthen your targets and limits before the negotiation starts. Then, stick to them! Finally, spend time exploring the Other Party’s goals and measures. They will likely reveal their targets early in the negotiation. Focus on finding out their limits (and fundamental interests) and drive the negotiation towards them. The most effective means to do this is to constantly feel out their proposals with questions like: “Why do you need that much?” Their data, or lack thereof, will provide an indicator for when they are nearing their limits. It is also a healthy activity to benchmark (compare) some of their key data points, with others outside of the negotiation meeting, to know if the Other Party are really at their limit; or, bluffing. Finally, identify common or overlapping goals to support collaborative negotiation discussions, or to look for strategic trades; i.e. give up a low priority goal to get a high priority goal.


3. Your BATNA Instructions

• I will save the funds not used to develop a multi-brand promotion for later in the FY. State your Best Alternative to This Negotiated Agreement if you cannot reach agreement to your proposal

4. Their BATNA

• If I turn down this promotion I will use the brands from Competitor Y for the display. State your estimate of their Best Alternative to This Negotiated Agreement they do not agreement to your proposal

Examples of Goals – Targets – Limits – Reasons/Data

Pri You Target/Limit Reasons/Data

1 MDA Spending T 10% 10% will allow me to double my number of displays.

L 20% Will continue spending at the current percentage.

2 Joint volume goal of +10%. T 15% Data shows I could build my share at the customer to greater than market share

L 5% This will meet my commitment – but provide no growth versus objective.

3 Display T Two locations for 2 weeks

Most effective Spend of money – will provide incremental volume of 25%.

Feature L 1 feature Current approach – provides same volume lift as previous year.Will spend more if I can combine with a display.

Buyer Example:

1 Increase fees for product display. T $1,000/display Will increase bonus paid to me.

L $750/display Minimum needed to meet Boss’s number.

2 Improve Private Label sales. T +10% Profit of PL greater than national Brands – increase category profit by 15%.

L +5% Profit improvement meets company standards.

5a. Value Analysis – Create Value

The purpose of this section is to identify the best available agreement option or combination of options to achieve your goals. You should brainstorm all options which include the Other Party, and all alternatives to making an agreement with the Other Party. Then, decide and prioritize how well each option, or combination of options, best enable you to achieve your goals.

Value Elements Instructions

C Yours Cost to You Value to Them 1. List all individual elements of value available from your side and those from the other party.

2. Give an actual value or cost for the Value Element, or rate H/M/L

3. Mark complimentary (C) options to create possible

Note: Be sure to think about all value elements including those offered by third parties and non-traditional sources.

Product initiative H H

Pricing/MDA investment H H

C Free standing displays M M

Shopper Based Design capability

L M

Instore couponing L M

Instore claim L M

C Sales & profit growth M H

C Theirs Cost to Them Value to You

Space M H

C Feature/Promotion L/M M

Distribution H H

C Display L M/H

Market share L M

Commitment L H


6. Questions List

The purpose of this section is to brainstorm a list of questions, and answers to expected questions from the Other Party, that will enable you to exploit information to achieve your goals. This list of questions will constantly change. As you get answers, record them in the related section of the planning model and erase the questions from the list. As new questions come up, add them to the list. Equally important to “What is asked?” is “Who will ask?” and “When to ask?” Many questions are best asked through third parties, or in informal situations outside of the formal negotiation. Likewise, prepare your team for questions that will be asked in informal settings. Develop answers that turn the Other Party’s tough questions into revealing questions back to them. Finally, use questions to test all of your assumptions; do not leave anything to chance.

To understand the customer’s real needs focus on the “persuasive questions” of Issue, Impact and importance supplemented by Information questions.

Examples of Questions – Who/When & Other Party Questions – Counter Answers:

Pri Your Questions Who When

1 What are the key issues you are facing this year? You Before visiting buyer; then check data

2 What are your business growth targets for next year? You 1st meeting to show interest/relationship

3 What impact will it have if you miss your volume target by 5%? Finance Before meetings

4 What are your goals and how can we help you? You 1st meeting

5 How do you feel about longer-term agreements? You While exploring options in all mtgs.

6 What types of shoes will you focus on this year? You Same

Pri Other Party’s Questions “Counter” Answers

1 How much will you spend this year? It depends on whether or not we achieve discount cost structure needed to meet sales projections.

2 What are other retailers asking you to do on payments? Just like we don’t share your plans with other retailers, we don’t share theirs with you.

3 Why can’t you increase your spending to allow us to make the category average?

You know we spend all funds available to you. Let’s see if we can put together a plan that improves profitability.

# Value elements exchange Value Created (Amount and for whom)

Instructions

1 Product initiative Distribution L 1. Re-order the value elements listed above by how you intend to trade/exchange each

2. Plan the exchange of value elements to create value

3. Determine value you wish to commercialize from your options.

4. Determine who receives which portion of the value

5. Note the value created and for which party

2 Net pricing Commitment H (cust)

3 SBD Space H (us)

4 FSDs Display M (us)

5 MDA Feature M (cust)

6 Coupons Commitment H (us)

7 SBD Market share M (both)

8 Instore claim Space H (us)

9 Sales growth Display M (both)

5b. Capture and Commercialize Value

38 Section 10 | P&G Negotiation Planning Model

7a. Negotiation Meeting Plan

The purpose of this section is to create a meeting agenda which leads the discussion towards achieving your goals. A fresh agenda should be created for each meeting with each Other Party; although there may be common, repeating items across all agendas.

• Place – Create a physical environment that is most favorable to communicate your key points and get the Other Party to openly discuss their interests. Also, take into account any cultural or strength-weakness perceptions in choosing your offices, the Other Party’s offices, a third party’s offices, or a more relationship-building location.

• Visual Aids – Use ideal technology and methods to communicate the key arguments in ways that the Other Party can understand and be influenced. Seeing is more convincing than hearing in some people; and seeing and hearing together is better still. Also, there tends to be a higher acceptance (legitimacy) of written information over spoken words. However, make sure technology doesn’t get in the way of the message. Often, a simple 1-page black and white handout can deliver the key point more effectively than waiting to set up a video projector to see the same chart in multiple colors that are hard to read.

• Who Open – Generally, where you are not sure how much you might gain, or lack detailed industry information, it is better to encourage the Other Party to open to make sure you don’t start too low. When the negotiation environment is well defined and you are negotiating a major change, it is better that you open with a high target and defend it with strong data. Then, the more you influence the negotiation discussion to focus on your targets, rather than the Other Party’s targets, the more successful you will be.

• Opening Proposals/Key Agenda Plan/Items – In creating an agenda plan/process, take initiative to get early agreement on the optimum meeting process to achieve your goals.– Focus the early part of the negotiation agenda(s) on building the optimum relationship mood and

understanding as much as possible about the Other Party’s situation, interests, issues, and goals to find out if your chosen strategies and goals are optimum. Look for areas of common interests/goals, as well as weaknesses to take advantage of. Then, request the Other Party’s opening proposal or present your own.

– Focus the middle part of the negotiation agenda(s) building options and agreements that achieve your negotiation targets. If the relationship-behavior environment is win-win, lead a collaborative discussion of different options or combinations of options that enable both parties to win. If closer to win-lose, focus your communication on compelling arguments in favor of your targets. Build in reasonable bargaining room and don’t share data which reveal your limits – until you have no other choices.

– Focus the final part of the agenda(s) on finalizing and implementing the agreement. Make sure both parties, and their organizations, understand and accept all terms.

In some negotiations, all parts will take place in one meeting. In other negotiations, it may take several months and many meetings to cover each agenda section.• Concessions – Throughout the negotiation, you may be pressured to make concessions on some of

your targets. Before you negotiate, decide the least important concessions and the smallest concession increments that you can make to support/trade for larger concessions with the Other Party. Also, make sure your concessions appear to be taking you to your limit; rather than being so generous that the Other Party feels encouraged to ask for more.

P&G Negotiation For Value | Section 6: 17














Who opens?














SeniorManager(s)


TechnicalExpert(s)




7a. Negotiation Meeting Plan – continued

• Breaks – Think about when it would be helpful in your agenda to take breaks so that you maintain or build full momentum towards your goals. Likewise, plan on taking breaks at appropriate points to consider learnings from the Other Party; or, change the discussion momentum away from their goals and back towards your goals.

Examples of Break Management:

• If the Other Party is close to agreeing, don’t let them break until they agree.

• Encourage the Other Party to take a break and think about a worrying situation you have presented to influence them to accept your offer.

• Whenever you feel yourself getting to a concession point which isn’t a strategic trade (i.e., you would give up more than you would get), take a break before making the concession, and review your negotiation plan to consider other options.

• In a team negotiation, agree on who will call breaks; perhaps even have a signal for one team member to request a break at a critical time to have a team discussion.

• Impasse – Be prepared to discuss with the Other Party why you cannot reach agreement. Often, when there is not overlap between your limits and the limits of the Other Party, you will find yourselves unable to negotiate an agreement. Breaking this impasse requires you both to open up a little more and look deeper into each other’s underlying interests and develop new options. You must be prepared for this, and have a walk away position; or, you may find yourself giving beyond your limits and losing the negotiation.

• Authority – To manage authority, seek a balance, based on the negotiation environment, to limit what you can give up, while getting the Other Party’s decision makers to give more.

Examples of Authority Management:

• Assign your boss to be the final decision maker in order to limit your ability to give in.

• Have enough authority yourself to get the Other Party to make concessions.

• Ensure you get the Other Party’s decision maker into the negotiation so that his subordinates do not influence his/her decisions in the wrong direction.















Who opens?














SeniorManager(s)


TechnicalExpert(s)




7b. Negotiation Team Roles

The purpose of this section is to decide who will do what during the negotiation meeting(s) so that all roles will harmoniously support achieving the goals. You must choose a lead negotiator who will control negotiation meeting discussion. Many negotiations are lost or severely damaged when other team members make disconnected comments or divert the questioning/ influencing process being conducted by another member of the team. Also, plan ways to use all of your organization’s resources, at relevant points, to support your key goals. Finally, prepare your entire organization for the negotiation – whether folks have an active role or not. There are usually many levels of communication between your group’s members and members from the Other Party. To the extent your message is consistent at all levels and in all communications – formal and informal – you will be much more effective. The roles listed in the negotiation planning model are suggestions/options; expand or contract the list as needed to win.















Who opens?














SeniorManager(s)


TechnicalExpert(s)




7c. Negotiation Tactics Plan (Refer to Negotiation Tactics)

The purpose of this section is to pick key tactics to influence the negotiation environment. Use the Negotiation Tactics reference document to choose tactics which persuade acceptance of your desired goals. Also, prepare responses to tactics you think the Other Party will use on you. Use the priority (Pri.) column to pick 2-3 key tactics. Note: a tactic often requires repeated emphasis to be effective; don’t jump from tactic to tactic to find one that works; none will. Also, overuse of many different tactics projects an insincere attitude and will likely weaken the relationship.

Generic Examples of Tactics – When/How to Use and Other Party Tactics – Defenses:

Pri Your Tactics When/How to Use

1 Problem Transfer Share your key issues early to enlist the Other Party’s help to solve them. (This drives discussion towards your goal targets).

2 Ask Why/Explore/What If Use early and at impasse to understand the Other Party’s situation and options.

3 All Levels Prepare all levels of your organization to communicate a consistent message to all levels of the Other Party’s organization.

4 Broken Record Throughout the negotiation, focus on a few key points to repeatedly emphasize your determination. (This is even more effective when combined with All Levels).

5 Test & Switch Use when you are stuck. Test an outrageous (impossible) offer you know will enable the Other Party to agree to your goal; then, try alternative offers to get the same benefit.

6 Stop Me Use to signal that you have good alternatives, when the Other Party is not cooperating.

Pri Other Party’s Tactics Tactics to Defend

1 Problem Transfer Problem Transfer: “I’d like to work on that problem, if only I could stop thinking about mine. Can we work on my problem first?”

2 Good Guy - Bad Guy Emotion: “I am very frustrated that you are using such a relationship-destroying tactic on me when I am working towards a win-win solution for both of us.”

3 All I Can Afford What If: “What if I double my _____, then, can you give me more?” Then, continue exploring options to get the same concession.


8a. Negotiation Log

The purpose of this section is to record negotiation proposals, commitments, and positions to make sure all favorable items are remembered and used. You will also benefit by recording and studying the back-and-forth discussion of the negotiation to improve the process to support your goals. Use as many sheets as necessary to record all important events and discussions.

8b. Negotiation Agreement

1. Agreement Resp. When Instructions

To improve the promotion effectiveness of our funds by 10% in FY

CBDM End of FY 1. List the specific details of the agreements reached, showing – Our commitment(s) – What we receive in return– Clearly state conditions required for

our commitments – we will pay for performance.

– Note Who is responsible for execution and when

2. Include dispute resolution clauses/process How and when will you decide if the agreement is not being fulfilled from either parties. How will differences be resolved?

3. How will you handle changes in people, market, and business relationship to ensure the agreement is fulfilled? Agree on action/responsibilities if they occur.

4. When would you reopen the settlement to create additional value for both parties. ‘Post settlement’ settlement –

2. Resolution of Disagreement Resp. When

We will report in writing to all Senior Leadership each quarter on progress toward s the goal.

CBDM Within one week of end of quarter

If we are not tracking to our goal each quarter we have agreed to involve the Commercial Director.

CD By the end of the month following the quarter

Commercial Director agrees to intervene with CBDM

3. “Predictable Surprises” Resp. When

Change in CD? Plan a meeting with the Customer’s Sr. Leadership confirming the direction with new CD

CBDM Once change is announced

Change in market dynamics? Confirm the changes help the customer reach their goals.

CBDM If major changes announced.

4. “Post Settlement” Settlement Resp. When

If the program is producing better than anticipated results reopen the negotiation to include more reductions leading to improved business.

F&A Review each month


Acknowledgement

We want to thank Larry Loftus, Director, Global Purchasing for his support and help in developing the CBD Negotiation Planning Model and training. The work you see is based on Larry’s direction. In fact, without his help and support we would not have been able to make the progress or to have the program you see today.

From CBD Capability, the leaders for this work have been Steve Ashcroft, and Bruce Peters. Along with your regional Capability Managers they stand ready to assist you.

In addition, significant additions were provided by Jaceck Bodych, Kevin Hawkins, Patsy Kaschalk, Mary Lee, Dean Nelson, Nellie Shen, and Tom Verdery.

Negotiation For ValuePre-Reading

Version: January 2009

3 negotiation for value

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