ANALYSING BUSINESS MARKETS

PART V

MANAGING

BUSINESS-TO-

BUSINESS CUSTOMER

RELATIONSHIP

•Closer relationships are

drivern in part by supply

chain management, early

supplier involvement and

purchasing alliances.

• Business-to-Business

marketers avoid “spray and

pray” to attract customers

• Increase in use of social

media to communicate with

existing as well as

prospective customers

BENEFITS OF VERTICAL COORIDINATION

• Greater vertical

coordination between

buying partners and

sellers, so they can

transcend merely

transacting & instead

engage in activities

that create more

value for both

parties.

• Includes more

than proportionate

increase in market

share through

mass production

and

advertising,overco

ming relationship

barriers and

lowering the cost

of reproducing

products

Categories to

classify

buyer-supplier

relationships

BASIC BUYING & SELLING BARE BONES

CONTRACTUAL TRANSACTION

COOPERATIVE SYSTEMS

MUTUALLY ADAPTIVE

CUSTOMER SUPPLY

COLLBORATIVE

CUSTOMER IS KING

RISKS AND OPPORTUNISM

• Vertical coordination can facilitate stronger

customer-seller ties but may increase the risk to the

customer & supplier’s specific inverstments.

• Specific investment help firms grow profits and

achieve their positioning but can also entail

considerable risk to both customer and supplier.

• Buyer may be vulnerable to hold up because of

swithcing costs whereas a Supplier may be more

culneravle because of dedicated assets or

expropriation of knowledge/technology

• Opportunism is “some form of cheating or

undersupply relative to an implicit or explicit

contact”

• Opportunism is a concern

• Specific investment shift from expropriation to

bonding

• Presence of significant future time horizon and

strong solidarity norms

NEW TECHNOLOGY & BUSINESS CUSTOMERS

Top firms are comfortable using technology to

improve the way they do business with their

business-to-business customers

Some of the methods used are designing

websites,improving search results,leveraging emails,

engaging in social media and laughing webinars and

podcasts to improve their business performance

Created by Aburvaa Ramesh, SVCE , during an internship By Prof. Sameer Mathur, IIM Lucknow.www.IIMInternship.com