Modulo Tunisini di Business marketing

CONNECT TECHNICALLY SELECTED SUPPLIERS

Buyer’s approach to suppliers: STRATEGIC SUPPLY MANAGEMENT APPROACH

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Value searched: TECHNOLOGICAL AND STRATEGIC INTEGRATION HIGH INVOLVEMENT

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VERY SELECTED SUPPLIERS CO-MAKERSHIP

CONSEQUENCES for the seller

Purchase categories – the Kraljic matrix

To determine what approach to take in dealing with supply markets, a company might segment its

purchases by product category. Profit impact can be explained as the extent

to which items add significant value to the

organization’s output either because they

account for a large proportion of that output or

because they have a significant impact on

quality.

Supply risk refers to the vulnerability of

product availability.

UNDERSTANDING B2B RELATIONSHIPS AND NETWORKS

CLASS 3:

What is a relationship?

is composed of a series of interactive episodes between dyadic parties over time

o a “relationship” differs from a “transaction”

o It has been said to exist only when the parties move from a state of independence to

o dependence or interdependence.

It’s a social construct and it exists if people believe that a relationship exists and behave

o consequently

In b2b relationship people talk about each other. The rule of the person is very important and in

o the b2b business relationship is based not only in business, but also in people relationship.

Relationships change over time.

o

The TRANSACTIONAL exchange The single client is unimportant:

he/she reacts to Clients’ homogeneity.

Discrete Transactions:

These are simple, one-time transactions where the focus is on the exchange of money for easily

 measured commodities.

Discrete transactions are characterized by limited communication, narrow content, and no long-

 term relationship between parties.

Ex. An example is a one-time purchase of unbranded gasoline, paid in cash, with no ongoing interaction

between the buyer and seller.

The RELATIONAL exchange

So basically a transaction is a simple interaction structure (from seller to buyer and viceversa); while in

a relationship there are complex interaction structures, with more parties involved.

Relational Exchange:

This concept is based on building long-term relationships between buyer and seller, where the

 exchange is viewed in the context of past, present, and future interactions.

Trust, cooperation, and mutual goals are central to relational exchanges. These exchanges are more

 complex and last over extended periods.

Relational exchanges often involve complex duties, social exchanges, and a need for conflict

 resolution and collaboration.

While discrete transactions are useful for analysing economic choices, recognizing relational elements in

exchanges can enhance understanding, especially in markets where long-term relationships are key.

Buyer-seller relationship’s CHARACTERISTICS

1. Trust vs formality

A trusts B when A is convinced that if A or B will meet some problems in the execution of their

transaction, B will behave as A would have done, given the same resources as B.

One party may TRUST the other party’s:

 benevolence : a belief that one party acts in the interests of the other

 honesty : a belief that the other party’s word is reliable or credible

 competence : a belief that the other party has the necessary expertise to perform as required.

Trust emerges as parties share experiences and interpret and assess each other’s motives. When

mutual trust exists between partners, both are motivated to make investments in the relationship.

It has been suggested that as relationships evolve over time so does the character of trust:

calculus-based trust : this is present in the early stages of a relationship and is quite calculative

o knowledge-based trust : this relies on the individual parties ’ interactive history

o identification-based trust : this happens when mutual understanding is deep

o

Commitment arises from trust, shared values, and the belief that partners will be difficult to replace.

Commitment motivates partners to cooperate in order to preserve relationship investments. Evidence of

commitment is found in the investments that one party makes in the other.

Relationships can be based on trust or formal contracts. Cultural differences affect this dynamic. For

example, in the UK, trust is crucial due to enforceability issues with written contracts, while in Japan,

informal trust is emphasized over contracts.

2. Power and dependence

This refers to how one party's reliance on the other can affect the terms of the relationship. When one

company is heavily dependent on the other, the more powerful party can dictate terms.

A depends on B when: 1) A needs resources controlled by B 2) A has no alternatives.

 balanced relation: when the power/dependence of A over B is equal to the power/dependence of B upon

A

 unbalanced relation: A or B has greater power 15/10/24

3. Complexity

Relationships become more complex with greater interaction points between buyer and seller. The level

of complexity can influence the closeness of the relationship. It is related to closeness and distance

between the parties:

- Technological distance

- Social distance

- Cultural distance

- Organizational/managerial distance

4. Supplier relationships

Refers to the level of coordination between the parties, to routines established.

5. Cooperation and conflict

Conflict is inevitable in relationships but can lead to cooperation if resolved constructively. Over time,

companies may adapt their practices to improve cooperation. Conflict should be managed

constructively: open communication and understanding are key to resolving disputes and maintaining a

profitable, mutually beneficial relationship. A balance of collaboration and conflict is ideal for productive,

long-term relationships.

 Cooperation

 Co-opetition

 Tensions regulated by:

1. Negotiation

2. Reciprocal adaptation to meet in the middle of a conflict

3. Power exercise = one of the two parties is more powerful than the other

= Relationships with high conflict and high collaboration are likely to be productive and creative, whereas

low conflict and low collaboration lead to low-return, short-lived relationships

6. Adaptations

Relationships lead to mutual adaptations to meet the needs of both parties. Adaptations can be in

products or services, with technological collaboration being the most common form. In any case,

when b2b relationship work well, there is mutual adaptations which proves that the parties are committed

to having a good relationship between each other.

Knowledge-Based Adaptation: Suppliers may learn about a buyer’s systems, leading to creative

solutions for mutual problems. However, this increases dependency on the supplier.

7. A relationship is a long-term investment

Long-term relationships require significant investment, with costs often exceeding revenues in the

early stages. However, they offer benefits over time, reducing transaction costs and risks. As a social

construct a business relationship is well working when parties believe in it and invest in it in a long-term

perspective.

RELATIONSHIP LIFECICLE (DWYER) = tells us that b2b relationships move across different steps,

which are the following:

1. Awareness = refers to party A's recognition that party B is a feasible exchange partner.

This can have different origins, stimuli and needs. At this stage, no interaction has occurred yet. Any

unilateral actions or positioning by the parties to improve their attractiveness to each other are still part of

the awareness phase. The shift to the Exploration phase begins when actual interaction or tacit

coordination occurs

2. Exploration = refers to the search and trial phase in relational exchange. In this phase potential

exchange partners first consider obligations, benefits and burdens, and the possibility of exchange.

This phase is has 5 Sub-processes: 1. Attraction (and recognition of rewards) 2. Communication and

bargaining 3. Power (and justice) 4. Norm development 5. Expectations development

= In summary, the exploration phase is critical for testing compatibility, integrity, and performance

between the parties.

3. Expansion = refers to the continual increase in benefits obtained by exchange partners and to their

increasing interdependence (Reciprocal satisfaction)

The expansion phase is driven by the satisfaction of the exchange partner’s performance, increasing the

motivation to maintain the relationship. Example: Citibank used expansion to increase its market

presence by upselling additional services.

4. Commitment = At this most advanced phase of buyer-seller interdependence the exchange partners

have achieved a level of satisfaction from the exchange process that virtually precludes other

primary exchange partners who could provide similar benefits. It includes three criteria:

- Inputs: High levels of economic, emotional, or communication resources exchanged.

- Durability: A long-term association built on mutual benefits and trust.

- Consistency: Reliable inputs from both parties, making the relationship predictable and stable.

In this phase, both parties invest resources to maintain the relationship, and dissolution is less likely

unless external pressures arise.

5. Dissolution = Relationships may end at any stage, and dissolution becomes more likely after high

interdependence is reached in the expansion or commitment phases. The dissolution process is not

always linear but involves stages:

- Intrapsychic: One party evaluates dissatisfaction privately.

- Interactive: The relationship is negotiated for unbonding.

- Social: Dissolution is made public.

- Grave Dressing: Recovery from the breakup.

There is the need to understand the transitions between relationship phases, particularly the exploration

and commitment stages, and the factors influencing these transitions, such as trust, power, and goal

congruence. The research should also focus on the dynamics of negotiation, specifically contractual and

structural negotiations, and how these processes shape relational exchanges. Trust and commitment are

highlighted as critical constructs for study. Additionally, the dissolution of relationships, especially the

disengagement process, requires further exploration to understand how parties uncouple from high-

dependence relationships. Lastly, decision models for evaluating relational transactions are suggested,

with an emphasis on using advanced mathematical models to understand the complexity of relationship

marketing.

The framework for developing buyer-seller relationships offers two key managerial contributions: it

provides post hoc explanations for the success or failure of marketing practices and stimulates new

marketing programming ideas. Three main managerial areas are emphasized:

1. Performance Metering: It's crucial to track customer satisfaction and evolving priorities through

methods like surveys, follow-ups, and customer data co