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Negotiation Scenarios: Incorrect quote on price
Tuesday, July 10th, 2007

Sam Supplier quoted a price to a customer.  When Sam got back to his office, he realized that he had understated the price.  If Sam honors the price that he has quoted, Sam will lose money on the transaction.  It is a relatively small transaction and the error amounts to less than $200 difference total.

Sam is concerned about losing money on the deal.  Sam is also concerned that correcting the price quote will raise concerns about his credibility as a serious business person with the customer.

What should Sam do?  If you have been in Sam’s situation, what did you do?

Perspective

The best thing that Sam could have done is to double check the prices before quoting them.  When prices are quoted, customers expect the suppliers to deliver at the quoted price.

Relationships

If suppliers quote prices and then discover that they are losing money, they risk harming the relationship by correcting the pricing.  Errors like this can raise issues with the suppliers’ credibility if they are raised.

From a customer’s perspective, it may make sense to go forward with the deal, even if the supplier corrects the mistake on price.  It is a good idea to understand how the issue arose.  Also, ask what steps the supplier is taking to learn from the experience and to ensure that it does not happen again.

Questions

Firms in Sam’s situation might want to think about questions like:

Can they afford to eat the loss?

How will this issue impact their credibility?

What steps can be taken to avoid issues like this in the future?  

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Rained out! Monitoring weather risks
Sunday, July 8th, 2007

In baseball, games can be rained out.  At my family’s fishing lodge in Oregon, we sometimes have fishing trips that are rained out as well. 

In the early summer, it is a bit unexpected to find businesses in North Texas rained out.  The unusual amounts of rain this year - sometimes more than eight inches over the normal amount - have left many businesses rained out and disrupted a lot of transportation.  Case in point, Lake Lewisville in Texas was high enough that it closed the southbound service road to I35 and could have easily closed I35 itself with just one more day of rain.  For more on the flooding, this search on Yahoo will provide a lot of information.

We have little ability to control weather like this.  Instead, it is important to identify weather risks, develop contingency plans, and execute the contingency plans if they are necessary.  One tool for monitoring weather related risks is the National Weather Service. 

One tool for executing the contingency plan is the telephone.  Make sure the other party to the relationship knows that the plan is being executed.  This allows them to prepare for risks.  Sometimes, products may arrive early and require storage space.  In other cases the situation escalates and performance becomes impossible.  If people know about the situation, they can deal with it.  If they don’t know, how can they prepare?

[t_targets:  flooding, business, communication, water risks, negotiation, contingency plans]

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Veterinary records online
Monday, July 2nd, 2007

Would you want to have your pet’s veterinary records online?  Would you want to visit the online clinic online, rather than just making a phone call?  Main Street Veterinary Clinic in Lewisville thinks that the owners (parents?) of its patients might.

Check it out by going here…  Then, please let me know what you think.  Is this a good service, or an example of an idea that is going too far?

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Will manufacturers try to control minimum price?
Thursday, June 28th, 2007

Suppose that Mark Manufacturer produces a widget that Sam Supplier sells to Connie Customer.  Can Mark’s contract with Sam specify the minimum price that Sam will charge Connie?

Until today, few people in Mark’s situation were willing to do so.  Instead, people in Mark’s situation negotiated their price with Sam.  Then, Sam and Connie negotiated the price between themselves.     

As a result of the Supreme Court’s ruling in LEEGIN CREATIVE LEATHER PRODUCTS v. PSKS dba KAY’S KLOSET, Mark may be able to negotiate with Sam regarding the price that Sam will charge Connie.  A balancing test will be used to decide if the price that Mark and Sam negotiate and the use of provision itself is reasonable.  The Court said:

Factors relevant to the inquiry are the number of manufacturers using the practice, the restraint’s source, and a manufacturer’s market power….

The rule of reason is designed and used to eliminate anticompetitive transactions from the market.

It may be sometime before people in Mark’s situation engage in large scale negotiations over minimum prices.  Perhaps, it will be a situation where the restrictions occur in franchise and licensing situations.  In such situations, the manufacturer often exercises more control than in other types of business relationships.

What do you see as the future of pricing?  What will it mean for your business?  What will it mean for you as a consumer?

Is this part of a general trend in the US Supreme Court?  If so, what does this mean for you?

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Is an Internet presence right for your business?
Thursday, June 28th, 2007

Many small business owners create a website and expect that website to work miracles.  They have heard about the importance of Internet marketing and assume that having a website is enough.  If a small business is in a hot area, having a website may be enough.  For others, an Internet presence may be a part of the marketing puzzle.  In some cases, an Internet presence is counter-productive.

In deciding if an internet presence is right for your business and how much of an investment to make in creating a website for your business, you may want to consider a variety of questions including those discussed in this posting.  As this list illustrates, it is critical to think about issues, rather than to adopt an approach because “everyone” else seems to be doing so. 

What can an Internet presence do?  A website can attract people who do not know about your business.  It may help people who know you think about you, if you have a good rating with search engines.  (Which explains why there are so many specialists in search engine optimization.)  A website can help people who know you learn about your business as well.  The website may have little impact in terms of actual sales.  

How do your customers select suppliers?  Often, in the business-to-business environment, people who visit the website may not be making decisions.  Instead, they may be in support organizations, such as procurement or accounting.  In many cases, the people who are doing searches on the Internet are may be seeking information which supports the purchasing decision that has already been made. 

Will your website be visited by your customers?  When the website will be visited by advocates, rather than customers, sales can occur if the site (1) convinces people that they need your offering and/or (2) educates potential advocates so that they are able to talk with others about your services or they think of your firm/industry when a need arises.

Are your customers online?  If so, it is easier to justify a website because your customer might search for the products and services that you offer.  If not, remember that adding layers rather than talking with firms yourself can increase costs, cause confusion, and, in many cases, requires more time in the sales cycle.

Will your customers value a relationship?  Many customers want to know their suppliers.  If a customer is spending what it sees as a large sum or is buying something important, the relationship can be paramount.  In such situations, the customer may base decisions on information that is provided as well as customer referrals, face-to-face meetings, and dialogue.  Websites may be unimportant to customers who rely on such approaches as part of their decision process.

Do your customers want or need for you to have a website?  Customers may not need for you to have a website.  If they do not need a website to access, learn about, or purchase products from, they may be slow to use the website, even if it exists. 

How often will the website be updated?  If the website contains outdated information, it may reflect poorly on a business.  Rather than attracting and retaining customers, it may drive customers away.  Alternatively, it could result in requests for services that have lower margins or reflect a prior direction of your business, rather than its current vision. 

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Negotiation Scenarios: Dealing with Telemarketers
Monday, June 25th, 2007

Suppose that a nonprofit organization calls you on a regular basis to see if you are interested in renewing a membership or donating to its cause.  Perhaps, a potential supplier calls you regularly to see if you are interested in buying its “widget.”

You have the ability to negotiate when dealing with telemarketers.  Your response is a negotiation.  Most responses fit into one of the five styles of negotiation which are avoidance, accommodation, compromise, problem solving, or competing.  Think about five typical responses and which category they may fall into…

Hanging up or seeing that it is a telemarketer and not answering the telephone would be two examples of the avoidance technique.  In this approach, people simply avoid negotiating.

If you listen to the person’s speech even though you are not going to buy, this consistent with an accommodation approach.  With accommodation, you solve the problem by solving the issue the other person is facing.  In this situation, the other person is trying to find people to listen to his or her information and that is what you are doing.

Suppose that you tell the other person you are busy and agree that the person can call you at a different time.  This is a compromise.  With this, both parties get less than what they were hoping for, but the result is somewhere between what the parties are hoping for.  

Imagine asking questions, learning about the widget, and mentioning it to your friend who may have a need for what is being sold.  That could be a problem-solving approach.  With problem solving, people often suggest out-of-the-box ideas that expand the realm of options beyond those that are ”obvious.” 

What approach would you be using if you told the person to go away and never call you again?  This approach would be one manifestation of competing.

The circumstances determine what response is appropriate.  The key is to use the approach that is most likely to lead to the result that you are seeking.

By the way, on the subject of telemarketers, here are a few tips for dealing with telemarketers…

Telemarketers often use “limited time offers” to try to force your hand.  Rather than falling victim to that, ask yourself if you were looking for what is being offered before you received the call.

Stay connected to your community.  When people are isolated, they may be more vulnerable to telemarketers’ tricks.  These are two reasons that many elderly people contribute to causes they don’t support and buy widgets they don’t need.

Get it in writing.  If someone calls you via telephone and you did not initiate the contact, have them send you the information in the mail.

Give the telemarketer little or no information.  Any information you provide can be used to try to make the sale.  The less you say, the more difficult it is for them to sell you something.

Use the do not call registry.  Click here to visit the site and register. You can also make complaints about callers on this site.

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How do you get an opportunity to help your customers?
Tuesday, June 12th, 2007

Before suppliers can actually help a customer, they have to get an opportunity to talk with the customer.  This requires them to develop a credible explanation for how they help their customers.  This is a difficult challenge.

Explanations that sound like they are run-of-the mill get ignored. 

Explanations that sound too-good-to be-true hurt credibility.

To overcome this issue, some hire specialists to help them craft and refine their messages.  While this is one approach, the results are variable.  Many specialists have never sat in the customer’s chair and are relying on past experience.  If selecting a marketing expert, branding specialist, SEO expert, web designer, or copy writer, look at samples of the person’s work.  Asking a customer or potential customer to review the samples can be especially helpful. 

Others rely on cold calling, beat the customer over the head until the customer throws them a bone, or uses their connections to get their foot in the door. 

Perhaps though, a supplier has a limited budget or decides not to rely on these approaches.  Should the supplier give up?  If not, what other options exist?  Networking, public speaking, writing, teaching, alliances, and free trials are six options that they may want to pursue.  Consider these options.

Networking

Networking with people who may need the firm’s services is an approach for overcoming these issues.  Many firms use networking, relationship management, and membership in professional organizations to stay on the minds of their customers and potential customers.  For some, online networking is an option that has value.  For others, especially those who focus more on getting to know the other person, picking up the telephone or meeting face-to-face is likely to have more value.

Public Speaking and Writing

Public speaking and writing are venues that many use to overcome these issues.  To the extent that these approaches have value for customers and potential customers, many find these approaches extremely helpful. 

Blogs, such as this one, may be helpful to some businesses.

Teaching

For me, teaching in a community college program would have been a great path to market.  Many community college students work full-time and, at the school where I taught, many of them worked for firms who needed my help.

A few times each semester, students asked for help with contract negotiations, planning businesses, buying or selling businesses, building customer relationships, building teams, understanding customers or suppliers, and raising money for businesses.  

Based on this experience, teaching in the technical/vocational program at  community colleges could help many suppliers market their businesses.   

Alliances

Alliances with others in the industry or who offer complimentary products and services can also lead to business for firms.  Many customers are trying to consolidate their supplier bases, control costs, and manage risks.  If a firm provides a great service and can suggest others who can help, this is likely to be well-received.

Free Trials

A lot of suppliers offer free trials of the services they offer.  The suppliers have varying degrees of success with free trials or free services.  In many cases, free services are seen as being worth less and the suppliers are not appreciated.   Alternatively, the suppliers may find themselves in the position of competing on price.

Conclusion

Suppliers have a variety of routes that they can use to market their businesses. Creativity is important in deciding how to market a business. The more creative a person is, the more possibilities and opportunities the person is likely to encounter.

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