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2. Chapter 2 The Character ofBusiness Marketing2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-2 3. CESSNA AIRCRAFT COMPANY TURNAROUND STRATEGYINTEGRATED THREE CRITICAL PROCESSES:1.NEW PRODUCT DEVELOPMENT2.STRATEGIC SOURCING3.SUSTAINING PRODUCTION2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-3 4. SUPPLY CHAIN MANAGEMENTSCM INVOLVES . . . INFORMATION SHARING JOINT PLANNING COORDINATION OF EFFORTS TO ELIMINATE WASTE BE INNOVATIVE IMPROVE QUALITY PROVIDE FLEXIBILITY 2-McGraw-Hill/Irwin Business Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-4 5. BUSINESS TO BUSINESS: WHAT DETERMINES ASUCCESSFUL RELATIONSHIP?MOTIVATION ! THE SELLERS MOTIVATION TO RELATE THE BUYERS MOTIVATION TO RELATE IF THEY ARENT EQUALLY MOTIVATED IT WONT BE AN EQUAL RELATIONSHIP2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-5 6. BUSINESS TO BUSINESS: THE TYPES OF RELATIONSHIPSWHEN SELLERS MOTIVATION TO RELATE ISHIGH RESULTS IN RESULTS IN BUYERSSTRATEGIC ADVANTAGEPARTNERSHIPSLOW HIGH BUYERS MOTIVATION TO RELATE IS TRANSACTIONAL SELLERS RELATIONSHIPS ADVANTAGELOW2-McGraw-Hill/IrwinBusiness Marketing, 4/eCopyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-6 7. THE REALM OF RELATIONSHIPS Sellers motivation to relate High Seller-maintained Jointrelation Buyers Marketrelationship maintenance BuyersLowHigh motivation Buyer-maintainedto relate relationDiscrete exchange (spot contracts)No exchange Sellersmarket Low EXHIBIT 2-22-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-7 8. STRATEGIC PARTNERSHIPS OCCUR WHEN BOTH PARTIES HAVE MUTUALLY STRONG INTERESTSIN MAINTAINING ANONGOING EXCHANGE2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-8 9. JIT RELATIONSHIPSA SUPPLIER PRODUCES AND DELIVERS PRECISELY . . . THE NECESSARY QUANTITIES AT THE NECESSARY TIME WITH THE NECESSARY PERFORMANCE SPECIFICATIONS . . .EVERYTIME2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-9 10. GOING FOR HIGHPERFORMANCE RELATIONSHIPSSELLERS DEVELOPBUYERS Want to:A Want: Sell Large COMMON Reliable delivery Volumes withoutGROUND interruptions Sell similar amounts over time Reliable products with low rejection Manage their and defect rates selling and support expensesEfficient lead times2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-10 11. REQUIREMENTS FOR HIGH PERFORMANCE RELATIONSHIPSGOES BEYOND THE FINANCIAL CONSIDERATIONS:INTEGRITYFAIRNESSLOYALTYFLEXIBILITYINPUT INTO YOUR PARTNERS STRATEGYPARTNERS INPUT INTO YOUR STRATEGYCOMPLIANCE WITH PROCEDURES AND AGREEMENTHONOR COMMITMENTSSTAND BEHIND YOUR PRODUCTS 2-McGraw-Hill/Irwin Business Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-11 12. THE RELATIONSHIP DEVELOPMENTPROCESSRelationship phasePhase characteristics1. Awareness1No interaction. Unilateral considerations of potential Partners..2. Exploration2Interaction between the partiesCommunication Power & occurs. A gradual increase in . Attractiondependence reflects probing and . & bargainingjustice testing. Termination of this fragile association is simple Norm Expectations3. Expansiondevelopment development 3One party has made a successfulrequest 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 4Some means of sustaining the relationship result contracts, shared . Shared values and decision- ownership, social ties, inputs are making structures significant and consistent. Partnerssupport joint investment in relation.adapt and resolve disputes internally0 Sellers dependence on buyerBuyers dependence on seller 0Source: Adapted from F. Robert Dwyer, Paul H. Schurr, and Sejo Ob, Developing Buyer-Seller Relationships.: Used with permission from the Journal ofmarketing, published by the American Marketing Association, vol 52 (April 1987), p.21.2-McGraw-Hill/IrwinExhibit 2-4Business Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved2-12 13. TWO CHOICES FOR STAYINGIN A BUSINESS RELATIONSHIP1. YOU WANT TO.THE REWARDS ARE FINANCIAL, STRATEGIC OR PSYCHOLOGICAL1. YOU HAVE TO.THE COST TO EXIT IS TOO HIGH OR THERE ARE NO ALTERNATIVES2-McGraw-Hill/IrwinBusiness Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-13 14. SUGGESTIONS FOR MAKING BUSINESS- TO-BUSINESS RELATIONSHIPS LAST MAKE ON-SITE VISITS TO YOUR PARTNER TRADE PERSONNEL AND OFFICES MANAGE TOTAL DEPENDENCE WITH ANALTERNATE SUPPLIER MAKE THE PLEDGE OF CONTINUOUS SERVICE DEVELOP A RELATIONAL CONTRACT PROVIDE OWNERSHIP BY BRINGING FUNCTIONS ORTECHNOLOGY WITHIN BOUNDARIES OF PARTNERSFIRM 2-McGraw-Hill/Irwin Business Marketing, 4/e Copyright 2009 The McGraw-Hill Companies, Inc. All rights reserved 2-14