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Chapter 2
The Character of
Business Marketing
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Business Marketing, 4/e
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CESSNA AIRCRAFT COMPANY
TURNAROUND STRATEGY
INTEGRATED THREE CRITICAL PROCESSES:
1. NEW PRODUCT DEVELOPMENT
2. STRATEGIC SOURCING
3. SUSTAINING PRODUCTION
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SUPPLY CHAIN MANAGEMENT
SCM INVOLVES . . .
INFORMATION SHARING
JOINT PLANNING
COORDINATION OF EFFORTS TO
•
•
•
•
ELIMINATE WASTE
BE INNOVATIVE
IMPROVE QUALITY
PROVIDE FLEXIBILITY
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Business Marketing, 4/e
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BUSINESS TO BUSINESS:
WHAT DETERMINES A
SUCCESSFUL RELATIONSHIP?
MOTIVATION !
•
THE SELLER’S MOTIVATION TO RELATE
•
THE BUYER’S MOTIVATION TO RELATE
IF THEY AREN’T EQUALLY MOTIVATED IT
WON’T BE AN EQUAL RELATIONSHIP
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Business Marketing, 4/e
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BUSINESS TO BUSINESS:
THE TYPES OF RELATIONSHIPS
WHEN SELLER’S MOTIVATION TO RELATE IS
HIGH
RESULTS IN
BUYER’S
ADVANTAGE
RESULTS IN
STRATEGIC
PARTNERSHIPS
HIGH BUYER’S MOTIVATION TO RELATE IS
LOW
TRANSACTIONAL SELLER’S
RELATIONSHIPS ADVANTAGE
LOW
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THE REALM OF RELATIONSHIPS
Seller’s motivation to relate
High
Buyer’s Market
Seller-maintained
Joint
relation
relationship
maintenance
Low
Buyer-maintained
relation
Buyer’s
High motivation
to relate
Discrete exchange
(spot contracts)
No
exchange
Seller’s
market
Low
EXHIBIT 2-2
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Business Marketing, 4/e
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STRATEGIC PARTNERSHIPS
OCCUR WHEN BOTH PARTIES HAVE
MUTUALLY STRONG INTERESTS
IN MAINTAINING AN
ONGOING EXCHANGE
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JIT RELATIONSHIPS
A SUPPLIER PRODUCES AND DELIVERS
PRECISELY . . .
• THE NECESSARY QUANTITIES
• AT THE NECESSARY TIME
• WITH THE NECESSARY PERFORMANCE
SPECIFICATIONS . . .
EVERYTIME
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GOING FOR HIGH
PERFORMANCE RELATIONSHIPS
SELLERS
Want to:
Sell Large
Volumes
Sell similar
amounts over time
Manage their
selling and
support expenses
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Business Marketing, 4/e
DEVELOP
A
COMMON
GROUND
BUYERS
Want:
Reliable delivery
without
interruptions
Reliable products
with low rejection
and defect rates
Efficient lead times
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REQUIREMENTS FOR HIGH
PERFORMANCE RELATIONSHIPS
GOES BEYOND THE FINANCIAL CONSIDERATIONS:
•
•
•
•
•
•
•
•
•
INTEGRITY
FAIRNESS
LOYALTY
FLEXIBILITY
INPUT INTO YOUR PARTNER’S STRATEGY
PARTNER’S INPUT INTO YOUR STRATEGY
COMPLIANCE WITH PROCEDURES AND AGREEMENT
HONOR COMMITMENTS
STAND BEHIND YOUR PRODUCTS
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THE RELATIONSHIP DEVELOPMENT PROCESS
Phase characteristics
Relationship phase
1. Awareness
1
No interaction. Unilateral
considerations of potential Partners.
2. Exploration
2
Interaction between the parties
occurs. A gradual increase in
dependence reflects probing and
testing. Termination of this
fragile association is simple
3
One party has made a successful
request for adjustment. Both
parties are satisfied with some
customization involved. Additional
benefits from products, services, or
terms are sought from the current
partner rather than from an
alternative partner.
4
Some means of sustaining the
relationship result contracts, shared
ownership, social ties, inputs are
significant and consistent. Partners
adapt and resolve disputes
internally
Attraction
Communication
& bargaining
Norm
development
3. Expansion
Power &
justice
Expectations
development
4. Commitment
Shared values and decisionmaking structures
support joint investment in relation.
0 Seller’s dependence on buyer
Buyer’s dependence on seller 0
Source: Adapted from F. Robert Dwyer, Paul H. Schurr, and Sejo Ob, “Developing Buyer-Seller Relationships.: Used with permission from the
Journal of marketing, published by the American Marketing Association, vol 52 (April 1987), p.21.
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Business Marketing, 4/e
Exhibit 2-4
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TWO CHOICES FOR STAYING
IN A BUSINESS RELATIONSHIP
1. YOU WANT TO.
• THE REWARDS ARE FINANCIAL,
STRATEGIC OR PSYCHOLOGICAL
2. YOU HAVE TO.
• THE COST TO EXIT IS TOO HIGH
OR THERE ARE NO ALTERNATIVES
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SUGGESTIONS FOR MAKING BUSINESSTO-BUSINESS RELATIONSHIPS LAST
•
•
•
MAKE ON-SITE VISITS TO YOUR PARTNER
TRADE PERSONNEL AND OFFICES
MANAGE TOTAL DEPENDENCE WITH AN
ALTERNATE SUPPLIER
•
•
•
MAKE THE PLEDGE OF CONTINUOUS SERVICE
DEVELOP A RELATIONAL CONTRACT
PROVIDE OWNERSHIP BY BRINGING FUNCTIONS OR
TECHNOLOGY WITHIN BOUNDARIES OF PARTNER’S
FIRM
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