An exporter should concentrate on the following aspects to be a better negotiator and be fully prepared for negotiations:
1. Understand the requirement of the buyers.
2. Assess the state of competition facing the product in the target market as regards the price, marketing channels, and promotional strategies used by the competitors.
3. Make a realistic assessment of the supply position to ascertain the quantities that can be obtained and the time schedule for obtaining them.
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4. Make detailed analysis of the strength of the firm and the product. This should cover the following aspects of the firm’s operations:
(a) Management capability
(b) Production capability and processes; quality control system.
(c) Technical cooperation, if any, with foreign firms
(d) Export organization for handling orders
(e) Financial standing and links with banking institution
(f) Membership of the trade and industry association including chambers of commerce.
5. Study in detail the attribute of the product in particular in details specification as regards quality and packaging.
6. Anticipate the possible questions from the importer and be ready with the answers. Some of the possible objections of the buyer to the price quoted by the exporter and the possible response of the exporter as follows:
(a) The price is too high. The response of the exporter should not be to offer reduction on the price; rather it should be to justify the price in relation to the quality of the product and other benefits offered as a part of the offer.
(b) There are better offers from other exporters for the same product. In such a case, the response should be to ask for more details of such offers, find out how serious such offers are: convince the importer that the exporter’s firm has the better offer.
(c) The importer asks for a discount. The exporter need to make a better offers without asking from something in return, but without affecting the loss of importer’s interest; the exporter may offer a discount of 5% in price but may request the importer to pay for freight charges.
(d) The price of $…….. is may last offer ( The importer specifies a lower price). The exporter should avoid accepting such an offer immediately; find out the quantities involved; determine if there will be repeat orders; ascertain who pays for storage, publicity, after sales service and so on.
(e) The product is acceptable but the price is too high. The person should be to discuss the details of costing with the importer, highlight the product benefits, reliability as a regular supplier, timely delivery, and unique design and so on.
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To achieve a favorable out come from the negotiations, an exporter should draw up a plan of action in advanced and should be flexible during the negotiations with the importer; it generally believed that as much as 80% of the overall time devoted to negotiations should go to such representation. The preliminary work should also include developing counter-proposal if objection are raised on any of the exporter’s opening negotiating point. The preparations should, thus, involve formulating the negotiating strategy and tactics taking in to consideration the point and issues explained above.
In some cases, meeting the importer’s requirements is a simple process. For example, during sales negotiation, an exporter of cutlery was told by an importer that the price was too high, although the quality finish of the item were acceptable to him. During the discussion with the importer, the exporter learnt that he was interested in bulk purchases rather than pre-package sets of 12 as consumers in that market purchased cutlery either as individual pieces or in sets of eight. The exporter then made a counterproposal for sales in bulk at a much lower price, based on savings in packing, transport and import duties.