SOLEX-DIGITAL: EFFECTIVE NEGOTIATION STRATEGIES

Marilyn Boldt, a sales rep for Solex-Digitala large semiconductor manufactureris negotiating with the chief buyer for National Computer Company (NCC). The buyer, Howard Logan, a thirty-year employee of NCC now nearing retirement, is such an aggressive, greedy bargainer that most salespeople hate to negotiate with him. He views each sales negotiation as a contest to be won, so he wont agree to sign a contract unless he feels that hes gotten the best of the supplier. Salespeople who do agree to the usual seller losebuyer win agreement with Mr. Logan usually try to salvage a little profit on the contract by cutting some corners, usually on product quality or service. But this strategy often leads to dissatisfaction by NCC, so Mr. Logan usually moves on to another supplier for the next contract. The NCC account could be very valuable since its annual purchases of semiconductors exceed $4 million and are steadily increasing by about 5 percent a year. Mr. Logan, however, makes sales to NCC very dicey by insisting on squeezing out most of the profit margin and then switching suppliers if performance is less than fully satisfactory. Mr. Logans assistant, Dale Mobley, seems to be much more reasonable; but he doesnt say much in negotiations since Logan always dominates. Most of the sales reps who call on NCC seem to be looking forward to the day when Mr. Logan retires because they often subtly ask receptionists about his retirement plans.

Mr. Logan has just demanded that Marilyn give him a whopping 20 percent discount on all NCC purchasesor, as he bluntly states, I wont be buying anything from Solex-Digital. If the 20 percent discount is provided, Mr. Logan promises to give Solex-Digital all of NCCs semiconductor business this year. Marilyn knows that her company cant make any profit if she agrees to a 20 percent discount, and shes quite sure that no other semiconductor supplier will offer such a large discount. While Mr. Logan continues talking, Marilyn wonders how to respond to his demand.

3. Marilyn wants to keep NCC as a customer because it could become a valued account when Mr. Logan retires. So shes thinking about calling her sales manager to ask if she can offer the 20 percent discount and accept a loss on the contract in order to keep the customer relationship with NCC. As her sales manager, what advice would you give Marilyn?