Negotiating With Prospective Buyers :
Whatever the channel of distribution for exporting to the overseas countries is proposed to be utilized, it is essential that the exporters should possess necessary skill for negotiating with the overseas channels of distribution. The ability to negotiate effectively is needed for discussion with importers or trade agents. While conducting business negotiations, the prospective exporter should avoid conflict, controversy and criticism vis-a-vis the other party. During conversation the attitude should be to communicate
effectively. There should be eight Cs in business negotiations.
The general problem you may face is about pricing. The buyer's contention is that prices are too high. It should be noted that though the price is only one of the many issues that are discussed during business negotiations, it influences the entire negotiating process. Since this is the most sensitive issue in business negotiations, it should be tactfully postponed until all the other issues have been discussed and mutually agreed upon. As
far as the price is concerned, you should try to determine the buyer's real interest in the product from the outset, only then a suitable counter proposal should be presented. It should also be remembered that the buyer may request modifications in presentation of the product. You should show the willingness to meet such request, if possible, provided that it will result in profitable export business.
Price being the most important sales tool, it has to be properly developed and presented. Therefore, in order to create a favourable impression, minimize costly errors and generate repeated business.
The following points should be kept in mind while preparing the price list.
1. Submit a computer printed list printed on a regular bond paper
and laid-out simply and clearly with at least an inch between
columns and between groupings.
2. Prominently indicate the name of your company, its full address,
telephone and fax numbers and E-Mail address, including the
country and city codes.
3. Fully describe the items being quoted.
4. Group the items logically (i.e. all the fabrics together, all the
made- ups together etc.).
5. Specify whether shipped by sea or by air, f.o.h. or c.i.f. and to which port.
6. Quote exact amount and not rounded-off figures.
7. Mention the dates upto which the prices quoted will remain valid.
8. Where there is an internal reference number which must be quoted,
try to keep it as short as possible. The buyer has no interest in this
detail and the more complex it is… the greater is the risk of error.
9. Clearly mention payment terms required by you.
10. Preshipment inspection should be well defined.
One main point regarding export pricing is that while negotiating with
overseas buyer, you may not remember the cost of a product. It may also
be difficult for you to remember the profit margin built in various prices
quoted by you. A clear jotting of this information is not free from the risk
of being leaked out to the competitors or to the overseas buyers. Some
coding is, therefore, essential for the prices quoted by you so that at any
stage/point of time, you can always utilise the information, enabling you to
profitably negotiate with the overseas buyer. This can be done by assigning
codes to the cost price.
For assigning codes to the cost price, you may select an English
Password consisting of 10 separate letters, each letter to represent a numerical
For Example :
CRAZY MOUTH is the Password selected by you where C = I, R = 2, A = 3, Z = 4. Y = 5, M = 6, 0 = 7, U = 8. T = 9, H = O.
This Password can be successfully used for recognising various
items of exports and their varieties. Thus, brass candles stand which is
being quoted at Rs. I 00 (sale price) but whose cost price to you is Rs. 25.50
will be coded as item number RYYH and then assigned with a running
serial number to make it more fascinating. You can decode the word RYYH
to write as Rs. 25.50 so as to get an idea of the difference between the Sale
Price and the Cost Price, which will provide you the range within which you
can negotiate with overseas buyers.
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