How much and When Should you negotiate for your salary ?

On this article I can write on and on for hours. :) Now that that I have negotiated about salary but know many people including close friends who have fallen on there face while trying to negotiate. I think there are two kind of companies in India and two kind of job seekers.
Types of Companies -
1. Tier A MNC's for whom money don't matter much over quality. Actually most of the finance companies belong to this category rather than IT companies. These companies don't paying you salaries as per your asking to an extent.
2. Tier B companies. All most all the Indian IT companies fell in this category. They are not going to pay you a single rupee more than what is there CTC (cost to company). If you are been hired for 3.5 Lakh per annum, don't ask one rupee more than that. To them, you don't have any self identity and are just like other 10,000 who are working at same position.
Types of Job seekers.
1. They are the kind of people who think they should be paid nothing less than 10 Lakh per annum even though they have no experience and no skills. They will just blindly open there mouth and ask whatever figure they can imagine off thinking since the company is Big so they will pay it. They won't. It doesn't matter if the company is Goldman Sach or HSBC or Amazon or Google, unless you are really good enough and company see some quality in you, they are not going to pay you a single dime more.
2. Second category is of those who don't ask for much, settle for anything whatever company asks for. Now this is also not a very smart thing assuming you are experienced person and are in the industry where there is shortage of really good people. if you know that you are a SAP/SAS specialist and many companies are looking for, you should negotiate for the salary.
Anyway now coming back to the original question of How and when you should negotiate for the salary, I have already covered all the points, so let me again reiterate it for you.
1. See the company and its back record. Do they have the history of offering salary on person by person or they give same to everyone.
2. Look at yourself, your skills and market. Put yourself on the Manager/HR's seat and ask yourself, How much you will give to youself.
3. Ask the people (in a friendly way) how much they are getting and how did they negotiated it.
In the End, use your common sense and see where your interests lies and consider all options.