Business-to-business
marketing is considered by companies to be a sound business strategy and more
so when the electronic means is utilized (Ramsdell, 2000). For buyers, B2B
marketplaces promise not only to deliver more competitive prices but also to
rid the supply chain of a host of inefficiencies. For sellers, B2B creates a
channel for their product distribution thus minimizing the cost of transaction
attained when they themselves engage with the end-users of their products.
In business-to-business trade among buyers and sellers, the
relationship involves complex products traded where there are high levels of
inter-dependencies. In these situations it is necessary to co-operate in order
to maximize the opportunities for the network of companies, and to build in
protection measures against opportunistic behavior, either through trust
developed over time, contracts, or a combination of both (Agrawal and Pak,
2001; Ramsdell, 2000; Hollad, 1996).
Factors such as trust and reputation are critical, and there is also
the notion of cooperative strategies based on mutual benefit rather than the
simplistic idea of maximizing revenues to individual organizations (Farrely and
Quester, 2003; Archer and Yuan, 2000; Abramson and Ai,
1999). There is widespread research and anecdotal evidence of the
importance of relationships in business-to-business markets and concepts such
as the virtual value chain (Rayport and Sviokla, 1995) and cooperative supply
chain structures (Holland 1996) extend the theory to market networks of
separately owned organizations choosing to work closely together.
In practice, relationships in
business-to-business marketing have come to mean trust that results in
protective and complementary relations in Asia, and will thus include the
sharing or pooling of resources (Hamzah-Sendut et al, 1990 in Abramson
and Ai, 1999, p.10). These factors are all part of the Asian concept of guanxi,
the six key constructs of which being: Mutual trust between parties; Commitment
towards mutual benefit; Empathy towards all parties; Maintenance of
relationship; Provision of favors to partners; and Full reciprocation of
favors; (Abramson and Ai, 1999, p.10).
Two adjacent
players--the buyer and the seller--usually share information at each stage of
the supply chain and transaction process, and the nature and amount of what
they share depends on the quality of their relationship (Agrawal and Pak,
2001). Thus, the successful exchange of information in the transaction of B2B reflects
the amount of investment and trust buyers and sellers bestow to each other.
The B2B relationship is even more controversial in the emerging
market of B2B retailing. The business is lucrative where Internet business-to-business sales will
reach $1.3 trillion by 2003 and; by 2004, business-to-consumer sales will reach
$100 billion (Lord, 2000). Aside from the potentially huge market offered by
the internet, E-commerce technologies provide effective and efficient
ways in which corporate buyers can gather information rapidly about available
products and services, evaluate and negotiate with suppliers, implement order
fulfillment over communications links, and access post-sales services (Chaston
and Mangles, 2003). From the supplier side, marketing, sales, and service
information is also readily gathered from business partners. Building and
maintaining B2B relationships is the key to success in e-commerce and, unless
service is maintained, customer loss may result, more than offsetting any cost
efficiencies due to introducing e-commerce technology (Archer and Yuan, 2000).
Since the core of e-commerce is information and communications, support for
managing customer relationships particularly trust is of primary consideration
in the buyer-seller relationship (Archer and Yuan, 2000).
Although
there is some evidence of a move towards electronic markets, there is also
strong evidence to support the hypothesis that electronic communication
technologies will forge closer relationships rather than create more fragmented
ones. This is particularly true in business-to-business markets where the
levels of interdependencies between buyers and sellers are typically extremely
high compared with business to consumer markets (Johnston and Lawrence, 1988,
Konsynski and McFarlan 1990).
