B2B Marketing Nick Ellis

Chapter 1:
B2B marketing - ​business to business.​ ​The marketing activities of any kind of organization
which has exchange relationships with other organizations or businesses. Oftenly in terms of
continuously interaction rather than as a sequence.

B2C marketing - ​business to consumer. The process of selling products and services directly
between consumers who are end-users of this product/services.

Significance B2B markets

→ Purchasing power of private & public sector organizations can be huge.
→ Upstream interorganizational trading supports almost every end-user market.
→ Key B2B activities are carried out “behind the scenes” of most B2C experiences.
→ B2C marketers are learning from B2B marketing practices.
→ B2B activities make a major contribution to most national economies.
→ B2B exchange have a greater impact on people’s lives than B2C trading.

Characteristics of B2B marketing:

→ the size of the market
→ international aspects
→ concentration of buyer power
→ the nature of demand
→ buying processes and decision-making

The difference between B2B market & B2C

- Marketing between companies or organisations aren’t individual consumers. However
companies and organisations are represented BY individuals.
- Fewer buyers, sellers, parties in the business market today.
- Big quantities bought and sold at the same time
- The purchase are production input, which makes the correct purchase and supply schedules
extremely important. “JIT”
- Close and intense interactions and relationships due to the need to negotiate technical,
economic, logistics and other details.
- Technical, financial cooperation between buyer and seller

network​: connection of two/more relationships, several relationships.

the significance of relationships and networks:

→ shifting from short-term transactions to long-term relationships
→ inter-firm collaboration underpinning effective S/DCM
→ needing to build relationship with network or stakeholders.
→ increasing awareness of importance of personal/social networks.

supply chain - ​a network who refer to the flow of goods, from upstream(start) to
downstream(end). The trade between the supplying and buying organization, a serie of
inter-organizational relationships set up to support the buying and selling of goods. Strives to
integrate the dependent activities, actors, and resources into marketing channels between
point of origin - final consumption.

demand chain​: network or supply chain, looking at supply chain from a demand perspective.
Aligned to B2B, start with specific customers need and attempts to design the chain to serve
those needs, instead of starting with the supplier/manufacturer and workers as in SCM.

value chain:​ you concentrate on value provided by each actor, similar to unique; what value
is each actor adding to the product/service. Adding values is important in the competing of
customers. Adding those activities together should reduce cost or improve performance in a
way that the customer perceive they are gaining superior value

cluster​: a geographical bonded or industrial collaboration or agglomeration of companies;

local network

ROR​ - ​Return on revenue is a measure of company profitability that is calculated by dividing

net income by revenue. A ​business​ can increase ​ROR​ by increasing profit with a change in
sales mix or by cutting expenses.

The organization’s main activities:

→ Moving parts & Materials→ Manufacturing→ Moving finished products → Marketing &
sales→ Providing services

Supporting activities:
- Purchasing
- Research & developments
- Personnel
- Organizational infrastructure

stakeholders ​- “intressenter”

Chapter 3:
Opportunistic behavior -​ means buyer/seller taking advantage of the business situation,
example: cheating, dishonesty, disorting data, hiding issues, false promises etc.
→ can lead to legal or ethical consequences.
Buying behaviour model - ​includes all activities of organizational members as they define a
buying situation and identify, evaluate and choose among alternative brands and suppliers.
Individual:​ individuals are working for organisations but they may also have personal
motives.
Social:​ interactions and relationships between people in the organization and outside it might
influence the nature and results of the process.
Organizational​: organizationals factors - goals, structe, technology, rules and regulations of
the company or organization strongly impact role and powers of personnel and the nature of
the process.
Environmental:​ general economic, business, political factors that influence the demand for
and availability of goods and services.

Types of organizational buyers

Commercial: private companies, commercial decisions
Institutional: partly free decision making but responsibility to government, donors, society.
Governmental: strictly regulated by government and based on policies of government of the
day.

Transactional marketing (™)

→ focus on single sales
→ focus on volume
→ short-term timescales
→ emphasis on product features and quality
→ little emphasis on customer service
→ moderate but noncontinuous customer contact
VS
Relationship marketing (RM)
→ focus on customer retention
→ focus on customer value
→ long-term timescales
→ emphasis on relationship quality
→ high emphasis on customer service
→ high level of continuous customer contacts

Key elements of relationship marketing:

- long-term perspective: retain customers, cost more to attract new customer.
- trust: complexity, an acceptance of vulnerability to another possible, but not expected, ill
will or lack of good will.
- commitment: an exchange partner believing that an ongoing relationship with another is so
important as to warrant maximum efforts at maintaining it.
- communication: trust and consistency. Firms should focus on creating relationship
dialogues.
- customer service: important in develop of the relationship.
- mutual benefits: a strong IOR is characterized by shared benefits and sense of mutuality,
win-win relationships wise.
- values

SDL- service dominant logic ​-​ a synthesis of our knowledge of the significance of the
service element of product offerings, the co-creation of value with customers, and how this
impact on buyer-seller relationship.​ ​Explaining value creation through exchange among
configurations of actors.

The relationship ladder of loyalty:

1. Partner
2. Member
3. Advocate
4. Supporter
5. Client
6. Customer
7. Prospect

CRM - customer relationship management -​ a strategy that companies use to manage

interactions with customers and potential customers. CRM helps organisations streamline
processes, build customer relationships, increase sales, improve customer service, and
increase profitability. The goal of a CRM system is simple: Improve business relationships.

CRM five primary stages ​in development and implementation of the strategy:
1. ​customer portfolio​ analysis: to identify the actual and potential customer.
2.​ customer intimacy​: to explore profile, history, expectations, preferences of the customer.
3. ​network development​: to manage relationship with the individuals and organizations that
contribute to value creations.
4. ​value proposition development:​ to identify sources of value for customers that meet their
expectations.
5. ​manage the customer life cycle​: repetitive and continuously develop and keep the
customer.
→ customer profitability

Relationship life cycles

1. ​awareness​ - buying and selling organization indepently consider each other as an exchange
partner, observing ads or corporate websites.
2. ​exploration​ - parties begin to probe and test each other, arranging call or making initial
purchase. Crucial moment: include attraction, negotiation, power & justice, norms,
expectations.
3. ​expansion​ - moves to a greater exchange of rewards, could be in account development and
“up-selling”.
4. ​commitment​ - when both parties show lasting desire to maintain a valued relationship.
5. “extra” dissolve - the stage entered when/if the parties no longer mutall.

IOR​ - inter-organizational relationships​ -​ refer to longer-term relationships between and

among organizations (e.g., suppliers, customers, competitors, trade associations, and public
sector organizations) that are pursuing a mutual interest while also remaining independency
while retaining separate interests​.

Reasons why IOR might fails:

→ fear of dependency - suppliers may act opportunistically, loss flexibility to choose alt
suppliers.
→ lack of perceived value in the relationship - not believing the relationship will lead to
competitive advantage.
→ lack of credibility in the proposed partners - customer feel the supplier is too small
→ lack of relational orientation in the buying firm - buying culture might be transactional.
→ the face of technological change - missing out on innovations available via alt.
relationships.

Chapter 5: Industrial Networks

i​ndustrial networks ​- formed by patterns of IORs between collaborating and sometime
competing firms.

ARA-model​ - r​ elative positions of the organizations making up a network. Analyze the

company, relationships and network levels. ​ A ​ ctors are
individuals/departments/company/group of companies. Each actor control certain activities
and resources BUT due interdependencies actors may indirect control over counterparts
activities and resources.
Actor bonds​ - connect actors and influence how actors perceive each other and form their
identity in relation to each other.
Activity​ ​links​ - regard technical, admin, commercial, and other activities of a company that
can be connected.
Resources​ ​ties​ - connect various sources elements such as technological, material,
knowledge resources - often manifested as a product or a service.

IMP​ - saying that t​he business process is based on interactions rather than single
isolated transactions. The model consist four elements;
→ ​the interaction process
→ ​the participants​ in the interaction process
→ ​the environment​ within which interaction takes place
→ ​the atmosphere​ affecting and affected by the interaction.

Chapter 7: Business marketing planning

Market positioning
Position by value proposition
1. ​all benefits approach:​ the supplier list all the potential benefits they believe their
product/service might provide for target segments. The danger with this is making claims that
aren’t actual deliverable.
2. ​favourable points of difference:​ Why should out company invest in your offerings?
managers need more detailed knowledge of their offering in order to be able to differentiate it
from the next-best alt. It’s easy to fall into a trap of listing many favourable points.
3. ​resonating focus proposition: ​the selling firms makes its offerings superior on the few
elements where performance matters most to customers. Managers must be able to
demonstrate superiority, communicate to buyers in a manner that suggest the supplier
understands the customer’s needs.

Reposition
Cell 1: basic components ​“less complete offering -transactional nature of relationship”
Involves the most basic offerings, limited relationships with customer.
Cell 2: integrated components ​“less complete offering -relational nature of relationships”
Entails offerings a slightly more integrated set of components that require relationships. This
may spur product development, enhance CR, but incur relationships management cost.
Cell 3: basic solution ​“more complete offering-transactional nature of relationships”
Involves a more complete product, with no commitment beyond transactional relationships.
This allows the offering to become more differentiated, keeps relationships cost low, but
increase costs in coordinating more complex products and services required.
Cell 4: integrated solution​ “more complete offering-relational nature of relationships”
Entails making a complete offering and developing a close relationships with the customer.
This can bring the maximum degree of differentiation, but brings higher relationships
management cost.

Positioning using Marketing mix programmes

Product feature
Benefit
Price/Quality
Existing user
Experience & Reputation

Benchmarking​ - a method to guide positioning. Identify best practices for particular business
processes, and then learning from and adapting these practices for the benefit of your own
organization.

B2B strategy decisions

1. ​Network visioning​: how to develop a relevant network, opportunities they contain, analyse
strategic groups, understand the nature of network competition.
2. ​Focal net management​ : highlight the main actors, strategic behaviour. how to develop and
manage supplier/customer nets, how to enter new networks/markets.
3. ​Portfolio management:​ key activities who are best carried out internally. how to develop
and manage optimal customer/supplier portfolio, which IOR to invest most resources.
4. ​Relationship management​: posses the core skill, evaluating lifetime value of an IOR -
creating, managing, terminating a relationships effectively.

SME​ - ​small and medium-sized enterprises. They can make the most of opportunities in the
relationships by focusing on the development of capabilities that are valued for their
customer. Build their relationships portfolio in categorize options carefully, take better, quick
decisions.
1. standard supply: basic products/services can be offered from a catalogue or list. Involves
an internal management focus on technical skills in production.
2. traditional supply: products are developed from customer specification, requires the careful
management of information and component flows between buyer and seller.
3. partnership supply: involves a similar set of management skill as the traditional one but
with additional need for careful management of relationships and collaboration.

Functional integration in B2B

→ Making clear strategic decisions
→ Employing the right people
→ Ensuring personnel remain stable
→ Encouraging teamwork via compensation
→ Structuring the marketing function appropriately

Chapter 8: Business Products

The best known “P” of the marketing mix is the product itself. The exchange of products
between firms is after all the prime reason that B2B markets exists.
Classifying Business Products
● Input products:​ the offerings who are integral to the manufacturing production
process itself. The flow of these goods into the firm from upstream suppliers.
Ex) Raw materials, manufactured materials & parts.
● Foundation products:​ can represent significant capital investments, tend to be used
to perform the manufacturing process as well as being utilized in administrative tasks.
Ex) Capital equipment or installations, Accessory equipment
● Facilitating or MRO supplies: ​Facilitating supplies tend to support the process take
the the form of business services. They are often termed MRO goods, meaning
maintenance, repair and operational items.
Ex) Tangible supplies, Business services.

Product attributes - ​To understand how customers value their different elements of their
offerings it’s helpful for B2B marketers to apply ​tangibility​ who refers to the physical
attributes of a good, something in which service is a obvious relative lacking. We can relate
the idea of tangibility to core products, augmented products and ​intangibility​ who are
additional elements such as the services which can support a conventional product.

● Tangible core attributes: ​these represent the basic functional capacity of a product.
Ex) ice-cream making machines produced by the italian manufacture Carpigiani. The
firm website markets one line of it’s machines as having “ a big production capacity
in order to provide ice cream even during busy periods” and a “electronic control and
refrigeration system built taking into account current international standards”
● Tangible augmented attributes: ​these features are added to core attributes, either to
enhance the product’s performance or to provide something that helps distinguish it
from competitors offerings.
Ex) Carpigiani claims that it’s Holiday S3 SuperTRE product represents a “powerful
electronic machine..” ideal in order to create specialized offerings where if requested
by the customer the ice cream can have different toppings.

● Intangible attributes: ​These are what customers perceive as enhancing the product
including warranties, financial services, delivery, staff training, and the corporate
reputation of the salesman. Such attributes are becoming increasingly important to
help seller differentiate their offerings in the marketplace, many manufactures can
now provide goods with very similar levels of operational excellence. Rapid,
real-time phone assistance to resolve technical issues.
Ex) Carpigiani provides it’s organizational customers with support options such as
personalized luminous display sign and T-shirts for their retail staff.

Managing Business Products

A manager need to consider an overall portfolio of the products. Looking at the whole
product range of offerings, assessing the contribution, enhance long-term profitability,
trade-offs. A manager must appreciate the impact of decision for the product portfolio.
1. product items​: each individual product offering​.
2. product lines​: combo of individual products offered to specific market segments.
3. product mix​: the number of product lines.
4. depth of line​: the number of products offered within each line.

Categorizing product lines

→ ​Catalogue products:​ are made in advanced of orders in a standard format in anticipation of
demand. The level of customization is very limited.
→ ​Custom-built products​: are custom-assembled for customers from preformed parts and
components. The final configuration is then made to meet specific client need.
→ ​Custom-designed products:​ these products are much more individualized than the
previous. They are designed to meet the very specific needs of a few customers, highly
new-task purchase.
→ ​Business services:​ organizations almost always offer a service elements in support of the
product, such as technical advice/service installation. To ensure that quality are maintained
even though the service may differ each time its delivered.

The product life cycle​ - products having limited life. The figure stands income against time.
1. Development: Income negative due the investment cost resources to bring the product to
the market. Costs can include material testing, field-testing, staff training. Activites happens
inside the selling firm or partnerships up and downstream.
2. Introduction: The product enter the market for the first time, low level of customer
awareness, communication, media. Customer reaction to the new product will need to be
carefully monitored at this stage in order ro refine the marketing mix.
3. Growth: If customer had accept the new product the sale are thought to expand at this
stage.
4. Maturity: most potential buyers have adopted the product, the sales will reach is highest
point. Focusing on maintaining the volume of production in an attempt to achieve economics
sales.
5. Decline: the market consolidate and underperforming products may have to be withdrawn.
Ensure efficient production, focus on key customers. If the relationships between seller-buyer
are strong might be a possibility to use it for a new development of a product.

New Product Development - NPD

NPD Development Process

1. Idea generating
2. Idea screening
3. Business planning
4. Product development
5. Test marketing
6. Product Launching

NPD Stage Gate

The entrance to each stage is a gate which controls the process and serves as quality-control
checkpoint, determining whether the product should be give the go-ahead or terminated.
1. ​Pre-investigation​: involves a small team of technical and marketing people to gain a quick
assessment of any proposed project.
2. ​Detailed investigation​: entails much more detailed set of analyses leading to the making of
a business case for the product. Here the manufacturing department usually comes on board.
3. ​Development:​ Is equivalent to the fourth stage in the conventional process above and
involves full team of managers from marking, technical, manufacturing, purchasing, sales,
finance departments.
4. ​Testing and Validation:​ Corresponds to the fifth stage above and aims to deliver a fully
tested product ready for commercialization.
5. ​Full production and Market launch​: sees the implementation of the full launch plan and
any post-launch activities such as monitoring sales performance and any marketing
adjustments that may be necessary. The core development team remains in place for this
stage in order to see their project through.

Chapter 9: Business Services

Classifying Business Services
product-service combinations
1. First, the firm must possess the capability to manufacture or distribute goods.
2. Secondly, it starts to offer additional services that complement the product portfolio.
3. Thirdly, it practises servicization by marketing different product/service combinations.

Business service classification

● product-related:
ex) delivery services, installation & maintenance, after-sales training, warranty
services.
● marketing service: B2B
ex) market research services, advertising agencies, export advice
● professional service
ex) consulting service, accountancy services, legal advice, recruitment, headhunting,
rental services, booking services.
● information service
ex) inventory management, supply chain management, data aggregation,
● financial services
ex) financing for product purchaser, managing billing processes, credit evaluation,
banking & insurance

Characteristic of Business Services

● Intangibility: ​Services can’t be touched, seen or owned by offering. That means
business services are difficult to evaluate prior to purchase and have to be experienced
at the point of consumption. Marketers need to provide tangible evidence or clues for
customers such as staff uniforms, attractive reception, corporate logos, consultant.
● Inseparability: ​Services are produced and consumed simultaneously, making it hard
to seperate provider/client. Marketers need to prepare front-line staff & educate
customers.
● Perishability: ​Services can’t be stored. Marketers need to try to manage demand via
promotion and/or price and manage supply, part-time employees.
in terms of demand:​ using promotional pricing in order to dampen demand at peak
periods and stimulate.
in terms of supply:​ hiring staff on part-time contracts to only work at peak times,
 training staff so they can multitask enable services level to be maintained in one area
where the customers queues may form.
● Heterogeneity​: Service involve the interaction of many individuals in production &
consumption. The nature and experience of the service depends on who provides it,
consumes it. Marketers need to ensure consistency via standardization or skilled staff.

Business offerings
A product in marketing is goods, services, ideas, personalities, experiences, places, that a
company can sell or exchange in the market.
Aspects of offerings:
- products that other wants
- products that satisfy needs
- offerings as exchanges
- offerings as innovation
- offerings as promises

The uncertainties of Customers ​- when a customer can’t define it’s problem or may not
know the best solution to the problem.
-​ network uncertainties:​ the customer don’t have any clear supplier, might be optinals but no
established relationships with any supplier.
-​ fulfillment uncertainties​: the purchaser knows what it wants, but unsure if the supplier can
fulfill all these wants. If the supplier can promise the right price, quality, performance.

The uncertainties of Suppliers

- ​capacity uncertainty​: how much it’s likely to sell, how much to have in stock. Investments
in developing products, finding new customers.
- ​application uncertainty​: what type of customer problems should they try to solve, how can
their offerings be used by customers. Application uncertainty is high in the case of new
technology, new/complex needs, when the supplier doesn’t know the customer well.
- ​fulfillment uncertainty:​ a supplier may not trust - the customer knows what it should be
buying, will the customer pay the price that was agreed. Fulfilment uncertainty is high in the
case of the supplier undertakes considerable development/adaptation work on behalf of it’s
customer. Where demand for it’s offerings is concentrated in few customers.

Customer abilities
- ​problem-solving ability: t​ he purchaser can offer the supplier knowledge about the type of
solution it should produce, the volume and type of demand it requires. A customer’s
problem-solving ability helps a supplier who has high application and fulfillment uncertainty.
The customer can help the supplier to integrate the supply in the right way.
- fulfillment ability: ​the ability to fulfill it’s part of the deal, delivery arrangements,
information, payment. A customer with strong fulfillment ability will help the supplier to
fulfill the need better and will be an easy purchaser.
Supplier abilities
- ​problem-solving ability: t​ he supplier ability to design, develop, deliver and offering that will
provide a solution to a customer’s problem. Having the networks or able to create the
networks to help them to provide the solution.
- fulfillment ability:​ The ability to fulfill the needs of the purchaser. The ability to deal with
the uncertainties of the purchaser and deliver the required solution.

Factors determining complexity/relationship involvement

Complexity of offering -​ complexity of product, solution and distribution arrangements - just
in time.
Relationship involvement/Adaptation​ - the type of relationships wished for or existing, the
level of adaptions made.
Sales/Purchasing strategy of the companies -​ delivery strategy, purchasing orientation,
selling products/systems.

Phases of offering development

Pre-relationships phase
Relationship development phase
Implementation phase
After-sales phase
Stages of buying and information needs
Recognition of need
- the organisation recognises and registers a need
- what kind of information is needed?
Determining specifications
- the organisation draws up specifications of it’s need
- information needed
Search for suppliers
- the organisation will look for suppliers or request information suppliers
- information needed
Assessing alternatives
- the organisation will assess the information and offers received.
- information needs
Purchase
- the organisation will negotiate the delivery of and payment for supplies
- information needs

Intermediation and it’s role (middlemen)

Who are they?​ - wholesalers, retailers, distributors, transport, logistics, delivery companies,
banks, foreign agents, project marketers, system integrators, project consultants, technical
consultants.
What do they do?
- ​Holding and managing stock
- Financing production investments and financing sales through credits to buyer
- Collection and passing on information to purchasers and marketers
- Negotiating on behalf of buyer or seller
- Reducing the relationship management work of purchaser or marketer, thus allowing
purchaser and marketer to concentrate on their core competence
- Providing knowledge and information, increasing trust between purchaser and marketer.
- With globalization, the role of the foreign trade intermediary rises.
- The intermediary specializes in the area and might be more competent regarding the product
and technology.
- All companies in the B2B landscape are intermediaries because all B2B companies are the
same time buyers and at the same time suppliers.

Project Business Characteristics:

- uniqueness
- project complexity: from products to systems to project.
- specific time schedules/strict deadline involved.
- networking aspects, need to get other companies as suppliers/subcontractors.
Project Business Strategy
- market scanning
-project design and contact taking
- the need for financial arrangements with banks, public financiers.
- finding network partners
- successful project marketing give references and relationships for future project sales.

Legal definitions and type of projects

Turnkey project​ - after contract signature, the project marketer takes full responsibility for
completion of agreed facilities. The marketer will deliver a functioning set of agreed
facilities.
Turnkey plus -​ marketer continues to manage the completed facilities for an agreed period
after the turnkey project. Marketer trains the staff of the buyer to use the project.

B2B Services Marketing Management

● Service concept development: ​Involves expressing the service terms of the
customers problems that the supplier must address, what the service will do. Guides
investment decision by supplying firm over the resources and activities necessary to
deliver the service.
● Service outcome management:​ involves determining how the service will solve the
customer problem, how the service will be delivered. Involves agreeing specific,
measurable performance criteria, logistic.
● Customer expectation management:​ for relationships between service providers and
customers to be successful, it’s important to manage customer expectations.
 ● Physical resources & environment management​: these element of service delivery
must provide the appropriate technological base of operations and support interaction
with the customer. Marketers need to ensure that systems puts in place to check
resources are sufficient to enable service promises to be met and locations where
customers interactions may take place within high standard.
● Customer interaction management: ​Since any relationships will be the outcome of
the interactions between customer and supplier it’s difficult for managers to have
complete control of the service delivery. Both parties play an role in building the
atmosphere. The marketers can attempts to basic issues that orders placements so that
queues don’t build up at busy times.

Service quality dimensional model

→ tangibles
→ reliability
→ responsiveness
→ assurance
→ empathy

Gröönros service quality model

Expectations ← → Experiences
Market Image
Image What​:outcome/technical/quality
WOM How​:process/functional quality
Customer needs
Customer Learning

GAP-MODEL
Gap 1 ​- management’s perception of consumer expectations is different from consumer’s
expectations.
Gap 2​ - management's perceptions of consumer expectations aren’t correct translated into
quality specifications.
Gap 3 -​ Service quality specifications aren’t correctly implemented in service delivery.
Gap 4 ​- Promises made in external communication are different from the service offered.
Gap 5 ​- Perceived or experienced service isn’t consistent with expected service

Lessons of service quality models for the business marketer

- quality is perceived by the purchaser
- quality is linked with the service process
- quality is produced specifically in the interactions between service provider and the
purchaser
- the marketer side of service quality is produced by a large number of staff in different
departments.
- the service provider should help the purchasers to play their roles in quality delivery(and
interaction process)
- quality control should permeate and be monitored throughout the whole business marketing
organisation.
- the business marketer should manage customer quality expectations through market
communications to put them in with what the company deliver. This stresses coordination
between all parts of the company that are involved in communications with the purchaser.

New service development

Customized expert services:
Planned pioneering services:
Improved service experiences:
Peripheral low market potential services:
Poorly planned industrialized clones:

Chapter 10: Value & Pricing

Value in Organizational Markets
Values are relative to the customers expectations and experings of other offerings within any
product category. Values can be found in areas like knowledge-exchange relationship,
reliability logistic links, quality of products, delivery, after-sales support.
● Cost: ​can include acquisition costs which can comprise the initial purchase price
minus any discounts, plus delivery, installation, internal costs such as training, lost
production, disposal of ant equipment. potential risks arising from poor purchase
leading to interrupted operations and personal damages.
- ​potential risks
- “hidden” and internal costs
- purchase price
VS
● Benefits: ​to the customer organization may include the functional and operational
gains offered by the physical aspects of the product, reliability of any attendant
service, financial benefits such as convenient payback period, benefits gained by the
purchasing manager who is recognized to make good decisions.
- ​recognition gained by buying manager
- convenient payback period
- reliability of service
- functional gains from product

Making Pricing Decisions

● Inside-out pricing: ​also known as cost based pricing. Assumes that price should
reflect the costs involves “inside” the selling firm in making and marketing the
product. Involves a few problems such as:
>difficult to identify and measure all the costs involved, even if its activity-base
 costing.
> it isn’t a very market-oriented approach and runs the risk of setting a higher price
than customers are able to pay.
● Outside-in pricing​: consider the perceptions customers have of value and the
appropriate price to pay for the product given these value perceptions. Pricing
decisions should be based on evaluating both tangible and intangible elements that
customers gain from the purchase. It encourage the manager to think in terms of
relationships. This approach are market-oriented it’s also difficult to implement in
practice due to the knowledge needed of the idea of customer’s perceptions of value.

● Price setting decisions

1. Company: Costs, corporate objectives, marketing plans, product range.
2. Customer: value perceptions, perceptions of product/firm, ability to pay.
3. Channels: Costs, abilities, locus of power.
4. Competition: offerings, pricing/costs, competitive structure
5. Context/environment: economy, regulations, currency.

● B2B Pricing Strategies

Inside-out strategies
> Mark-up/Break-even
> Peak load pricing
> Marginal cost pricing
> Suggested resale pricing
Outside-in strategies
> Price-skimming
> Penetration pricing
> Target pricing

Total cost of ownership model, iceberg view

- purchase price
- transaction cost
- maintenance cost
- inventory cost
- operating cost
- training cost
- technical support cost
- disposal cost

Leasing ​- a process that gives customers an alternative to outright purchase. This

approach often used for goods which are very expensive.
> operating leases​: these financial arrangements include maintenance of the asset that
is effectively “owned”, although there is not transfer of ownership of the actual
 product when the payment schedule has been completed.
> capital leases​: once they have agreed a purchase price with the supplier, customers
arrange a capital lease with a leasing firm. These lease involve no maintenance
element.
>​ Sales/leaseback​: products are sold to a leasing firm, then leased back to the original
owners for a fee over and agreed period. Provides injection of cash from the intial
sale.

Managing Business Relationships, David Ford mfl.

Chapter 1: IMP and the integration Approach
IMP ​- International Marketing and Purchasing Group. No business is an island.
Claims that business markets are continuous webs of relationships and network, the business
market are natural networks. All firms and org are interlocked in business relationships, webs
whether they know/understand it.

Embeddedness​ - Each relationship are dependent on and interacts with nets and networks.
You’re positioned in a context that you are working in and impact by your business
environment. It’s about a strong position, and one which it is difficult to get out of. You are
in a net – when others move it affects you, when you move it affects others and so even if
you are independent, you are constrained.
Ex) If you want to bring a new product to the market, your success depends on getting your
network partners to support you as well as what happens in other networks

Adaptations​ - reacting to others, changing views and positions in order to adjust to others,
economic technical adaptations go on throughout the relationship.
.
The myth of actions
→ the supplier acts and the customer reacts
→ marketing is what manufactures do
→ each customer is individually insignificant
→ the marketing actions of a supplier and the purchasing reactions of a customer can be
analysed

The IMP approach of actions

→​ Business markets don’t consist of a large number of individually insignificant
customers:​ customers vary widely in size, requirement and importance. Some of them are
bigger than their suppliers and marketers have to deal with many of them individually.

→ ​Business markets don’t consist of active suppliers and passive customers​: a customer
faced with a particular problem has to seek out for it’s suitable supplier, asses it’s abilities,
ask it to help the customer.

→ ​Customers aren’t looking for a product from a manufacture​: instead they seek a
solution of their problem from a supplier. Can also arise in a positive meaning bc there’s
problems ending in development. Many possible solutions that’s not provide by a single
product/service, interaction between a customer and different suppliers may lead to different
offerings.

→ ​Lot’s of people from different functions in both companies are likely to be involved
in the process of developing and fulfilling the offering that is traded between them​:
Business market is not a process of action by the supplier and reaction of the customer it.s
one interaction between them.

→ ​Each business sale and purchase isn’t an isolated event, but part of a continuing
relationship between a supplier and a customer. ​Each interaction between a customer and
a supplier is a single episode in the relationship between them.

→ ​Many business relationships are close, complex and long-term​:

→ ​Each relationship is part of a network of relationships:​ no business can be understood
in isolation
→ ​no single type of relationship is “right” for either buyer or supplier in all
circumstances:

The myth of independence​:

→ ​a company is able to act independently.​ It can carry out it’s own analysis of the
environment in which is operates, develop and implement it’s own strategy based on it’s own
resources, taking into account it’s own competences and shortcomings.

IMP approach ​- the interaction that takes place between active customers and active
suppliers in relationships. The companies in these relationships are interdependent for sales,
supplies, information, development and for access to other companies elsewhere in the
surroundings network.

→ ​the management process in any company is interactive, evolutionary and responsive.

Companies have a restricted view of the surrounding network and limited knowledge of the
aims and intentions if their counterparts. They have limited freedom to act independently and
the outcomes of their actions will be strongly influenced by the attitudes and actions of those
with whom they have relationship with.

→ ​strategising is not simply concerned with competition​. The essence of stateging is in

coping with and taking advantage of relationships with surroundings companies in ther
entirety.
→ ​a company position is based on it’s total set of relationships​. We can only understand
the position of two companies within the network of relationships in which they operate. The
network position consists of the reputation, rights, limitations on behaviour and obligations
which it has acquired through it’s interaction within those relationships.

→ ​a company’s network position changes and develops through interaction with other
companies in different positions in the network​.

→ i​nterdependence is multi-dimensional​, 3 dimensions.

A) the ​links​ between the ​activities​ of the company and those around it.
B) the ​ties ​between the ​recourse​ of the companies.
C) the ​bonds​ between the individual ​actors​ in the companies

→ ​interdependence means that the management of customer - supplier relationship is

essentially similar for both of the companies involved.

The myth of completeness

This myth has it roots in traditional ideas of strategy: which emphasizes the company’s own
resources and skill its internal competencies and shortcomings. Which in second lead to a
myth that a company is a complete organisation able to operate on the basis of it’s own
abilities and resources.
The IMP approach -​ ​is built on the fact that no company has sufficient resources to satisfy
the requirements of any customer and therefore is dependent on the skills, resources and
actions and intentions the suppliers, distributors, customers and even competitors to satisfy
those requirements.

→ strategy involves using a company's own resources and those with which it interacts
and with which it’s interdependent.

→ a large part of what company sell is made up of what it buys. ​The value of a
company’s purchases often accounts for 60-80% of it cost of goods sold.

→ ​companies are becoming less complete​. Each generation of new offerings is likely to
involve more and different technologies.

→ core competencies are based in the network. ​A company’s ability to bundle will depend
on it’s overall network position and in skills managing to activate relationships.

→ ​technologies are developed interactively.

Chapter 2: The manager and the Network
The Manager and his network
The manager operating in a network need not only deal with the company’s customers,
suppliers and competitors different in their importance. But they are likely also to operate in
quite different ways and have wide range of relationships with other customers and suppliers.
Therefore a supplier will face customers with access to very different resources and with
different problems, not all which it’s able to solve.​ The supplier need to specialise​ in a
limited number of customer and ignore others.

What is a network?
​ etwork isn’t a world of of individual and isolated transactions. It’s the result of
The​ N
complex interaction within and between companies, each which interacts with each other. No
single relationship can be understood without reference to the network itself. Each company
is embedded in a network of relationships.

– A system of connected relationships between business-to-business actors

– Includes companies, but also other actors in the business market, e.g. financial institutions,
research institutions, regulators
– A network is at least a triad, but often bigger.

Success in the network

- stay out of jail: ​there are certain types of co-operations that are illegal, such as price and
market fixing, monopolies, anti-trust.
- professional self-interest is expected: ​each company needs to be aware that they are
simultaneously co-operating in such things as establishing a new format fighting hard to
acheive market share within format. Otherwise will be seen as naive​.
- chinese walls: ​to segregate info when co-operating with a competitor, ensure is kept on
“need to know basis”.
- discipline and consistency of communication​: all levels of communication need to support
the relationship and encourage mutual respect.
- ​relationships are based on technology and position in the network​: companies only
co-operate when they need too.
- ​be a good company to work with: ​a company with a reputation of openness, trust will
attract ideas and proposals.

The first network paradox

Case:​ ​a network is basis of operations, growth, development. A source of freedom for a
company but a cage that imprisons if you end up in wrong relationship.
→ a company must analyze its position with respect to specific counterparts.
→ change can only be achieved through the network.
→ companies in networks must change the expectations of others.
→ change must often be achieved with existing counterpart.
→ a company total set of relationships can only be changed slowly.
→ technological change takes place between companies.

The second network paradox

Case: ​companies operating need to live with both models of the link to the company and their
other relationships. A company establishes its relationships freely as well as being the
outcome of its relationships.
→ companies are conditioned by their relationships
→ companies need to seek commonality in their relationships
→ standardisation
→ major choices concern relationships and investments and adaption
→ strategy is inter-active
→ resource dependence
→ which party has most effect on relationship development?

The third network paradox

Case:​ Companies try to maintain their relationship and control the network to achieve their
own aims. Ambition seen as a key force in developing the network BUT when a company
achieves control the network gets less effective and innovative.
→ there is danger in self-centred view of the network: a company that see the network in it’s
own terms and a way of solving their own problems will fail to understand both the
motivations and problems of others. The dynamic of the network and the interface between
well-being.
→ there are dangers for a company in a network to control: each company must seek to
manage within the network to gain advantage from the actions of others in seeking their own
benefits and profiting from their initiatives.
→ there is no single strategic approach to managing: it isn’t a linear process of achieving and
maintain control. Is about develop interactive approach in each episode, relationship, strategic
move. “Everyone in a network isn’t the architect of his own fortune, but of each other”.

Chapter 3: The manager and the relationship

Relationship can be characterised in the 2 following statements:
1. Is never a matter of choice, all companies have always had them and can’t exist without
them. But these relationship can vary in content, strength and duration.
2. Relationships are a mixed blessing. A company’s relationship with it’s customers,
suppliers and others are the asset to the company but are also burden for it to carry. Each can
fail or succeed depending how it copes with them.
What is a relationship​?
- a description of the pattern of interactions and the mutual conditioning of behaviours over
time between a company, customer, supplier mfl.
- The past and the future affect current behaviour in expericens, expectations and promises.
- The concept of seeing relationships as a “behavioural concept”, the issue gets focused on
how to cope with the relationships and how to make the best of it.

Horizontal and Vertical Relationships

Horizontal: between competitors, co-opetition.
Vertical: between suppliers, companies at different levels of the value chain.

The substance of a relationship

3 aspects:
Actor bonds
- the start of a relationship starts with a interaction between at least two actors, in the
beginning they will meet dimensions of distance between them.
→ Social distance: the extent to which the actors are unfamiliar with each others way of
thinking and working.
→ Cultural distance: the degree of which norms and values of the companies differ.
→ Technological distance: refers to the difference between product/production technology.
→ Time distance: refers to the fact the actors might have a different view of
“JUST-IN-TIME”.
At some stage as the actors become familiar with each other, their mutual knowledge will be
sufficient to start a collaboration based on trust and commitment.
Types of bonds:
Economic - financial or monetary bonds such as credit facilities, loans, joint investment.
Technological - joint development of technology or products
Legal - contracts signed
Social - personal contacts between staff; trust built up
Geographical - nearness of each other
Knowledge - strengths, weaknesses, opportunities, possibilities and problems of the
counterpart in cooperation. Rules, routines including language. Personal experience of each
other.
Time - working processes and assurance of keeping agreed schedules. Meeting delivery
timetables and precisions. Flexibility of information flow. Established modes of
communication system.

Activity links
- interlocking of behaviours of the two actors(companies) will be necessary to start. Example
an order to be processed, scheduled, fulfilled by the supplier. Activities that leads to
development and these links results in design, production, logistic.
Resources ties
Assets that companies use to perform their activities.
types of resources:
→ Physical: machinery, equipment, buildings
→ Financial: investments, bank accounts, credit agreements
→ Technological: patents, technology development competences, innovation
→ Human: HR, staff, experience and cultural knowledge, engineering capabilities,
management skills etc.
→ Marketing: market knowledge, negotiation skills, marketing relationships, network
→ Reputational: brand assets, corporate reputation, corporate social responsibility reputation.
→ Organisational/managerial/entrepreneurial: management and entrepreneurial skills,
coordination and organisational skills.
→ Relationship and networking: contacts and relationships, “whom do you know?”

Heterogeneity of resources ​- a key. resources are many and varied as the previous list
shows. They are getting more varied and complex due to increasing competition/sophisticated
products.

From resource to capabilities ​-

Capabilities can seen as the ability to put together different resources into a functioning
whole.
Uniqueness, difficult to recognize and copy.
Defined and classified on specialist levels - tech, marketing, organizational.
Characteristics:
Valuable - they enable the firm to improve its efficiency and effectiveness
Rare - possessed by only a small number of firms.
Imperfectly imitable - can’t easily be copied
Imperfectly substitutable - there aren’t other resources that can easily be used as substitutes
Over all - they help to achieve sustained competitive advantage

The aspects of relationships

1. the relationship as a device
→ a device to achieve efficiency
→ a device to achieve innovation
→ a device to influence others

2. the relationships as an asset

→ pre-relationship stage: How can we establish relationships, what shall we do to ensure it’s
begin, what will we get from it.
→ exploratory stage: investment of time learning , adaptations, trust, commitment or end it.
→ developing stage: intensive mutual learning, building trust through investment/informal
adaptations.
→ mature/stable stage: establish business routines, maintaining the strength of the
relationships.

3. the relationship as a problem

→ relationships are unruly: giving up part of your indepence, difficult to control, require
adaptations.
→ relationships are uncertain: the path of development isn’t predictable or controllable
→ relationships are demanding: time and resources are needed to build and manage the
relationship.
→ relationships are exclusive: membership in one relationship might exclude you from
others.
→ relationships are sticky: being involved in one relationship means that you get connected
and embedded with other parties in a network that you may not have liked to interact on your
own.

Chapter 4: Relationships with customers

Customer relationships exist and marketing managers have to cope with their reality.
Main characteristics:
1. a sale is unlikely to be a on-off, easily identifiable event.
2. offerings and payments between suppliers and customer are likely to be complex.
3. the pattern of interaction in customer relationships can vary widely.
4. the nature and importance of a company’s customers will vary widely.
5. customers are involved in defining the content of a relationship.
6. the concept of a customer relationship changes over time.
7. a customer relationship links a complex set of resources and activities.
8. a supplier’s market isn’t defined by its products or services

How a relationship develops

→ Interaction: ​between individual actors, leading to the formation of actor bonds.
Ex) These bonds is the reliance and trust that may develop between service personnel from a
supplier and the operations staff in customer.
→ Co-ordination activities: ​the activities of the two companies leading to activity links.
Ex) Occurs when a supplier to the fashion industry co-ordinates the colour it dyes garment to
the pattern of daily sales in a customer’s retail stores.
→ Adaptations: ​the resources of the two companies leading to formation resource ties.
Ex) this would be if the supplier to the fashion industry and the retailer invested in a single
software package to transmit real-time sales information and to control production and
logistics.

Involvement in relationships
 ● solid actor bonds support extensive interaction, mutual knowledge and develop a high
level of mutual trust with customers.
● tight activity links closely co-ordinate different activities of the companies.
● strong resource ties dedicate different resource elements such as offerings, operations,
facilities and organisation roles to a counterpart.

Managing a portfolio of customer

● structure of the customer base: ​refers to number/type of customer.​ ​a typical

underlying problem is the tendency of the current customer base to decay. This means
that to maintain or develop volume of sales/products of a business a supplier must
identify alt ways to grow the business.
Ex)​ broadening, maintaining or restricting the customer base, depending on their own
resources, the nature of competition and resource of the customer. No rule about what
structure that fits best.
● the extent of customer relationships​: refers to the volume and characteristics of the
supplier’s relationships. This meet different problems from different groups.
● relationships involvement
● financial performance and profitability

Chapter 7: Technology and business network

All companies need a wide range of different technological resources, no single company can
ever possess all that it needs.

● Companies establish relationships to gain access to the technological resources of

others and to exploit their own expensively developed technologies.
● Technology is developed in the relationships between companies as well as in
themselves. Is the result of both companiés investments aimed at making their
interactions more efficient and effective. This “new” knowledge can be used in other
leads within other relationships.
● The Technology can easily be transmitted, modified and combined to other
companies/relationships.
● A single technology can’t be used in isolation, it must be combined with new and old
ones. Each technology is embedded in the network and that means an investment in
tech is also an investment in network.

The nature of technology

Tech is a widely but sometimes loosely terms. But it can be explained as ​an ability based on
scientific knowledge that can be used for commercial purposes. ​From this we can separate it
into two broad areas.
→ ​product technologies​: abilities that enable the relationships to design the offering that is
exchanged between them. Problem solving abilities and a customer’s demand abilities.
Ex)​ McD’s product technologies provide the ability to design offering of a customer need of
eat speedily. The offering itself aren’t tech but are based on those tech.
→ ​process technologies​: abilities that enable the companies in a relationship to produce or
fulfil an offering, on time, at the right place, right specification, right price--all this things
consistently. Process tech are the basis of transfer ability supplier > customer.
Ex)​ McD’s have process tech able to produce their food fast.

→ Technological content: ​what is involved in the process

→ Business application: ​what the technological content is to be used for and how it can be
used

Embeddedness:​ ​refers to the many connections between a single technological development

and the surroundings network. It determines the economic consequences of any tech
investment by a company.
Issues for managers of embeddedness​:
→ ​knowledge​: any large tech investment include connections to other diversity invest among
suppliers, customers, competitors. The manager must develop knowledge beyond within it’s
company, must develop mechanisms to scan future developments and updates. Collecting and
restore this will be very costly for one company, thats why is of a big importance of an
interactive process to be able to capitalise knowledge of others.
→ ​control​: a single company can never control the whole embeddedness bc the tech is
connected to many actors with different interests.
→ ​change​: the way a company copes with tech in it’s relationships it will affect what
happens in the wide network. The purpose of a change can lead to other unexpected
consequences.
→ ​bundling​: a single tech is of no value until it’s combined with others. To satisfy
requirements it must be able to embed in a network and the companies different relationship.

The effects of Relationships on Technological Development

Interactive effects​: New knowledge often appears at the border between existing bodies of
knowledge. This mean that interaction between companies with different areas of knowledge
lead to new thinking, the economic potential can neither be judge in isolation. It can only be
assessed by support it generates from others and potential uses.
Complementary effects​:These relate to the growing need for companies to specialise in their
tech development. Relationships provide the means for companies to complement their own
resources with those of others.

Bringing relationships and technology together

→ Utilize technology: ​it rely on structure relationships in a way that you can take advantage
of each others knowledge.
→ Invest value:​ investments in tech is largely determined by other investments, not only
made by the original company. A tech resource can become an asset or a responsibility
depending on these investments​.
→ cooperation between relationships and technology:

Conclusion:
The major conclusion is that the way a company creates economic value from tech is to large
extent dependent on it’s relationships. Relationships are the way tech becomes embedded in a
networks.

For individuals:​ a company’s ability to mobilise its own personnel and their contacts is very
important to achieve a change. Recruit new staff of using the individual network to create
innovation. The aim is to obtain someone who already having a network within resources,
this strategy is faster and less costly than trying to develop change from scratch.

For companies:​ all relationships between companies will involve self-interest by both parties.
A certain interest in the other well-being is a necessary condition for a relationship to
develop. If two parties having their own ambitious but also listen to each other, are prepared
for change, to influence, then we having conditions for co-evolution.

The two most common problems in improving the link between tech and relationships
concern human technical resources. The available human resource determine what can be
done and how, which limits the number and potential of a company’s development. But must
be seen as priority to expend. Any technological change can affect a company’s relationships
possibilities and all changes must be looked at from it’s perspective.

Chapter 8: Managing in networks

The characteristics of Networks
→ ​problems, interaction and solutions:​ Companies as members of a business network
consisting of a large number of active heterogeneous companies each interacting with others
and seeking for a solution to their problem. One important outcome of this aim is that for
managing networks is that these integrated solutions are likely to affect several involved
companies.
→ ​interdependence and limits to discretion: T ​ he importance of interaction between the
parties. Interdepence for sales, supplies, information, technology, development and access.
This means companies have limited discretion to act/create independent strategies. The
position in the network is based on the total set of relationships and changes through
interaction.
→ ​Incompleteness​: no company can alone has the resources, skills or technologies that is
necessary to satisfy requirements or solve the problem. They are fully dependent on others
skills, resources, actions and intentions. Is important to form a structure in the networks
relationships that provide access for companies to the resources of others.
Making sense of the network

● A network isn’t restricted to the set of companies with which a single company deals,
or even to the companies that they also deal with.
● A network isn’t confined to the set of companies with which a company has formal or
informal agreements about some particular co-operation.
● Any view of a network centred on single company, or defined by the company, or
defined by the company itself, is inevitable restricted and biased and gives an
incomplete view of the world surrounding that company and the actual or potential
influences on it.
● A company-centered view of a network provides a distorted picture of the ideas,
problems, pressures and aspirations of the companies that the company includes it’s
view.
● A company-centred view of the network is likely to be limited to those companies and
influences within it’s immediate horizons. As such, it provides an inadequate basis for
understanding the dynamics if the wider world of the network. It hinders the
company’s attempts to understand the pressures and opportunities that exist or may
exist in the future.

Network pictures: ​refers to the views of the network held by participants in that network.
The network picture will depend on their OWN experience, relationships and position in the
network and will be affected by their problems, uncernatines, abilities and by the limits to
their knowledge and understanding. There’s no absolute or objective network types and all
will have different elements, characteristics, possibilities when seen from different
perspectives. Dependent on the company’s own experience, position, knowledge,
understanding. Need to be realistic and put yourself in the other companie position.
Ex)​ IKEA catalogue wanting green paper as an reaction to their customers environmentally
aware. They formulated a environmental policy which their producer Haindl refused to
accept. IKEA had to mobilise paper producers in a number of countries, as well as suppliers
of equipment and chemicals. In other words they had to expand its picture of network in
order to find a solution.

Networking: ​refers to what the company can or might wish to do. Networking include all of
the interactions of a company or individual in the network.

→ Networking is interactive: All actions like suggesting, requesting, requiring, performing,

adapting activities. The outcome of those interactions are connected to the company’s
original aims and goals.
→ Network is based on restricted freedom: Restricted in their actions bc they have to take
into account the reactions of others.
→ Networking isn’t defined by conventional company categories: All companies are
middle-men that have suppliers and customers. Each will build their activities on those of
others and produce and output that will be used by someone else. Each will behave in a
unique way.
→ Networking involves combined co-operation and competition: involves both working
with, through, against others.
→ Position, experience and expectations are central factors in networking
→ Networking is based on incomplete knowledge: learning by doing
→ Networking copes with the network paradoxes:

Three aspects of networking​:

1. Choices within existing relationships: ”a company’s relationships are the basis of it’s
current operations and development. Yet those relationships also restrict that development.”
Company’s relationships are the major asset. It involves choices of when to ​confront​ the
status quo accepted ways of operating when to ​conform​ particular ways of operating into
which is tied by it’s relationships. Making the choice between conforming and confronting
requires an understanding of the evolution of both the surrounding companies and the
relationship between them.

2. Choices about position: “It’s equally valid to say that a company defines it’s relationships
or that a company is defined by those relationships. “

“ the choice for a company between ​consolidate​ by stabilizing and strengthening it’s existing
network position or ​create a new position​ by changing the combination of it’s existing
relationships developing new ones. “

- ​new relationships for consolidation​: a company may seek to consolidate it’s existing
position by adding new customers or suppliers that are similar to it’s existing ones. Alt. it
may try to change it’s position by developing new and different relationships.

- ​existing relationships for consolidation and creating​: existing relationships can be used to
create a new network position by, for example: developing new tech in those relationships so
as radically alter their content, or enable new relationships to be developed. Alt. the company
can simply seek to consolidate it’s existing position by operation in the same ways as before
it’s existing relationships, but with increased effectiveness.

3. Choices about how to network: “companies try to control the network and want the
benefits of control, but control has it’s problems and when it comes total, it’s destructive”
- it’s dependence of others
- the inadequacy of it’s picture of the network
- the diverse perspectives, approaches, requirements and aims of those around it
- the need to accommodate and work with these others but to be willing to coerce them when
it’s necessary and it’s able to do so

Network outcomes
Networking always affects more than one company. We can’t with certainty if the outcome
will be positive or negative in terms of profit, now or in the future. But each company will
observe, assess and respond to only a subset of the networking outcomes that affect it based
on it’s particular network picture. A useful way of coping with multi-faceted and
multi-layered nature of network outcomes it to examine them along three dimensions that we
have used throughout this book - actors, activities and resources.

Actors
single actor:​ network outcomes directly affect each single in the network, each company
needs to examine the outcomes of networking for other significant actors, as well as
examining outcomes of itself. Is important to examine network outcomes of single actors in
relation to other actors in the network.

single relationships:​ the outcomes for a relationships are of two types:

- firstly, the concern what it’s accomplished in the relationships, it’s ​effectiveness​.
- secondly, the outcome will affect the view of the participants about the direction of the
relationships and it’s value, is subjective but it’s critical for the enthusiasm and involvement
of the participants in the relationships. Companies need to evaluate the value and process.

the network:​ the outcome can be identified for whole sets of actors and relationships. Change
or stability in one or more relationships can lead to wider outcomes in the network as a
whole. Network outcomes have an important collective element. The outcomes that are
observed by all participants and can explain to them how the network operates.

Activities
Network outcomes can also affect how different activities are related to each other. They can
restructure a company’s relationship by changing their activities that are performed and
linked between them.

● Aggregation (​ sammangyttring) - refer to the network outcome which a company

undertakes activities internally that were previously undertaken by relationships
counterparts. Either re-structure an existing relationship or cause it to end.
Ex) ECCO decided to buy unprocessed cow leather instead of prepared one.
● Disaggregation ​(uppdelning) - refers to the network outcome by which a company
ceases to carry out some activities internally and relies for them on a relationship
counterpart. Either involves establishing new relationships or extending an existing
one.
Ex) Nike who now buys in all of the products they sell from their suppliers.
 ● Disintermediation (​ direkt förmedling) - refers to the outcome through which two
companies establish a direct relationship, where none had existed before or where the
companies had previously dealt with each other via an intermediary.
Ex) IKEA when they established the relationships with producers of pulp and with the
producers of paper equipment.
● Intermediation (​ förmedling) - refers to the outcome through which a new company
established as an intermediary between companies that had previously dealt with each
other directly or when a existing company changes it’s portfolio of relationships to
include intermediaries.

Resources
Networking can have outcomes that affect the development and utilization of resource
between companies.

Utilisation of resources: ​Networking has important outcome that affects access to and
utilisation of resources for companies. There resources include both those in the company
itself and it’s counterparts. The resources may include existing tech, know-how, offerings,
facilities and knowledge-intensive companies.
Ex) ​IKEA access to and efficient utilisation of resource dominated the networking.
Development of resources: ​Another type of outcome affects the development of
the resources of the companies involved, weather technical, physical or operational.
Ex)​ IKEA case when the development and introduction of a new tech of totally chlorine-free
paper.

Interconnections
Networking, network pictures and network customers outcomes are all interconnected. None
of them automatically precedes the others and each affects and is affected by those others.

- Between networking and network outcomes

Complex connection and not straightforward. Networking is a part of the complex and
continuous interaction that takes place and the outcomes will often be blurred.
Companies can certainly learn from networking and their subsequent choices in
networking are affected by how their network outcomes develop. Outcomes trigger
actions and companies “learn by doing” of the networking is in practice a process of
controlled experimentation.

- Between network pictures and networking

Company’s networking is affected by it’s network picture that is happening within the
network and it’s view of it’s position.
Ex) Experience with different aspects of networking may convince a company of the
respective role and influence of important counterparts. A great deal of activity within
companies and relationships consist of discussion and bargaining about network
 pictures.

- Between network pictures and network outcome

Clear connection. If outcomes are in line with a company’s existing network picture
then that picture will be re-infocred. If the outcome is not in the line with the
company’s expectations then is likely that it’s network picture as what is seen as
relevant outcome dimensions and indeed what is seen to have happened are
determined by the network picture.

Chapter 9: So what does it all mean?

● ​ anagers must not view their activities as generalised approaches to customer or
M
supplier markets, but as individual approaches to a diverse collection of customers
and suppliers.

A view of Networks
● Networks is something complex, the network consist of all of the companies that are
significant for the particular issue being addressed.
● Networks don’t exist in isolation.
● No-one manage the network but all have to try to manage in it.
● A major concern for a manager is to maintain or change the position of her company
in the network. Network position consists of the company’s relationships and the
benefits, costs, rights and obligations that come from them and changing position is
likely to involve variation in existing relationships and establishing.
● It’s important for the manager to investigate her own network picture and why they
see things that way and to try to make sense of the network pictures of others that
form the basis for their action.

A view of managing in Networks

● Network pictures: The picture includes what happens in it, why it happens that form
the basis of their actions. Also need to investigate it’s own picture, the validity of the
adaption on which us based and effects that these have on it’s actions.
● Networking: The actions, 3 aspects involving choices that are central to the process of
managing in networks.
> ​the manager must choose with which aspects of her current interaction she will
conform​ and which she will ​confront.​ It’s important to assess her relationships on a
continuing basis to monitor those aspects of each relationships. She must consider the
overall, long-term effect of cumulative confronting or conforming.
>​ managing network also involves evaluation, maintenance and change of the
company's position. This involves choices between ​consolidating​ some elements of
that position and ​creating​ new elements. Those choices involves both existing and
new relationships. Ex) the company could choose to maintain it’s existing distribution
 relationships to increase the range of it’s offerings.
> ​managing in business networks require an overall assessment of the company’s
dealings with the surrounding network. This lead to major choices about extent to
which the company will attempt to ​coerce​ those around it to achieve it ends or
concede​ to their capabilities and initiative in the network. Ex) a company may insist
that its suppliers should deliver. Conversely, it could concede to their design and
logistic capabilities and hope to gain from their capabilities and wider initiative.
● Network outcome: all companies attempt to manage their relationships and all are
networking at once. It’s never possible to completely disentangle specific network
outcomes from the complex networking occurs. It’s important for the manager to
investigate as far as possible the outcomes for her own networking. The foundation of
“learning-by-doing”.The analysis of network outcomes can be facilitated by
separating them into the outcomes for different actors, activities and resources.

A view of managing relationships

Involves managing both individual and groups of relationships. Relationships are the primary
assets of a company, without which it can neither sell nor buy nor develop. It’s requires
continuing investment. Managing business relationships is a multi-activity, it require
following:

→ ​Each customer and supplier relationships must be managed for clearly thought-out costs
and benefits. Some business relationships are individually vital to a company’s success or
even survival. Others are only important as part of a collectivity of other, similar ones. Some
relationships are just trival. ​What should be the company’s own level of resource investment,
adaptation and integration. What it should seek and expect from it’s counterpart.

→ Each relationship must be investigate from the company’s own perspective and from the
perspective of the counterpart. Both companies will have different idea of the value of the
relationship, it’s place, portfolio and commitment. The manager’s task in a successful
business relationships isn’t to do exactly what the other part wants, whatever cost.
Relationships management requires a combination of co-operation, confrontation, guile and
pursuit of mutual and self-interest.

→ ​Each relationship must be managed as part of an interrelated portfolio of supplier or

customer relationship, from which the parties might look for different benefits and which
might be a different stages of evolution.
→ Each relationship involves the manager in evaluating how committed she is to the
relationships, how committed she wishes to appear to her counterpart. She must decide on the
investment, the extent she will adapt her products, processes or procedures. Decide how
integrated the two companies to be in their activities, resources and determine the work of the
individuals who are involved.
The manager’s choice will be profoundly affected by the interdependencies between the
companies in a relationship. Some choices will be made as a reaction to those of her
counterpart. Others will be limited by the wishes of her counterpart and the effects of all her
choices will be influenced by what the counterpart does.

→ Each relationship and the things that happen in it are linked to all the relationships of both
companies and to those, in which they aren’t directly involved, in the wider network around
them. ​The manager needs to approach each relationship with an eye on the wider context.
This might well involve her in acting in a particular relationship in order to achieve an effect
elsewhere in the network and being aware that each relationship is subject to multiple effects.

A view of the company in the Network

● a company must be organised to achieve efficiency and effectiveness in the first

aspect of networking, involving its routine operations and the interaction in it’s
current relationships.
● a company must also be equipped to manage the second aspect of networking
involving change and diversity in current and new relationships to alter its network
position.
● a company must also be skilled in the third aspect of networking, involving coercing
of other companies where possible and appropriate and the understanding, flexibility
and subtlety needed to concede and take advantage of the resource, skills and
initiative of others.

A view of the Technology in the Network

● No company can have all the skills and technologies that are needed to satisfy any
customer’s requirements. Keep internally and rely on companies externally.
● The successful operation in business network aren’t based on their internal tech skills.
Is about managing relationships with a number of others, their ability to bundle
together these technologies to supply an offering that meets the requirements.
● The manager’s task is not to develop new technology in splendid isolation over a long
time period. Instead, she needs to investigate and match her own technologies with
those of other companies. With those other companies she has to synthesise or
develop technologies and bring them to new applications, often in a different form.

A view of Strategy in the Network

● The first network paradox

a company’s relationships in the network are the key to it’s current activities and it’s
development. But at the same time these relationships can act to restrict that
development. A strategic approach to this paradox is necessary if a company is to
 manage the choices between conforming to these restrictions and confronting them to
achieve change.

● The second network paradox

Managing in the network involves managing relationships and so it’s logical to say
that the company’s relationships are the outcomes of it’s decisions. Yet when we look
at companies we see that it’s equally valid to say that the companies themselves are
outcome of the relationships they have. The strategist must be able to take both views
of her position if she is to make sound decisions about when to accept her company’s
current network position and work within it and when to create a new position by
changing the structure of its existing and new relationships.

● The third network paradox

All companies have to try to achieve control over their dealings with those around
them, but this control can lead to problems for the company and complete control
would be destructive. This is bc each company depend not only on the resource of
others but also on their knowledge and initiative. Major strategic choices facing a
manager in a network are when to coerce others in the network to achieve their own
aims and when to concede to the wishes and actions of others. These choices can
dramatically affect the scope, atmosphere and importance of a company’s
relationships. They will also have a major effect on the resources in which it will have
to invest.

● a company’s strategic direction isn’t the outcome of it’s own deliberations, choice,
actions alone. But it’s dependent on the corresponding commitment, aquisense,
initiative and countermoves of others.

A view of Marketing and Purchasing

● Both purchasing and marketing people have to manage individual relationships and
portfolios of relationships and are concerned with how these relationships are linked
to their company’s other direct relationships.
● Both are concerned with their company’s current and potential network position.
● Both have to interact with each other and with numerous other functions in their own
and each other’s companies.
● Both are concerned with integrating their own company’s technologies with those of
others.
● Both have to carry out a combination of routine order administration and strategic
roles.
● Finally, both functions exist in the same company and need to work with each other.
A company is where a supply and customer network come together and each is
mutually interdependent.
Purchasing​ = to scan for the resources that the company needs to complement it’s own. The
role of purchasing function must extend far beyond that of choosing a supplier against a
specification issued by another function. Purchasing must initiate and develop supplier
relationships and portfolio strategies. It units analysis have to be the relationship and the
portfolio and not product, service, order.

Marketing

Outcome and actors​: The marketer must not restrict the examination of her actions to their
immediate effect on the single customer to which they were directed, but also consider their
outcomes for the longer-term relationships with that customer with other relationships,
including her own suppliers and their effect on the wider network as a whole.

Outcome and activities​: Relationships in network involve adaptations and the integration of
the activities of the companies involved in them. Bc of this the marketer must consider the
outcomes of her own actions and those of her counterpart on the operation of both of the
companies. Ex) the acceptance of a single order may involve both companies in changes to
their offerings and operations or may lead to the restructuring of the wider network.

Outcomes and resources​: Finally, marketers must considers the outcomes of their own
actions and those of their customers in terms of resources of both companies. The
establishment of a new relationship or even an individual sale may have a significant effect
on the utilisation of the resources of both companies. It may also lead to or require the
development of those resources, sometimes in directions that do not relate to either
company’s overall strategies.