Part 1: Closing the sale?
It had been a long day for Hedley Lamarr. She had just finished her 3rd meeting in the last two weeks with Lyle Johnson, the head buyer at Von Shtupp Spas Inc. (VSSI).
She thought her first two meetings went very well. The first meeting happened just over two weeks ago and Hedley made a semi-customized presentation to Lyle. She presented an overview of LPCP focusing on their capabilities and providing Johnson with an overview of their new product lines.
She effectively used her questioning skills to determine that VSSI was in the process of seeking new vendors to replace almost all of their existing personal care appliances used in their spas and salons including hair dryers, hair straighteners, curling irons etc. She was also able to determine that VSSI was planning to aggressively expand their business over the next 5 years through opening new locations and the possible acquisition of smaller regional competitors. Although Lyle didn't share the details, Hedley estimated as much as 25% total growth combined between same location sales plus new locations.
Overall, she felt Johnson's feedback was quite positive, he seemed impressed by their new line of high efficiency products. In particular he was captivated by some of the items they would be launching in the next year, unique items like their new facial moisturizers, which LPCP had shown (based on prototypes) to clinically reduce wrinkles by 63% in older men and women. VSSI was the first company to see this product. In the next year they're also launching a new device using artificial intelligence technology that scanned user's hands or feet and automatically determined the optimal nail shape and then filed and buffed the nails perfectly. All that remained was for application of nail polish.
The only real product-related concern Lyle expressed was whether the new items were truly as energy efficient as she claimed. Hedley was able follow up the day after her meeting and provide him with full reports from both independent laboratories as well as government testing agencies to verify the claimed results of 50% energy savings versus existing appliances.
In her second meeting, she was able to answer a number of additional questions Lyle had and went through a more detailed review of specific products and features Johnson had asked about. He focused on products they sold that were most similar to their existing appliances. He also has some generic questions about LPCP's ability to deliver the products when VSSI might require them.
Hedley is prepared to respond to any additional questions Johnson might have, she has placed her delivery and technical teams on standby back at her office to be sure.
One of Hedley's objectives for this third meeting is to close the sale and get the order, but she's not certain...
Place yourself in the role of Hedley in the case.
1) Review the information on buyer-salesperson dialogues in Module 9.
a. Do you agree with Hedley that she is in a position to try to close the sale?
b. Explain your reasons based on information presented in the case using information from Module 9.
1) Referencing the different techniques that are noted for closing the sale in Module 9:
a. Identify the pros and cons (positives and negatives) of each technique for this situation.
b. Identify which technique you would recommend she use with reason why it is most applicable.
Part 2: The Negotiation
Hedley sat down opposite Lyle Johnson in the main boardroom of VSSI. The room was decorated in soft pastels and the murals of bamboo forests and waterfalls on the wall complimented the water fountain and live bamboo tress occupying the far end of the room. However, Hedley's feeling of Zen peacefulness was being overshadowed by her anxiety about the meeting.
Lyle Johnson started the discussion by explaining that he was quite impressed by the presentations she'd done on their previous two meetings. He did however, have some concerns ...
As the meeting went on Lyle confirmed that VSSI was beginning a program to replace all their existing personal care appliances across all their locations. He said their preference was to find a sole-source supplier (an exclusive single supplier) for all their business. He anticipated that the program would be at least $4.5 million in the first year, possibly as high as $5.3 million. He thought they would able to hit at least $1.0 million additional sales annually for the next 5 years following that based on VSSI's growth plans.
Johnson eventually came around to what he said were the issues and concerns that VSSI had with the LCPC offering which Hedley had informally proposed so far:
· His first concern was that compared to their competitors, the pricing for their new line was approximately 25% higher on average for similar appliances.
· His second concern was the ability of LCPC to deliver his needs on time. He would like the first of the product delivered to all their stores starting in exactly 2 months. Hedley had proposed 6 months.
Hedley is excited because she knows that she has now entered a negotiation with VSSI. This means that they're happy with the product offering LPCP has put forward. However, she also realizes that this stage is critical to her getting the sale.
Johnson has asked Hedley to get back to him in 48 hours with a revised proposal that addresses his concerns.
Hedley returned to the LCPC office and reviewed the meeting with her boss Tony. Tony reminded her that the first draft proposal she went over with Johnson was at full price and full margin for LCPC and she had some room to play with direct price.
He also reminded her that LCPC had options for indirect pricing including volume rebates and program allowances and he indicated that she has full authority to structure her proposal using any of the tools available, plus he encouraged her to be creative, as well bearing in mind some of the features and benefits of their new and future product lines.
Finally, as she was leaving Tony's office he reminded her that within their corporate profit targets the most she could reduce the actual direct and indirect price combined was 15% . She would definitely need to be creative.
Proposal to VSSI:
You are to play the role of Hedley and create a specific proposal to address Lyle's concerns. Review the information on Negotiations in Module 9 and develop a strategy for Hedley to follow in her next meeting with Lyle.
1. Hedley has multiple options to address Lyle's concerns about the price. Identify in detail the strategy (or combination of strategies) you would recommend Hedley should use address Lyle's price concerns.
Note: Do not just provide high level generic suggestions like "discount the price", you must provide specific details like "Offer a 30% price discount". Refer back to the approprate modules for options. Many are noted, pick the ones you think are best. Your grade will be based on the specific details you provide.
2. Why do you feel your recommendation is the best path in this case for Hedley to create a Win - Win negotiation for both parties?
With reference to what you have learned about closing sales and negotiations (not regarding this specific case), what is the most important factor required to achieve a "Win-Win" negotiation?