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Management Strategies
for
Business Markets
The Relationship
Spectrum
Transactional
Exchange
Anonymous
transaction /
Automated
purchasing
Timely exchange of
standard products
at competitive
prices
Value Added
Exchange
Focus shifts from
attracting
customers to
keeping customers.
Develop
comprehensive
understanding of
Customers needs
Tailoring firms offer to
those needs.
Commitment
Collaborative
Exchange
Complete
collaboration and
integration of
supplier with
customer or
channel partner.
Open exchange of
information
Systems ,
procedures and
routines of the
Buyer and Seller
are connected to
facilitate
operations.
Trust.
Transaction Collaborativ
al Exchange e Exchange
Availability of Alternatives
Several
Few
Stable
Volatile
Importance of Purchase
Low
High
Complexity of Purchase
Low
High
Information Exchange
Low
High
Operational Linkages
Limited
Extended
Switching Cost:
For the Buyer two major costs involved in change of supplier are as
under:
1. Cost of acquiring new equipment, inventory, training, business
procedures etc
2. Risk involved in selection of an inappropriate supplier.
Relationship
Value
Value Dimensions
Creation
Core Offering
COSTS
BENEFITS
Product Quality
Direct Costs
Deliver
Performance
Sourcing Process
Service Support
Acquisition Costs
Personal Interaction
Customer
Operations
Supplier Know-how
Time to Market
Operation Costs
Low-Cost-to-Serve
Customers
Presale
Costs
Production
Costs
1. Order standard
products
2. Large order quantities
3. Predictable ordering
cycle
4. Electronic processing
Delivery
Costs
Fast delivery
Standard delivery
Postsale
service
cost
HIGH
Passive
Product is crucial
Good Supplier Match
Price Sensitive
But few Special
Demands
FI
O
PR
T
Costly to serve
but pay top
dollar
ES Aggressive
S
S
Leverage their
LO
Buying Power
Low Price & Lot of
Customized Features
LOW
HIGH
COST TO SERVE
initiatives.
customers needs
product quality
a broad product line
delivery reliability
knowledgeable sales and service personnel
Strategic Alliances
Strategic Alliances involve a formal long-run
linkage, funded with direct co-investments by
two or more companies, that pool
complementary capabilities and resources to
achieve generally agreed objectives.
In contrast, a joint venture involves the
formation of a separate, independent
organization by the venture partners.
Partners to an
alliance seek
benefits such as: