Business Customers

Negotiating

B2B buyers and sellers use negotiating tactics to agree upon terms and pricing that benefit both the customer and the seller.

Learning Objectives

Discuss the primary purpose of negotiation in B2B organizations

Key Takeaways

Key Points

• Typically, many departments and roles are involved in the decision-making process for business purchases.
• Client concerns and modification requests are often addressed during the contract stage to help guide the buyer-seller relationship throughout the life of the contract.
• Due to globalization and evolving business trends, more companies are adopting negotiation teams in order to take advantage of cross-departmental and cross-functional knowledge during the negotiation process.

Key Terms

• B2B: Acronym for commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
• information silos: A management system incapable of reciprocal operation with other, related information systems.

Negotiating

Negotiation is a dialogue between two or more parties, intended to reach an understanding, resolve differences, or gain advantages. It is also used to agree upon courses of action, bargain for individual or collective advantages, and satisfy the various interests of people or parties involved in the negotiation"Negotiation" originates from the Latin expression negotiatus, the past participle of negotiare, which means "to carry on business".

Relevance of Negotiation in B2B Organizations

The negotiation process is an important step during the business-to-business (B2B) buying process. Both buyers and sellers use negotiating tactics to agree upon terms and pricing that will benefit both the customer and service provider. Typically, many departments and roles are involved in the decision-making process for business purchases. This is particularly true at the contract stage, where client concerns and modification requests are addressed to help guide the buyer-seller relationship throughout the life of the contract. Buyers may be interested in modifying their purchase via enhanced product features, price adjustments, or other customer benefits. Management, sales, marketing, quality control, and legal personnel may all play a part in negotiating buyer-seller contracts and agreements.

Evolution of Negotiation Tactics

Due to globalization and evolving business trends, more companies are now using negotiation teams. Teams can effectively collaborate, pool resources, and brainstorm solutions to break down and manage complex negotiations. More knowledge and wisdom can be harnessed in cross-departmental and cross-functional teams than with individuals operating in information silos. Writing and noting customer specifications, listening to buyer concerns, and communicating specific actions are roles team members must satisfy during the negotiation process. The capacity base of a negotiation team can also reduce errors and strengthen the long-term buyer-seller relationship because of the improved accuracy and wider range of knowledge that can be brought to the negotiation.