James A. Narus

Partnering as a Focused Market Strategy

Partnership-building efforts, even when sought by a customer firm, may not be in the best interests of a supplier firm. This article presents a comprehensive, strategic approach that offers managers guidance on decisions about which market segments and individual customer firms to target for close, collaborative relationships. Firms can gain competitive advantage by augmenting a suppliers product offering for transactional customers.

Partnership advantage and its determinants in distributor and manufacturer working relationships

Abstract This paper draws upon a social exchange theory perspective and the marketing channels literature to provide a conceptualization of partnership advantage. Partnership advantage directs consideration to the interdependent nature of manufacturer and distributor working relationships, and to the resultant need of each firm to be cognizant of the advantage that it provides to its partner firm, relative to alternate potential partners. The contribution of partnership advantage to competitive advantage in the final customer marketplace is also discussed. A key informant methodology and a structural equation modeling approach were employed to investigate the determinants of partnership advantage. Both the manufacturer firm perspective and the distributor firm perspective were studied, with sample sizes of 162 manufacturer firms and 199 distributor firms. Nine distributor firm characteristics were found to account for 66% of the total variation in partnership advantage from the manufacturer firm perspective. Market penetration ability, with a path coefficient of 0.57, made the greatest unique contribution. Thirteen manufacturer capabilities explained 58% of the total variation in partnership advantage from the distributor firm perspective. Product offering, with a path coefficient of 0.69, made the most unique contribution.

Distributor contributions to partnerships with manufacturers

Abstract As distributors move more and more toward a professional management style, their role in working partnerships with manufacturers must become proactive rather than reactive. Only in this way, the authors argue, will the partnership survive and prosper.

Industrial distributor selling: The roles of outside and inside sales

Abstract This paper examines the current practice of industrial distributor selling, focusing on the roles played by the outside and inside sales forces. Based on benchmark survey results, the present composition, responsibilities, and compensation programs of outside and inside sales forces are compared and contrasted. Some predictions are given on likely changes in selling practices, drawing upon interviews with managers, and managerial implications of them, are offered.

Key problems facing industrial distributors

Abstract This article reports on a survey of the problems faced by industrial distributors. Five major problem categories are identified and managerial implications are derived from the findings.

Understanding the Process of Transitioning to Customer Value Management

Customer Value Management (CVM) has emerged as an important vehicle for customer retention in business markets. Supplier firms under increasing pressure from relentless competitive forces are seeking to retain and grow the share of business from profitable existing customers as a means of finding a way out of downward spiralling price pressures. While a lot has been written in academics about the importance of CVM, several gaps remain on understanding how a large company actually undertakes this journey. Crafting competitive value chains and focusing on streams of competition are also emerging as important agenda for supplier firms since, increasingly, the end customer is no longer willing to pay for inefficiencies in the value chains. In this context, the challenge for a supplier firm in business markets is no longer restricted to getting its own operations in order, but, additionally, it must ensure that multiple interfaces that exist across the entire value chain all the way until the end customer are streamlined so that the value chain is free of value drains and every meaningful opportunity to create value is exploited. In this paper, the authors present the experiences of the India-based Tata Steel in implementing CVM across 25 select customers. This has enabled it to successfully come out of the commodity trap that it found itself some four years ago. The paper begins with an overview of existing research in the area of CVM covering the important aspects of customer loyalty, customer relationships, trust as an antecedent for relationships, value as a cornerstone of business markets, and importance of the supplier firm focusing on the efficacy of the value chain of which it is a part. While one part of the challenge for a supplier firm is to find avenues to create and deliver unique value to its customer firms, an equally formidable challenge is to obtain equitable return for value delivered. This is where value sharing through integrative negotiations between the supplier and customer firms becomes central. The authors conclude that current understanding on value creation and value sharing is at a preliminary stage. This is the gap that the paper seeks to address based on the actual experience of the company in implementing CVM. This paper presents a framework for mapping the various ideas generated in the CVM implementation process and attempts to build a value sharing methodology based on the CVM journey of the company. It concludes with several challenges that the company has to grapple with for continued progress on its CVM journey. One of the important challenges is addressing value drains and discovering new value creation avenues along all the interfaces between the various firms constituting the value chain all the way until the end customer. The key learnings can be summarized as follows: Success of CVM has to start from the top management of both supplier and customer firms. The focal responsibility cannot be delegated. Firms planning to embark on the CVM journey must adapt the CVM process to their own specific situations while general lessons can be drawn from Tata Steel�s CVM implementation experience. Meaningful roles must be found for all key managers in both supplier and customer firms for success of CVM implementation. It is necessary to take stretch targets for the process to be attractive and worth the while for both the firms. At the same time, it is essential to manage the expectations of both firms: CVM is not a panacea or a magic bullet to solve all the problems of both the firms. The overall philosophy of both firms must be to seek to expand the ‘value pie,’ thus coming up with integrative decisions based on aligned data where both the firms ‘read off the same page’ of data.

Certified value sellers

Some companies think that offering deep discounts to buyers is the only way to sell their products in business markets and propose a better way.

Commentary on “Business-to-Business Marketing Textbooks: A Comparative Review”

ABSTRACT Professor Backhaus and his colleagues undertake ambitious research to evaluate American textbooks on business-to-business marketing. Yet, in the process they do not report formal and universally accepted standards for business-to-business marketing textbook design and content, choosing instead to draw upon their own informally derived preferences. They apply the Bloom et al. (1956) taxonomy, on a limited basis, without providing validity and reliability test results. They evaluate several textbooks on the coverage characteristics of “instrumentally-oriented” and “marketing-management” approaches to marketing. They conclude by promoting the “transaction- types” approach and in particular the Backhaus version as a suitable framework for a business-to-business marketing textbook. My assessment follows.

Infosys Technologies LTD.: Growing Share of a Customer's Business

This case has multiple dimensions of analysis to it. While there is certainly an immediate short-term issue of winning the Ariba® e-procurement project of the existing client, Prairie Four Square (PFS), and gaining an increased share of the customer’s business that the Infosys team is trying to address, there is also an overall long-term strategic issue that needs to be addressed as well – that of the pricing mechanism based on value that needs to be deployed for long-term sustainability and growth of the relationship. This case offers an insight into the various dimensions of moving up the value chain and increasing the economic value of a customer relationship, identifying the differentiation strategy, communicating the positioning effectively, and the impact of local competition in the global scenario. The case also effectively illustrates the general growth path followed by most Indian software services companies, the issues they face in this progression, the changing scenarios in the global competitive arena, and the relentless pressure to lower costs in a diminishing labour cost arbitrage advantage scenario.

A Commentary on “Business Marketing in Master's Programs: A Part of the Fabric”: Cut from the Same Cloth?

ABSTRACT The authors of this article and their colleagues at the Richard Ivey School of Business at the University of Western Ontario are to be commended not only for this well-crafted article but also for their efforts to elevate and incorporate essential knowledge of business marketing into the fabric of their schools masters program. The provocative argument that the authors make is that business marketing behaviors, concepts and topics should not be the focus of just one elective course but that they should serve as a foundation of a schools entire masters program. According to the authors, that foundation can be built around four pillars or business marketing essentials-organizational buyer behavior, relationship marketing, customer value, and business markets. In this article, they present not only a process and guidelines for imbedding these pillars into a masters program but also recommend specific topics and cases for various masters level courses. For these reasons, this article is a “must read” for marketing scholars who seek not only to create and/or improve elective courses business marketing but also to enhance the prominence of the study of business marketing at their respective universities.