Business as Networks and the Relationship context, Supply Chain Management, Services for Business Markets and Open Innovation

Contents

Introduction

1. Short differentiation of B2B / B2C markets and the B2B branding question

2. Relationships within a network and the importance of trust and commitment

3. Supply Chain Management and the role of SME in a SC

4. Services in business markets – a new logic, benefits and challenges

5. New era of upcoming open innovation

Conclusion

List of References

Introduction

The learning diary will cover the Business Marketing course and will be mainly focused on the four seminar topics – Business as Networks and the Relationship context, Supply Chain Management, Services for Business Markets and Open Innovation. Furthermore questions about B2B branding, dealing with difficult relationships and the role of small companies in supply chains are addressed in more detail.

1. Short differentiation of B2B / B2C markets and the B2B branding question

Business markets (B2B) and consumer markets (B2C) need to be distinguished. The B2B market has its own characteristics and is distinctly marked with the biggest market share. Consequently it refers to that the volume of sales greatly exceeds the B2C market and a strong customer concentration. Consider that for every B2C transactions are a couple of B2B transactions are running before. Companies can serve both markets like Dell (hybrid strategy), pure B2B servers like the Schäffler Group (automotive supplier), or pure B2C servers like H&M. Categories of customer are governmental bodies, private companies and institutions (Gottfridsson 2012).

As already mentioned the B2B Market has a highly bigger volume as the B2C Market. Despite of that (pure) B2B brands (however a few strong B2B brands which are also active in the B2C segment are exist) are not that well known as B2C brands.

This raises the question if B2B branding is as important as B2C branding and which value does business relationships have related to brand value?

A definition of branding is “about taking something common and improving it in ways that make it more valuable and meaningful” (Bedburry 2002, p.14)

The importance of branding is well known in the B2C context and broadly accepted; most of the current 100 top valuable brands are B2C brands (Interbrand 2012). The traditional view shows no need for branding B2B products. The assumption was that B2B decisions only based on “hard facts” resp. functionality. Kotler and Pfoertsch (2007) reject that view and point out the emotional issue of a human being even at business life. Some B2B companies recognized this movement in early stages like Intel. Before 1989 almost no private end customer for computer was aware of Intel although they used it. They realized the big growth potential of the computer market and decided to start branding to make customers aware of the superior Intel processor. After their “Intel Inside” branding campaign (tool for product differentiation) Intel processor became a buying argument for the manufacturer and the end customer (Kotler and Pfoertsch 2007).

Moreover in the current business environment the internet brings easy access and more choices for B2B decision maker – therefore B2B brands act like ambassadors in the globalized economy. This enhances the need for B2B branding – not only for the customer but for all stakeholders - and the former concept that branding in B2B in wasted money is a big misinterpretation (Kotler and Pfoertsch 2007).

Leek and Christodoulides (2012) study point out that functional and emotional factors influence brand value in a B2B context. This value may initiate to develop long term emotional relationship value (Figure 1). But basically good quality products are the prerequisite for branding. “Nothing kills a bad product faster than good advertising” (de Legge 2002; cited in Kotler and Pfoertsch 2007, p.358).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: The brand value hierarchy (Leek and Christodoulides 2012)

Furthermore the study point out the issue of long term and short term relationship related to brand value. At transactional relationships buyers are very much influenced by the brand value. In long term business relationship factors like trust and commitment may suppress the pure brand value. The study proposes that brand value should initiate long term relationship and its task is to uphold and convey these brand values to an emotional and personal level (Leek and Christodoulides 2012).

However for further research it has to be questioned the coherence between the power of already existing long term personal business relations and the importance of pure brand value.

Furthermore the research determines more factors - next to relationship - with influence the brand value of the company from a suppliers view. These are functional and emotional qualities of a brand, company characteristics, situational and environmental factors, internal communications and external relationships. For a detailed model and description it will be directed to the research paper (Leek and Christodoulides 2012).

2. Relationships within a network and the importance of trust and commitment

To capture this, relationship management is essential in the B2B context. To simplify it, the goal is to “improve each other”. Therefore trust and commitment are the key success factors in your relationship and the position in the network – you compete with your whole network (Gottfridsson 2012). A business network consists of actors, activities and resources which have mutual connections each other (Hakansson and Johansson 1992).

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Network Model (Hakansson and Johansson 1992)

The relationship, based on trust and commitment is the backbone of an efficient and good position within the network and the business performance (Halinen and Tähtinen 2002, Hocutt 1998). To underline that Tähtinen and Vaaland (2006) reinforced the correlation between good business relationship and a profitable company. But in business networks are also difficult relationships existing and sometimes it is necessary to bring it to an end (Halinen and Tähtinen 2002).

Therefore this raises the question if difficult relationships should be restored or quitted and which factors are crucial when business relations are on the brink?

Halinen and Tähtinen (2002) define three patterns in their business relationship ending model. The type of relationship and its ending, influencing factors and the ending process itself (Figure 3).

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: A framework model for business relationship ending (Halinen and Tähtinen 2002)

The types of continuous relationships are characterized by constant business exchanges and an enduring time. According to a previous study of Hocutt (1998) chosen endings can be made by the consumers, sellers or by a mutual decision. For example better alternatives of partners are occurring or pressure from external network members. In a sellers point of view a no more profitable customer could be a trigger. Forced endings are caused by an external event like a bankruptcy of a partner and a natural ending occurs when there is no need for business exchange anymore. Terminal relationships are remaining despite the fact that both parties would not like to operate together. An example is when a central institution makes a decision for their sub-units. Above all episodic relationships are just established for a limited project time. The types of relations are not fixed and can change over time, but the types of relationships have different impacts on the relevant factors and the ending process itself (Halinen and Tähtinen 2002). Following table (Figure 4) shows the types of relationship and its ending.

Abbildung in dieser Leseprobe nicht enthalten

Figure 4: Different types of relationships and potential relationship endings (Halinen and Tähtinen 2002)

Furthermore Halinen and Tähtinen (2002) point out predisposing, precipitating and attenuating as influencing factors. But not only factors, more the response of the parties have impact on the break up. Predisposing factors are predefined (e.g. complex industry), precipitating factors emerge during the relationship (e.g. communication problems). Both factors support the dissolution process. On the other hand attenuating factors (more in detail later) have a hinder effect on business dissolution (Halinen and Tähtinen 2002).

The proposed ending process consists of seven stages and is illustrated in the following model (Figure 5). For giving a detailed insight of the different stages in the ending process further reading of Halinen and Tähtinen (2002) is recommended.

Abbildung in dieser Leseprobe nicht enthalten

Figure 5: Stages of business relationship ending (Halinen and Tähtinen 2002)

The simultaneously occurring factors have not to be seen isolated, rather the combination between factors and managerial implications have to be considered. This shows that the dissolution process is very complex and dependent on different parameters. To avoid this process a risk analysis of the predisposing factors and sensitiveness to precipitating events are useful when establishing new business relationships. However some relationships need to be quitted in order to release stuck capital from unprofitable relationships (Halinen and Tähtinen 2002).

Now the question concerning the restoring of business relationships is going to be addressed. In general, Tähtinen and Vaaland (2006) point out that some businesses have do dissolute, but most business relationships are worth to save. Their study is based on the Norwegian oil industry which is an example of a high technological and complex segment. However this is representative for a lot of industries in the current interwoven business environment.

[...]