Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument. In any disagreement, individuals understandably aim to achieve the best possible outcome for their position (or perhaps an organization they represent). However, the principles of fairness, seeking mutual benefit and maintaining a relationship are the keys to a successful outcome.
Marketing is concerned with exchange activities and the manner in which the terms of exchange are established. In routinised exchange, the terms are established by administered programs of pricing and distribution. In negotiated exchange, price and other terms are set via bargaining behavior, in which the buyer and the supplier negotiate long-term binding agreements. Although price is the most frequently negotiated issue, other issues include contract completion time, quality of goods and services offered, purchase volume, responsibility for financing, risk taking, and product safety.
Marketers who find themselves in bargaining situations need certain traits and skills to be effective. The most important are preparation and planning skill, knowledge of subject matter being negotiated, ability to think clearly and rapidly under pressure and uncertainty, ability to express thoughts verbally, listening skill, judgment and general intelligence, integrity, ability to persuade others, and patience.
