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How to create a Negotiation Strategy

A trading relationship is made up of a constant stream of small deals and trades, punctuated by major negotiations. Often the commercial value of those small trades is insignificant next to their potential to tip the next big negotiation a few degrees in your favour.

Negotiation strategies use this principle to transform the profitability of a key relationship over time. Here are the five steps for creating one:

1. Focus on the Relevant: Only develop a strategy for relationships that are highly relevant to your future profitability and growth. Can they realistically impact your profit by 25% or more in the next three years? Or have they the potential to radically change the market through innovation? If not, don’t waste time creating a strategy.

2. Choose your Style: Are you as relevant to them as they are to you? Do your roles in the market have strong synergies (e.g. innovator and showcase retailer)? Is the product set free from aggressive price competition? If all three answers are yes, your strategy can be truly collaborative. If not, it should always have a competitive edge.

3. Set your Goals: Define the level of relationship, contact and trade you want in three years time. Set one or two clear goals for the business and the relationship. What are the key barriers to getting there (e.g. dependency, power, space, investment etc.) and what will you need to change in order to overcome them?

4. Plan the Occasions: Map out the major trading occasions over the next 2-3 years, including e.g. key launches, range reviews, annual plans, investments, price changes. What are the minimum and maximum outcomes you will need to get from each occasion to propel you directly towards your strategic goals?

5. Create the Conditions: What will you need to have in place for each key occasion in order to achieve your outcomes? E.g. expectations, beliefs, obligations, principles, trust etc. How can you use every conversation, every deal and every point of contact between now and then to set yourself up for success?

CREATE STRATEGIES: For your most relevant trading partners, set up big, hairy goals, plan game-changing set-plays and use your every-day interactions to create the preconditions to support those plays.

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