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2. Chapter 2
The Character of
Business Marketing
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3. CESSNA AIRCRAFT COMPANY
TURNAROUND STRATEGY
INTEGRATED THREE CRITICAL PROCESSES:
1.NEW PRODUCT DEVELOPMENT
2.STRATEGIC SOURCING
3.SUSTAINING PRODUCTION
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4. 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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5. 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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6. BUSINESS TO BUSINESS:
THE TYPES OF RELATIONSHIPS
WHEN SELLER’S MOTIVATION TO RELATE IS
HIGH
RESULTS IN RESULTS IN
BUYER’S STRATEGIC
ADVANTAGE PARTNERSHIPS
LOW HIGH BUYER’S MOTIVATION TO RELATE IS
TRANSACTIONAL SELLER’S
RELATIONSHIPS ADVANTAGE
LOW
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7. THE REALM OF RELATIONSHIPS
Seller’s motivation to relate
High
Seller-maintained
Joint
relation
Buyer’s Market relationship
maintenance
Buyer’s
Low High motivation
Buyer-maintained to relate
relation
Discrete exchange
(spot contracts)
No
exchange Seller’s
market
Low
EXHIBIT 2-2
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8. STRATEGIC PARTNERSHIPS
OCCUR WHEN BOTH PARTIES HAVE
MUTUALLY STRONG INTERESTS
IN MAINTAINING AN
ONGOING EXCHANGE
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9. 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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10. GOING FOR HIGH
PERFORMANCE RELATIONSHIPS
SELLERS DEVELOP BUYERS
Want to: A Want:
Sell Large COMMON Reliable delivery
Volumes without
GROUND interruptions
Sell similar
amounts over time Reliable products
with low rejection
Manage their
and defect rates
selling and
support expenses Efficient lead times
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11. 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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12. THE RELATIONSHIP DEVELOPMENT
PROCESS
Relationship phase Phase characteristics
1. Awareness 1 No interaction. Unilateral
considerations of potential Partners.
.
2. Exploration 2 Interaction between the parties
Communication Power & occurs. A gradual increase in
.
Attraction dependence reflects probing and
.
& bargaining justice
testing. Termination of this
fragile association is simple
Norm Expectations
3. Expansion development development 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. Commitment 4 Some means of sustaining the
relationship result contracts, shared
.
Shared values and decision- ownership, social ties, inputs are
making structures significant and consistent. Partners
support joint investment in relation. adapt and resolve disputes
internally
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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Exhibit 2-4
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13. TWO CHOICES FOR STAYING
IN A BUSINESS RELATIONSHIP
1. YOU WANT TO.
• THE REWARDS ARE FINANCIAL,
STRATEGIC OR PSYCHOLOGICAL
1. YOU HAVE TO.
• THE COST TO EXIT IS TOO HIGH
OR THERE ARE NO ALTERNATIVES
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14. SUGGESTIONS FOR MAKING BUSINESS-
TO-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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