B 2 B Marketing & CRMBuyer -Seller Relationship

M.M.S- 3 rd Sem

Haresh Pursnani

Buyer-Seller Relationship

Buyer-Seller Relationship
Learning Objectives 1. To understand the various aspects of buyer and sales representative interaction, including the perceptions and the roles played by them. 2. To know the major factors which influence buyer-seller relationship. 3. To know the methods used by industrial marketers (or sellers) to influence industrial customers (or buyers), such as sales presentation and negotiations. 4. To understand the special dealing, between buyers and sellers, such as reciprocity and dealing with customers, importance of customers service is also emphasized.

Buyer Seller Interaction A Conceptual Framework

Relationship Marketing
The task of creating strong customer bond or loyalty is called relationship marketing . Barry and Parasuram have suggested three approaches for developing strong customer bond. ?????

Relationship Marketing
First approach is to add financial benefits to the customer relationship. For example, giving volume discount or rewarding the customer with free spare-parts kit. However, these benefits can be imitated by competitors, and hence can not be used to differentiate permanently.

Relationship Marketing
The second approach is to give social benefits, in addition to financial benefits. The company sales persons learn buyers individual needs and wants and then offer individualized services. For example, depending on individuals needs and wants, use problem solving languages, including solving personal problems, such as hotel booking or making travel arrangements.

Relationship Marketing
The third approach is adding structural ties to financial and social benefits. For example, supplying special equipment or service, such as training customers maintenance engineers.

Both of us win or win win style

This style is generally used for customers, suppliers, employees, relatives and so on, where long-term healthy relationships and mutual satisfaction are important.
Here, the negotiations are held for mutual satisfaction, with emphasis on development of genuine relationships based upon trust and understanding, where both sides win.

Both of us win or win win style

Building an environment of trust and confidence, much before the final negotiation. Be polite and humble, which helps the customer to communicate easily. The initial focus, during the final negotiation, should be on getting the agreement to the general statement of the problems. In other words, initially, identify the problems rather than solutions. The emphasis during negotiation should be on end results or needs, rather than on the means

Both of us win or win win style

Both sides should then work together, pooling their resource, ideas and sharing information to solve the problem stated earlier. Avoid defensive posture. Be amendable (i.e. responsive to correction) if negotiation climate is favorable. If possible, avoid legalist or contractual approach.

You Win, I lose style

This styles is sometimes used by sales / marketing persons with demanding and highly cost-conscious industrial customers, who feel satisfies if they have driven the seller to lose in the bargain.

Once a sales person knows such an approached of the industrial customers, he creates an environment, at the final stage of negotiation, that he has lost in the deal (although actually he has gained) but he is accepting the terms in view of long terms business relationship .

Type of Relationships
A business marketer may begin a relationship with GE as a supplier (one of many), move to a preferred supplier status (one of a few), and ultimately enter a collaborative relationship with GE (sole source for particular items).

Buyers and sellers craft different types of relationships in response to market conditions and the characteristics of the purchase situation.
Observe in Figure 4.1 that buyer- seller relationships are positioned on a continuum, with transactional exchange and collaborative exchange serving as the end points.

Managing Buyer- Seller Relationships

To develop specific relationship marketing strategies for a particulars customer, the business marketer must understand that some customers select a collaborative relationship, whereas others prefer a more distant or transactional relationship.
the typical characteristics of relationship at the end points of the buyer seller relationship spectrum :

Type of Relationships
Central to every relationship is an exchange process where each side gives something in return for a payoff of greater value. Transactional exchange centers on the timely exchange of basic products for highly competitive market prices.

Moving across the continuum relationships become closer or more collaborative (close) versus transactional (distant ) exchange

Value- Adding Exchanges:

Between the two extremes on the relationship continuum are value- adding exchanges, where the focus of the selling firms shifts from attracting customers to keeping customers. The marketer pursues this objective by developing a comprehensive understanding of a customers needs and changing requirements, tailoring the firms offerings to those needs, and providing continuing incentives for customers to concentrate most of their purchases with them.

To illustrate, Dell Computer provides a customized Web page for each of its premier corporate customers that individual employees in the customer organization can access for an array of information and technical support services.

Strategy Guidelines
The business marketer manages a portfolio of relationships with customers- some of these customers view the purchase as important and desire a close, tightly connected buyerseller relationship; other customers assign a lower level of importance to the purchase and prefer a looser relationship . Given the differing needs and orientations of customers, the business marketers first step is to determine which type of relationship matches the purchasing situation and supplymarket conditions for a particulars customer. Second, a strategy must be designed that is appropriate for each relationship type.

Managing High- and low cost to serve customers

What causes some customers to be more expensive than others ? Activity based costing provides a solid foundation for measuring and managing the profitability of individual customers high cost to serve customers for example, desire customized products, frequently change orders, and require a significant amount of presales and post sales support. By contrast, low- cost to serve customers purchase standard products, place orders and schedule deliveries on a predictable cycle, and require little or no pre sales or post sales support

IDENTIFYING PROFITABLE CUSTOMERS

Cost to Serve & Margins

Customer relationship management: the process

Customer relationship management (CRM) is a crossfunctional process for achieving. a continuing dialogue with customers across all their contact and access points, with personalized treatment of the most valuable customers, to ensure customer retention and the effectiveness of marketing initiatives.

CRM is the bundling of customer strategy and processes, supported by relevant software for the purpose of improving customer loyalty and, eventually, corporate profitability.

Acquiring the Right Customers:

Customer relationship management directs attention to two critical assets of the business to business firm: its stock of current and potential customer relationships and its collective knowledge of how to select, initiate, develop, and maintain profitable relationships with these customers. Customers portfolio management, then, is the process of creating value across a firms customer relationships- from transactional to collaborative- with an emphasis on balancing the customers desired level of relationship against the profitability of doing so.

Instituting the best Processes:

The sales force assumes a central relationship-management role in the business market. Technical service and customer service personnel also assume implementation roles that are important and visible in buying organizations. Successful relationship strategies are shaped by an effective organization and deployment of the personal selling effort and close coordinator with supporting units, such as logistics and technical service.

Best Practices at IBM:

In serving a particular customer, a number of IBM employees come into contact with the customer organization. To ensure consistent strategy execution. IBM identifies customer- contact roles for each of its accounts, specifies desired measurable actions for each role, and monitors the customers degree of satisfaction with each role . The IBM client representative assigned to the customer is the relationship owner, but the account team may include other specialists who complete a project for the customer (Project owner) or solve a particular customer problem (problem resolution owner).

Gaining Customers Relationship Advantage

Customer Related Capability Gaining a Position of Advantage Gauging the Payoff -The Performance Outcomes

customer- relating capability

To excel at customer relationship management, a firm requires a customer- relating capability. This capability, best nurtured in a market-driven organization, includes a strong relationship orientation among employees, a rich and widely used information base, and systems, processes, and incentives that enable personalized solutions for customers.

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