Here is a recount of Allen Weiss, distinguished professor of marketing at USC, talk on relationships at the MarketingProfs b2b conference: His approach is very economics, Porter’s 5 forces centric for evaluating relationships.
First, you have to start by defining a relationship. There are different types of relationships most of which can be defined by the time orientation of the partners. Short term orientation is driven by transactions with very little fidelity between the two. A “One-Night-Stand”. Long term is defined by numerous inter-linkages, formal and informal communication, and both parties are concerned with the benefits for both sides.
Walking into a situation its also important to understand how industry structure can impact the valuation of a relationship. In a transaction orientated industry, with low switching costs, focus is on price and fixing on lowest price. Another consideration is the “exposure” of the product. How aware is the end consumer of the supplier’s role in the service. If awareness is low, then there is a greater chance for modularity – or the ability to easily move. Portable cell phones, common CPU chip layouts, etc. are all examples of modular concepts.
Understanding the relative bargaining power between supplier and buyer is also critical. For example, is the product a key part of the value proposition for the buyer. Is the product strategic. For example, dating back to the early 80′s when Nutrasweet (an artificial sweetener) partnered with Coca-Cola. Not a complicated product, nor sexy, but initially gave Coke a strategic advantage in the market.
After relative power it then becomes an alignment of buyer / supplier desires. Does the buyer want a long term relationship when you are office short term? This isn’t a right or wrong, but simply acknowledging how things are. If you both want a relationship, then focus on value added relationship marketing, when you don’t then focus on transaction marketing. The hard part is when these two don’t align. In this case its like the prisoners dilemma and your best alternative is to treat the relationship like a transaction.
In the lucky scenario where you are either in, or have the opportunity to forge a value added relationship there are a few things to keep in mind. Be credible, authentic and do things to signal you are committed to the relationship. One way to signal commitment is by delivering goods or services that have very low transfer value. Examples could include giving fresh flowers to your spouse, or say, doing a market study or concepting for a customer with bench hours.
At the end of the day, driving a value added relationship is about interdependence while a transaction market is all price.
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