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Buyer-Seller Relationship

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Chapter Questions
What are the dimensions of buyer seller relationship? What are the types of buyer seller relationships? How to develop effective relationship marketing (RM) strategies? What are the various aspects of RM, CRM, and CLV? What are the methods used for influencing business customers? What are the special dealings between a buyer and a seller in business marketing?

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Dimensions of buyer seller relationship

Basic building block of buyer seller relationship is based on interactions of sales rep with buyer. Buyers perceptions of salesperson: stereotypical and salespersons company reputation. Behaviour of salesperson and buyer depend on: Organizational needs or objectives Personal needs Social needs

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Types of Buyer Seller Relationships

Broadly three types (in a range) of exchanges or relationships between buying and selling firms:

Transactional (distant) relationship.

Value added (continuing) relationship. Partnering / Collaborative (close) relationship.

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Transactional Exchange / Relationship

One-time transaction / Exchange Buyers prefer this when: Many suppliers are available Supply market is stable Less complex purchase decisions Sellers prefer this when buyers sales and profit potentials are low. Focus is on lowest / competitive prices and timely availability

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Value-Added Exchange / Relationship

Medium sales and profit potential of buyers. Focus on understanding and meeting buyers

needs better than competitors.

Sellers objective is to get maximum share.

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Collaborative / Partnering Exchange / Relationship

Foundation : Commitment and trust. Objective: Long-term mutually beneficial relationship. Buying firms prefer it when: Few supply alternatives High purchase complexity and uncertainty Selling firms prefer it when Buying firms sales and profit potentials are high

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Developing Effective Relationship Marketing Strategies

The steps include:
Linking CRM system with customer database Selecting customers Developing objectives and strategies

Implementing relationship strategies

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Linking CRM System with Customer Database

Build customer database using CRM software Customer database includes following customer information: Basic : Name, mail-ID, mobile nos. etc. Company : Customer type, products purchased, etc. Psychographic : Values, lifestyle of members, etc.

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Selecting Customers
Segment the total market Target segments with superior value offering Select customers with high profit potential from target segments for collaborative relationship

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Developing Objectives and Strategies

Relationship objectives: Based on The customers purchase orientation The customers specific needs

Relationship strategies:
Collaborative

Value added
Transactional

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Implementing Relationship Strategies

Done through sales and support people Sales groups serve different customer segments: e.g. key accounts, transactional accounts, dealers (trade accounts).

Evaluating Objectives and Strategies

Both buyer and seller evaluate if stated objectives and strategies achieved.

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Relationship Marketing (RM)

RM focuses on collaborative / partnering relationship Aims of RM: Building mutually satisfying, long-term relationships between customers, suppliers, intermediaries. Gain and retain business Develop strong customer bond / loyalty

Approaches / Strategies used in RM

Financial benefits Social benefits Structural or technical ties

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Customer Relationship Management

(CRM)

Meaning of CRM (from many definitions):

Develop customer strategy, business processes, customer-centric culture, supported by a software. Main objective: Give shared customer data to all customer interacting persons.

CRM applications:
Customer service and support Integrating marketing functions

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Benefits and Cost Analysis of CRM Benefits

Unified customer database Retaining customers Acquiring customers

Costs
CRM Software: Develop in-house, buy licensed, or outsource creation Implementation People and time Integration with existing systems

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Methods to Influence Business Customers Major Methods:

Sales Presentation Negotiation

Sales Presentation
Identify and respond to the customer needs Have two sided discussion Highlight superior value Use technology for presentation

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Negotiation
Many purposes of negotiation Meet customer before formal negotiation to collect information and build rapport Adopt win-win style out of various styles How to defend when customer uses another style?

During negotiation:
Be positive, kind, and calm Get agreement to the problem Explore areas of agreement Make concessions in small amounts Conclude by summing-up what is agreed

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Special Dealings in Business Marketing

(1) Reciprocity, and (2) Dealing with customers customers

Reciprocity
It means reciprocal dealings between a buyer and a seller. It is buying from a customer, or selling to a supplier. In practice, it often becomes complex. Kept it minimum.

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Dealing with Customers Customers

Some times, business marketers need to deal
with customers customers. It is a sensitive issue. Planning and coordination required with customer.

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Customer Service
Definition
Supplement to a core product or service, given free of charge by a supplier to a customer.

Examples
Delivery of a product or service, technical information, warranty service.

Quality of customer service depends on:

Timely delivery, prompt and accurate information, speedy technical service.