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Buyer Seller Relationships

Determinants Trust The willingness to rely on the ability, integrity, and motivation of the company to serve the needs of the consumers. Value The ability of a selling organisation to satisfy the needs of the customer at a comparatively lower cost or higher benefit than that offered by competitors and measured in monetary, and psychological terms.

Buyer Seller Relationships


An integral part of business to business operating strategies Context of buyer seller relationships: Trust and friendships supported by good quality products and services Strategic relationships Single source suppliers Cost reductions Two Models: Adversarial Model and Cooperative Model

Buyer Seller Relationships


Cooperative model: both parties lower operating costs through better inventory management and elimination of unnecessary tasks and procedures All suppliers are not appropriate partners for cooperative relationship 2 by 2 table categorize suppliers buyers for in depth relationships Value addition Low operating risks

Buyer Seller Relationships


Empirical models of buyer-seller relationships: The industrial marketing and purchasing (IMP) group emphasized on interaction approach Buyer seller Cooperation Dyadic interaction Environmental influence List of variables by Wilson & Moller

Buyer Seller Relationships


Commitment The most common dependent variable Discriminates stayers and leavers The desire to continue the relationship and to work to ensure its continuance. An enduring desire to maintain a valued relationship

Buyer Seller Relationships


Trust Fundamental relationship model building block Critical variable Cooperation Similar or complementary coordinated actions taken by firms in interdependent relationships to achieve mutual outcomes or singular outcomes with expected reciprocation over time. Interaction of cooperation and commitment results in cooperative behaviour

Buyer Seller Relationships


Mutual Goals The degree to which partners share goals that can be accomplished only through joint action and the maintainance of the relationship. Relationship continuance Performance satisfaction Mutuality of interest and stewardship behaviour Interdependence and power

Power imbalance: ability of one partner to get the other partner to do something he or she would not normally do.

Buyer Seller Relationships


Power imbalance directly related to degree of dependence of partners Performance satisfaction Critical Variable High level satisfaction Degree to which the business transaction meets the business performance expectations of the partner.

Product specific performance and nonproduct attributes

Buyer Seller Relationships


Structural bonds The vector of forces that creates impediments to the termination of the relationship. Develop with Investments, adaptations and shared technology

Higher the structural bonding, Higher levels of commitment


Comparison level of the alternatives

The Quality of the outcome available from the best available relationship partner

Buyer Seller Relationships


Adaptation When one party alters its processes or the items exchanged to accommodate the other party. Bond the Buyer and sellers

Early stages of relationship, develop trust


Mature stages, expand and solidify the relationship

Barriers to entry for competing suppliers

Buyer Seller Relationships


Nonretrievable investments Relationship specific commitment of resources that a partner invests in the relationship. Capital improvements, training and equipments

Shared technology
The degree to which one partner values the technology contributed by the other partner to the relationship.

Product level technology to computer systems


Stronger relationship

Buyer Seller Relationships


Parties commitment to the relationship Social bonds Investigate friendship, family and group interactions Personal social bonds develop through subjective social interaction. commitment The degree of mutual personal friendship and liking shared by the buyer and seller.