Case study: Selling under Pressure

Confidential information for Maria

Maria wants to buy a special product from John. Though she can walk away, she strongly believes that John’s
product is among the best out there. Because there is a lot of her operation riding on it, she wants it fast, cheap
and with maximum guarantees. However, since Maria has been a salesperson before, she knows they are under
the pressure to sell as much as possible. In addition, she knows that John’s company tends to give discounts out to
clients who take a harder stance. She has heard of discounts of up to 25-30%, especially when the salesperson is
close to their quarterly deadline and needs to fill up their quotas. However, these discounts may be only rumors.

Confidential information for John

John is an experienced and proud salesman. He knows that many clients, especially those that play hardball, need
to feel that they won something extra in the negotiation. For this reason, he already marks up the price by 15% to
be able to give his clients some discounts. He also has the leeway to give an additional 25-30% discount based on
the kind of machine he is selling, the volume, delivery, etc. His performance is measured based on revenue, so
selling at any price is better than not selling when it comes to his bonus. Of course, he also tries to maximize
margins when closing a sale. Whenever close to the quarterly deadline (as he is now), he leans towards sales
instead of margins. John is used to the different games played in negotiations and is not averse to some “acting”.

Task: Assess the value of the negotiation in the two contexts described below.
Questions:
The questions have to be answered for each one of the two contexts presented below.
 What are the risks/rewards of a particular line or move in the current context? Refer to one example.
 Overall, what went wrong/ well by employing the respective approach? Why?
 What was interesting or surprising for you in the current context?
Reward: up to 1 point of your final grade.
Deadline: April 24, 2020, 9:00 a.m.

Distributive Bargaining
INSIDE MARIA’S (BUYER) OFFICE, SHE IS IN A LOUNGE CHAIR LEANING BACK AS IF SHE HAS ALL THE TIME IN THE
WORLD. JOHN IS SITTING BY HER SIDE, LEANING FORWARD AND LOOKING A LOT MORE EAGER.

JOHN
How can I help you?
MARIA
I don’t need your help. You called me. How can I help you?
JOHN
Yes, you are right. Well, I’m a representative from DX Machines and I understand you’re interested in
our products.
MARIA
I may be interested, if the price is right and that is a big IF. I’m not sure your company does the best
machines on the market.
JOHN
Sure. So what do you want?
MARIA
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 What do YOU want?
JOHN
I just asked you that.
MARIA
So did I. So are you going to answer my question?
JOHN
Are you serious?
MARIA
Of course I’m serious. Are you going to answer my question or not?
JOHN
But I asked you first.
MARIA
Doesn’t mean I’m going to answer you first.
JOHN
Yes it does. How can I have a conversation with you if you won’t answer my questions?
MARIA
Well, you are not answering any of my questions, are you?
JOHN
But I asked you first, so you answer my questions and then I will answer yours.
MARIA
I don’t think so! You called me here, so you tell me what you want.
JOHN
Ok. Come on! Ok look, I’m not joking alright. What do you want?
MARIA
So I’m joking?
JOHN
No, I’m just trying to move things on.
MARIA
Ok, so answer my question.
JOHN
How can I answer your question if I don’t know want it is that you want.
MARIA
Fine. If you’re so keen on finding out what I want, then I want a 50% discount.
JOHN
I’m sorry?!?
MARIA
You heard me: I want a 50% discount.
JOHN
Are you out of your mind?
MARIA
You asked me what I wanted and I said I want a 50% discount. Is there a problem?
JOHN
Of course! 50% is impossible.
MARIA
Sorry, that’s what I want.
JOHN
Well, that’s not going to happen.
MARIA
Then what do you suggest?

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JOHN
Well, the best I can do would be to give you 5%!
MARIA
5%! It’s not a discount. That’s an insult.
JOHN
Oh, I give you a discount and you say it’s an insult?
MARIA
I say it the way it is. We both know you can do better.
JOHN
No, I can’t. I’m already cutting my commission in half by offering you this.
MARIA
I know the kind of discounts your company gives and I know you need this deal.
JOHN
Ok. In the spirit of trying to get things done quickly and to avoid having to go back and forth; if you
sign this deal today, the best that I can give you is 15%.
MARIA
That’s exactly what I want: 50%.
JOHN
No, fifteen percent. One five percent.
MARIA
You’ve got to be kidding me.
JOHN
Look, I’ve made a couple of steps to make this work and you’re still complaining. If you want this deal
to happen, there have to be flexibility on your part.
MARIA
What are you trying to say?
JOHN
Well, I just went up from 5% to 15%. That is a big move. You haven’t made any move at all.
MARIA
Ok, alright. For all I know, 5% could have been a bluff. But because I’m trying to be reasonable, I can
live with 45%.
JOHN
No way! I increase my discount by 200% and you move 10%. You don’t want a deal done today.
MARIA
No, but you do. You’ve got a deadline tomorrow and you haven’t met your quota yet. Now come on,
save us both some time. Give me a real discount.
JOHN
There is no deadline tomorrow and my quota is fine, thank you. Look, the best that I can give you is
20% discount and not a cent more.
MARIA
I think I hit a nerve. Tell you what, 35% discount and I want delivery in one week and you give me an
additional 2-year warranty?
JOHN
Are you out of your mind. You’re wasting my time here. I’m leaving.
MARIA
Ok! Look, alright. Don’t be upset, I’m just trying to get a good deal. Tell you what, 35% flat.
JOHN
I said 20%.
MARIA

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 You’re not the only one who can leave.
JOHN
Ok. 25% but I can’t go any further.
MARIA
30% and I‘ll sign the deal today.
JOHN
You’ll sign right now?
MARIA
Uh huh!
JOHN
Ok, deal!
MARIA
Congratulations!
THE END

Integrative Bargaining

JOHN
Thanks for agreeing to meet with me.
MARIA
No problem. How can I help you?
JOHN
I understand that Mr. Owodini told me you had an interest in our products.
MARIA
I never said such a thing.
JOHN
Oh sorry, I must have…maybe I misunderstood him.
MARIA
That’s ok.
JOHN
Thanks for your understanding. Well, I called because I thought you could be interested in hearing
about our products but I don’t want to disturb you if that’s not the case.
MARIA
No, no. Let’s see what you’ve got.
JOHN
Good. So do you already know something about our machines?
MARIA
Well, I know that if I were going to buy one of your machines, I would probably get the DPX-300.
JOHN
Ok.
MARIA
Also, since I also know the prices of similar high-end machines on the market, I would probably want a
50% discount.
JOHN
Why 50%?
MARIA
I just want it. It’s none of your business.
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JOHN
Well, I’m sorry. I don’t mean to be intrusive. I’m just trying to help here.
MARIA
Right!
JOHN
You see I can’t give you a 50% discount but we might be able to find a way to save you 50%. Does that
sound helpful?
MARIA
Does that mean I’m not going to get my discount?
JOHN
I can’t.
MARIA
Can’t or won’t?
JOHN
Look, I can’t make a loss here. Could you help me to understand why 50% is so important?
MARIA
They’re expensive machines.
JOHN
Of course, they cost a lot of money and I understand you want to save money on our machines.
MARIA
And I need the quality. I just want good value you know. Who doesn’t?
JOHN
Of course. And for me to give you good value for money, I need to ask you a few questions.
MARIA
If I answer your questions, will I get that discount?
JOHN
As I said, I can’t. But we may be able to work together to save you some money.
MARIA
What do you need to know?
JOHN
Ok, how many machines do you need?
MARIA
Two.
JOHN
And what for?
MARIA
To help me satisfy my demand.
JOHN
Can you share a bit more?
MARIA
Why?
JOHN
Well, then I can check if an idea I have might work for you.
MARIA
My demand is cyclical and at the peak I need two DPX-300s.
JOHN
Because of their output capacity?
MARIA
And the quality.

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JOHN
Yes, you did mention quality earlier.
MARIA
So what was your idea?
JOHN
Well, have you considered renting?
MARIA
Renting?
JOHN
It’s a new scheme that we are pioneering exactly for clients with a cyclical need. Where for some
months, they have a very high demand and for others it’s very low. Does this sound like your case?
MARIA
Yes. Actually, for two months out of the year, my demand is a 100% more and for six months, it’s 50%
more than my low season.
JOHN
Well, that’s very helpful. Thanks.
MARIA
So what do you have in mind?
JOHN
Well, one idea is that you buy one machine and rent another for a few months. I mean renting costs
only 30% of the purchasing cost per year.
MARIA
Oh. So I can rent for 5 months, run it at full capacity and store the excess for my high seasons.
JOHN
That would cost 12.5% per year, making for a first year savings of 37.5% over buying two machines.
MARIA
Why not rent both?
JOHN
Well, of course you could. Do you prefer to save money now or later?
MARIA
I prefer to save money now and later.
JOHN
Yes, we all do. So if your concern is the initial investment, then you may rent both.
MARIA
Even buying one machine is a huge investment. I need to get approval for the budget and in order to
do that I have to show them that buying is a better investment than renting.
JOHN
Why, I didn’t know you still didn’t have a budget. I can see now how legitimizing your decision is
imperative.
MARIA
It’s a lot of money.
JOHN
Of course. Well, buying can be better if you have consistent demand for one machine and you’re
going to keep it for 3 years. It becomes better with our financing and, if you decide to upgrade, we
have a buyback policy.
MARIA
Sounds good. Well, let’s talk about that later but right now let’s get back to that 50% discount.
JOHN

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 Indeed. So let me understand your situation a little better. We’ve brought the price down to 62.5% in
a buy + rent option, now we may be able to do better still if I can find out a little bit more.
MARIA
Go ahead.
JOHN
Ok, so why did you pick the DPX-300?
MARIA
Don’t you want to sell me the top of the line model?
JOHN
Of course, but only if it suits your needs.
MARIA
What do you mean?
JOHN
The DPX-300 is a good investment if you need its extra capabilities. If not, some of our other high-end
products may be better choices.
MARIA
Such as?
JOHN
The DPX-230 for example is 20% cheaper and has exactly the same quality and speed, just less
adaptable to different product lines.
MARIA
We only need it for one product line.
JOHN
Then the 230 would be a better choice, which would mean that together with the buy + rent option,
you can save 55%.
MARIA
That sounds promising.
JOHN
Good. Shall we continue?
THE END