Focus Industrial Markets

1
Focus Industrial Markets
Byuer Seller
Both parties are active looking for partners to
exchange with
2
The Marketing Mix concept
Seller
Through Marketing Mix optimize desired Market
response
Price, Product, Place, and Promotion
Buyers are passive and only react to the
stimuli by buying or not buying
Market or segment
3
Transactions versus relationships
From pure transaction to relationships
Strategic market relationship based
approach Partnership focus Collaboration Cooperati
on Value in partnership Buyer as active
participant Firm as part of the
process Boundary-less Dependence
Traditional transaction based approach Transactio
n focus Competition Firm-induced Value to the
firm Buyer passive Firm as focus for
control Short-term focus independent
4
The Business Exchange Spectrum

• Market characteristic
• Standard products
• Stable markets
• Low uncertainty
• Many actors
• Low involvement

Hybrid characteristic -Branded products -Mutual
orientation -Co-operation -Trust -Commitment
Hierarchy characteristic -Complex
products -Dynamic markets -High Uncertainty -Few
actors -High involvement
5
Long-term relationships
Repeated transactions
Buyer-seller Partnerships
Pure transactions

• -branded products
• stable market
• increased market
• uncertainty
• -increased
• involvement
• but still low
• - many actors

In this situation the parties are mutual
dependent of each other. The contract are often
formal.
-standard products -stable markets -low
market uncertainty -many actors -low
involvement The price is given
-branded products -stable markets -many
actors -higher market uncertainty -higher
involvement
Vertical integration
Network organisations
Strategic Alliances
In here we find companies with shared goals.
Example of this situation could be find In
airline, car producer.
Example of organisations in this situation are
often with complex products. For example
SUN-Ericson
In this situation the Company have decided
to internalised the transaction in the firm
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FIGURE 1.3. Stakeholding in the firm
Shareholders
Directors
Employees
Suppliers
Distributors
Sub-contractors
Firm
Intermediaries
Producers
Customers
Public
Government
Financial Partners
7
TREND DRIVING RELATONSHIPS

• globalisation of markets and organisations that
  span them
• falling world growth rates
• merger and acquisition activity
• the need for strategic supply chain management
• organisational complexity and the impact of
  information technology on business efficiency and
  the rapid development of electronic commerce

8
MANAGERIAL IMPLICATIONS

• relationships are important and in many instances
  vital (e.g. software, telecom, others?)
• for some, a change in mind-set is required from
  the profit supplier-led approach in marketing to
  an approach based on co-operation and
  relationships
• out-sourcing and sub-contracting is often more
  efficient than in-house management
• success in cost reduction, productivity
  improvements and especially in new product
  development require the voice of the customer
  to be heard
• team work within the firm and between firms is
  crucial
• new technology drives interdependency

9
Comparing and explaining the relational and
traditional strategy view
Strategic dimension Relational view Traditional
perspective
Bilateral-close mutual relationships
Discrete episodes managed by the market
Structure
Strategy formulation
A two party dyad or network interconnection
Firm induced-the firm as a independent actor
Organisation- environment relationships
Embedded in a social system, where the choices
are influenced
Firm has control over choices and makes them in a
rational and independent way
The view of Customers
Active/interactive
Passive
Power is advatage and gives control
The parties involved trust each other
Co-ordination mechanism
Nature of the exchange
Long-term view permits commited action
Short term view minimises investment in the
relationships
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The Power versus trust game

• The Power game
• Create fear
• Pursuse self-interest
• Playing multiple
• partners off against
• each other
• Primarily unilateral
• Through coercion
• Closed or formal,
• detailed and short term
• Reduce conflicts via
• detailed contracts
• Resolve conflicts via
• the legal system

• The Trust game
• Create trust
• Pursue whats fair
• Creating interdependence
• by limiting the numbers of
• partnerships
• Bilateral
• Trough expertise, open, or
• informal and long-term
• Reduce conflict by increasing
• mutual understanding

Dimension Modus operandi Guiding
principle Negotiation strategy Way of
influence Conflict management