Negotiation Types

Negotiation is a part of everyday life. Think of kids trading cards or when you ask for a salary raise at work. Even a trip to the farmer’s market may involve some haggling to score a bargain. 

We often also use our negotiation skills to maintain our personal relationships. For instance, trying to find the middle ground when organizing events with family and friends. Or even budgeting with a partner. Getting your children to bed may sometimes take sales training level skills. At some level, we often negotiate without even realizing it.

You might not like to negotiate. The process may seem like somewhat of a hassle. However, you’ll usually end up negotiating anyway.

So, you may as well learn how to negotiate well. Learning about the two main negotiation types can help sharpen your negotiation tactics.

The two distinct negotiation types are distributive and integrative.

The Negotiation Experts’ sales course can help you master both methods. Purchasing negotiation training can boost your skills. It helps to have a good grasp of both types of negotiation styles.

Distributive Negotiations – the Fixed Pie

The term distributive means a giving out, sharing or diffusing value. This means that there is a limited amount to distribute or divide. This type of negotiation is often referred to as “The Fixed Pie.” There is only so much to go around. Each person gets a limited and variable proportion.

Picture it this way. Somebody shouts out, “Who wants the last piece of pizza?” Everyone looks at each other, then two or more hands dive in to grab the last slice.

In the real world of negotiations, two teams enter discussions to gain as much value as possible. The seller wants to go after the best price they can get. The buyer wants to pay the lowest price to achieve the best bargain. It’s good old-fashioned haggling.

In a distributive negotiation, there’s usually no pre-existing relationship. It’s also unlikely that a long-term relationship will develop.

For instance, when you’re buying or selling your car or house. You go into the deal for a once off, simple transaction. You’re not looking to build a long term, trusting relationship. Here, you would use distributive negotiation bargaining. 

In this instance, you’re dealing with someone you don’t know. It’s only a one-time transaction. Except for the deal itself, there is no real benefit in investing in the relationship. So, you’re generally less concerned with how the other person sees you. You’re also not invested in what the other person thinks of your reputation. Your interests and the other side’s interests are usually self-serving—you’re competitive negotiators.

Distributive Bargaining Basics

• Play your cards close to your chest. Give little or no valuable information to the other side. The less the other negotiator knows about your interests, the better your position. For example, avoid sharing details about why you want to buy. Also, don’t mention your preferences or the point at which you would walk away from the deal. If you show eagerness or need, you could reveal a weakness that others may exploit.
• The opposite is equally true. Try to get as much information from the other side as you can. Getting as much information as possible can give you leverage to negotiate a better deal.
• Let the other side know you have options. Be open about the fact that you have other options. For example, other sellers you can buy from at a competitive price. Reminding the seller of their competition shows your willingness to walk if necessary. It also lets the seller know there in no downside on your part.
• Make the first offer. The first offer will work as a negotiation anchor. The anchor becomes the point on which the rest of the negotiation will likely revolve. The final price won’t fall too far from the set anchor. It helps to make the first offer to ensure discussions set off in your favor.
• Be realistic. Being too greedy or too stingy will likely result in no agreement. So, keep expectations realistic.

Integrative Negotiations – Everyone Wins Something (usually)

The word integrative means to join several parts into a whole. Integration implies cooperation. You join forces, to achieve something together.

It usually involves a higher degree of trust. You form and maintain a relationship.

Both sides want to walk away with something of value. Ideally, this means each team getting what they want. No side gains at the expense of the other party.

You need more developed business negotiation skills for integrative negotiations. So, we start our negotiation skills training with simple distributive bargaining. After that we build up to more complex skills. We introduce role plays for teams to take an integrative approach.

In the real world of business, the results often tilt in favor of one side over the other. This is because it’s unlikely that both sides will come to the table at equal strength when talks begin.

Still, there are many advantages when both teams take a cooperative approach. To collaborative effectively, you make value-for-value concessions. This negotiation technique requires creative problem-solving.

Generally, integrative negotiations are future-focused. You have for a long-term relationship in mind. The aim of our on-site negotiation training is to show how to create ongoing mutual gains. This mutually beneficial type of negotiation strategy is often described as the win-win scenario.

Integrative Negotiation Basics

• Multiple Issues. Integrative negotiations usually involve many issues that are up for discussion. Each side wants to get something of value while trading something of lesser value. In contrast, distributive negotiations generally revolve around the price or a single issue.
• Sharing. Both sides should share as much information as possible to understand each other’s situation. This helps each side understand the other’s interests. You can’t solve a problem without knowing the parameters. Cooperation is essential.
• Problem Solving. Find solutions to each other’s problems. For example, offer something valuable to the other side that is of lesser value to you. If you can make this trade and realize your goal, you have integrated your problems into a positive solution.
• Bridge Building. Building rapport is necessary for effective negotiation. More and more businesses are engaging in long-term relationships. Relationships offer greater security and the promise of future success.

Conclusion

Learning both negotiation styles can be a shot in the arm for both your business and personal life. Each type of negotiation has its place. You’ll often find some overlap between the two. Consider trying your hand at both, to become better prepared in different situations.