Market-Oriented Pricing: Strategies for Management

By Michael H. Morris; Gene Morris | Go to book overview

satisfied by those on the other side. Investments are being made by both sides, and each party must perceive the give-and-take to be equitable. Relationships also tend to get more personal over time. If an atmosphere of trust is not created early on, with benefits and burdens mutually shared, the job of the seller becomes more difficult with each new negotiation involving a particular customer.

The uncertainty that surrounds businesses today also affects ongoing negotiations. Rapid changes in technology, the economy, production costs, competition, government regulation, and market size are increasingly commonplace. In fact, the only constant in modern business would seem to be change. Such turmoil can alter the fundamental relationship between a seller and buyer in a very short amount of time. The seller who takes too much advantage of his or her organization's negotiating position today will most likely pay for such shortsightedness in the not-too-distant future.


SUMMARY

This chapter has attempted to provide a systematic method for arriving at prices when they are determined through negotiation. Negotiation was examined as a dynamic, two-way process in which both buyer and seller seek gains and make investments. The value of approaching negotiation as a positive sum or win-win game was emphasized. The effective negotiator seeks creative solutions that accomplish mutual goals.

A seven-step process for strategically managing negotiation was presented. The process begins with research on the customer and his or her requirements. Next, facts and assumptions are organized and implications are drawn for negotiation strategy and tactics. The bargainer then establishes settlement ranges and the zone of negotiation. Following this, a bargaining method is chosen and a starting place is selected. Finally, the tactics that appear most appropriate for the situation are identified.

Suggestions are also made regarding how the process of giving concessions should be managed. The negotiator is encouraged to monitor both position loss and image loss, while making concessions that are more apparent than real. Items that are of apparent value but entail little real cost represent ideal candidates for concessions.

The long-term implications of negotiation strategy for buyer-seller relationships are also stressed. The modern business environment is increasingly one in which buyer-seller relationships are less adversarial, and terms such as "cooperative marketing" or "partnership marketing" have become popular. In addition, extreme turbulence in the competitive environment is continuously affecting the relative bargaining positions of buyers and sellers in many markets. These developments suggest that negotiations be pursued with an eye toward both present and future needs of the parties.

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Market-Oriented Pricing: Strategies for Management
Table of contents

Table of contents

  • Recent Titles from Quorum Books ii
  • Title Page iii
  • Contents vii
  • Illustrations xi
  • Foreword xv
  • Preface xvii
  • 1 - Introduction: Price as a Statement of Value 1
  • References 17
  • 2 - Developing Pricing Programs 19
  • References 37
  • 3 - Understanding and Using Elasticity 39
  • References 54
  • 4 - The Psychology of Pricing 55
  • References 69
  • 5 - Negotiating Prices with Customers 71
  • Summary 85
  • References 86
  • 6 - Examining Costs from a Market Perspective 87
  • Summary 104
  • 7 - Industry and Competitor Analysis 107
  • References 124
  • 8 - Pricing across the Product Line 125
  • Summary 141
  • References 142
  • 9 - Legal and Ethical Aspects of Pricing Decisions 143
  • References 161
  • 10 - Computers as an Aid in Pricing 163
  • References 189
  • Suggested Readings 191
  • Index 197
  • About the Authors 201
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