Negotiate like an Indian
Posted by: Jens Thang in Bottomline, Business Negotiation, Concessions, Cultural Negotiation, Difficult Characters, Resistance, Sales Negotiation, Tactics, Uncategorized
Tim Ferris wrote a blog entry on negotiations. He quoted a portion from filmmaker, Bob Compton. This is an interesting observation of how negotiations are being conducted in India.
This is not to say that every Indian negotiates like this.
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In India, every transaction — EVERY transaction — is negotiated. Merchandise, cab fare, restaurant bills, wedding doweries — the list is endless.As our guide Vishnu explained, “In India, we bargain to the level of the individual vegetable purchase.”
While awkward and uncomfortable to most Americans, that level of negotiating can be quite valuable.Hotmail founder Sabeer Bhatia, a CA transplant from Bangalore, credited the bargaining skills he learned in vegetable markets at home for getting Microsoft to push its acquisition price for his company from $160 million to $400 million. Bill Gates’ eye teeth were floating in tea with that deal.
Here are a few rules for bargaining on the buy-side when in India:
Rule #1 - The true price of any item is what you pay — There are no suggested retail prices in India. Nothing is labeled, so it pays to talk with several vendors before making a significant purchase.
Rule # 2 - Try for 70% off — Don’t accept less than 30%
Rule # 3 - Make them show lots of merchandise — If it is a rug merchant, you want the demo guys sweating profusely before you make your first offer. Get the vendor to “invest” in the transaction — emotion, time and energy.
Rule # 4 - Offer on one item at a time – If you plan to buy a couple things DON’T let on at the outset. Act like you intend to buy only one item, if that much. Get the seller to give you prices on each item; play one item off another to show you are looking for the lower price point.
Rule # 5 - Wait for the pad of paper — Every Indian sales person has a pad of paper and a pencil that they pull out when the bargaining gets a bit more serious. Though they write down the price for an item, this is only the starting point - remember rule #2.
Rule # 6 - Say “TOO HIGH”, a lot – Don’t even start negotiating until the salesman has scratched through the initial price and lowered it at least twice. I found that simply staring in silence at the pad of paper for a long time would result in the vendor cutting the price.
Rule # 7 - Imply a bundled purchase — OK, now that the price has been cut 25-30%, ask the salesman what deal he would give you if you buy two items. Expect 5% off. Ask for three items; get another 5%. Then add a very expensive 4th item — one which you do not intend to buy. This will excite the vendor and he will do a bunch of calculations which you will be unable to follow. The price will come down for the expensive item as well as for the other items you intend to buy. Lock those prices and drop the expensive item.
At this point, you should have been able to shave close to 50% off the initial price. Most Americans generally are satisfied at this point and close the deal.
One final point - no matter what price you pay — if the sales guy is smiling when you leave — guess who won…
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Jens: Well, this is really a stereotype.
I am writing an article on the rules of Chinese negotiators. Feel free to email me your experience.
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Jens Thang
Negotiation Skills for Everyone
Email: jens@thenegotiationguru.com
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March 23rd, 2008 at 6:06 pm
However, it is exactly the same thing in the Arab countries but I will add because that seems to me incomplete that the Westerners stop too quickly because there is also the taste to haggle over, not to be interested by the article which interests you, to know to leave for better remaining, accepting the “glass of the friendship” to need etc etc
All that belonged to the play of the bargaining and the reciprocal pleasure to draw some!
The important thing in the businesses is actually that the two interlocutors leave satisfied because each one must find its account there and the concessions must be necessarily reciprocal. It is there, the true price, the whole is to guess where is the cursor and to seize it by the observation and listening. One never should seek to roll either the adversary, you will gain only once and you will not be the “clever” one of the history in addition to which you lose the direction of this negotiation, the salt of this one: there will be no more pleasure!
The negotiation must be always reasoned. If American developed the techniques of “reasoned negotiation”, it should be admitted that the Eastern ones in general are very gifted for the commercial discussion because they like the play which it implies and thus they live it and in a rather intuitive way with reference marks which we do not have any more including/understanding in our consumer society as many varied products so various only we do not know the basic prices so much any more.
Moreover, fatalism gained us so much so that one discusses little and that which discusses master key for funny of citizen. However, it is possible everywhere provided that your interlocutor is the good.
Then, it is well to have tools but it is still better when you done it by liking what you made, that will feel and you will tie a different bond and when you leave, you will not be only content because you have your object at a handsome price but because you invested yourself also in emotion, time and energy, i.e. that you deserved it and it is not any more the same thing of the whole!
PS: I talk about your interessant post on my weblog
Dominique from FRANCE
March 23rd, 2008 at 6:39 pm
“roll” is slang for me, I mean to swindle s.o !
March 25th, 2008 at 10:50 am
[…] received a comment on my previous blog post from a French ADR blogger, Dominique who made some very interesting points which I would like to […]