Information Sharing with B2B Customers the Seller's "Double-Edged Sword"
Hill, William W., Academy of Marketing Studies Journal
In the selling domain, it is clear that for the seller to survive, he/she must develop and maintain long-term relationships with the customers. Indeed, the marketing literature acknowledges the importance of the buyer-seller relationship toward sustaining competitive advantage (Hunt, 1983a; Ferber, 1970). Further, the stream of research relative to relationship marketing reinforces the importance of this strategy (Morgan and Hunt, 1994, Wilson, 1995). One factor noted for cultivating buyer relationships is information exchange (Cannon and Perraeult, Jr., 1999). Previous research suggests information exchange fosters customer satisfaction (Cannon and Perraeult, Jr., 1999), builds trust (Anderson and Weitz, 1992; Morgan and Hunt, 1994; Anderson and Narus, 1990; Doney and Cannon, 1997), and offers a perception of commitment (Dorsch and Carlson, 1996; Morgan and Hunt, 1994) for both parties. Information exchange has been suggested to have a positive impact on the internal functions within an organization (Buckman, 1998) and to be a constructive influence within alliances and joint ventures (D' Aspremont and Jacquemin, 1988; Kamien, Muller, and Zang, 1992). Moreover, in the supply chain, companies often share knowledge to improve visibility in chain operations resulting in innovative solutions between channel partners (Im and Rai, 2008).
Yet, surprisingly, previous research in this area has given minimal consideration to the negative influence of information exchange long-term. Specifically, do negative outcomes exist for the seller? Is there a limit to the amount of information that should be offered to the buyer? Are certain types of information too confidential to share? Are there specific contexts where the information offered is more detrimental to the business than others? Clearly, from this view, the answer to these questions is fundamentally yes. There seems to be a genuine sales dilemma in sharing information to build trust that runs the risk of transferring valuable knowledge to the buyer. This does not suggest that information sharing can always be avoided, nor does it imply that every scenario will necessarily lead to negative outcomes. This paper simply offers another perspective that is believed to be real. Thus, this view is counterintuitive to the belief that information sharing by the seller is always good approach for building relationships. In fact, the author suggests it can have serious impacts to the value of the seller and the products and services offered by the selling company. Since this issue has been given minimal notice in the marketing literature, this paper provides needed insight in this area.
INFORMATION EXCHANGE--IMPACTS TO RELATIONSHIPS AND PRODUCTS
Not surprisingly, firms seek innovative products as a means of achieving competitive advantage. A part of this process is being unique and difficult to imitate--clearly a key factor in sustaining companies against competitive challenges. Yet, while firms strive to differentiate, many find this goal problematic. A key problem here is competitive substitutes eventually become available in the marketplace. We know this is not uncommon even for the most successful companies. This issue of avoiding commodity status is particularly difficult within some raw material channels. Take, for instance, the mineral industry. Kaolin clays are mined, processed, cleaned, bleached, filtered, chemically treated, etc. prior to being shipped as clay slurries to the paper and paint industries. These industries use these mineral slurries and other raw materials to make coating recipes that, when applied to the surface of paper (or the living room wall), give optical properties that are appealing to the buyer. While many of these recipes are innovatively unique, in the world of manufacturing where formulating recipes is as much an "art" as a "science," the likelihood that customers or competitors will discover other mineral combinations that could provide similar benefits, is a strong possibility. Another example here (in the industrial setting) is in the control of the pH. There are a variety of chemicals that work adequately in the control pH beyond the standard industrial acids and bases sold for this purpose. So as you can see, even at the simplest process level, it is constant battle for the seller to differentiate products to make a "valued-difference" to the buyer. Substitutes are often just around the corner.
Because of this challenge, sellers are forced to compete largely through relationships. In doing so, sellers strive to enrich relationships by sharing information about the product, services, applications, etc. to secure trust, commitment, and to demonstrate seller expertise to the buyer. For the latter, the seller is not just selling the product, but the knowledge that can be offered. They are selling solutions involving their product. This is generally smart business--particularly with products that are otherwise considered commodities. Recall IBM's effective slogan "Solutions for a small planet" (i.e., the PC" is the commodity). Initially, the buyer will respect the seller for the knowledge that is shared and the relationship should prosper. Yet, over time, the seller is vulnerable to sharing valuable knowledge to the customer. In a sense, the seller, at some point, is giving away expertise--information that accelerates the commodity status for even new products in the market. Wilson's (2000) depiction of "the case of the vanishing salesperson," alludes to this concern. Wilson's (2000) view suggests that the role of the salesperson is diminished with deep relationships, and we agree. However, we suggest deep relationships often occur as the result of information exchange. That is, information exchange reduces the importance of the seller because the buyer has become knowledgeable of the product and how it is used. Of course, this added knowledge about the product to the buyer, surely reduces the uniqueness of the product over time. Based on this discussion, we offer the following propositions.
Proposition 1: For buyer-seller relationships that prosper, information exchange from the seller is likely a key factor stimulating the enrichment of that relationship in the short-term. As a result, the seller's perceived value to the buyer should initially increase.
Proposition 2: For buyer-seller relationships that prosper, information exchange from the seller is likely a key factor diminishing that relationship long-term. As a result, the seller's perceived value to the buyer should eventually decrease.
Proposition 3: Information exchange by the seller to the buyer to secure and nurture relationships is likely a key factor in reducing the timeframe that product remains unique to the market.
INFORMATION EXCHANGE PATHS
Information exchanges can occur through a variety of different exchanges, but as we have alluded to thus far, the most obvious path is from the seller to the buyer. As a guide to this discussion, see Figure 1. Here, we illustrate how information is transferred from the seller to the buyer and, then eventually in several directions. Of course, information can be transferred through verbal exchange in the selling process, but it also can occur when employees change jobs between sellers and sellers, buyer and sellers, sellers and buyers, etc. We know that many firms require employees to sign agreements preventing them from working for competitors, but these agreements have time limits and preventing an employee from permanently working for a competitor is difficult. Moreover, agreements are less common with employees who change jobs between selling and buying companies and vice versa. Undoubtedly, the information paths exist and must be acknowledged.
[FIGURE 1 OMITTED]
At this point, the discussion moves more specifically to the topic of information exchange, how it is defined, and the aspects of information exchange that are detrimental to the seller.
Cannon and Perreault, Jr. (1999, p. 441) define information exchange as "expectations of open sharing of information that may be useful to both parties." Moreover, it is suggested here that the risks associated with information exchange can be grouped into three areas: amount of exchange, type of exchange, and the context of the exchange. A discussion of each is addressed in the following sections.
Amount of Information Exchange Risk Relative to the Relationship
We suggest that the amount of information transferred from the seller to the buyer should serve to enhance the relationship until it reaches a peak. At some point in that exchange, it is proposed the relationship dampens (see Figure 2). That is, eventually, as more information is exchanged, this "giving away" of knowledge serves to transfer expert status from the seller to the buyer. The greater the information transferred, the better the buyer is educated, and the buyer's need for the seller is diminished. This does not infer the relationship is dissolved or it is at a lower level than at relationship's initiation, just that it is lessened from its peak.
[FIGURE 2 OMITTED]
Thus, it is proposed that
Proposition 4: The amount of information exchanged from the seller to the buyer may contribute to enriching the relationship in the short-term, but the diminishing the relationship in the long-term.
Types of Information Exchange Risk
It also evident that the type of information shared by the seller influences the quality of the knowledge exchange (i.e., some information is more valuable than others). The marketing literature most commonly identifies product and financial information exchange as primary areas subjected to the sharing environment (Dorsch et al., 2001; Srivastava et al., 1999). For product information, this may include product data characteristics (i.e., physical and chemical properties), product makeup, process/production knowledge, etc. Financial exchange could involve pricing, production costs, product revenue, etc. These types of information are certainly more valuable to the buyer than other information. Thus, sellers, against their better judgment, often share this information to help the short-term value of the relationship. Therefore, we propose:
Proposition 5: The type of information exchanged from the seller to the buyer may contribute to enriching the relationship in the short-term, but the diminishing the relationship in the long-term.
Contexts of Information Exchange Risk
Some business contexts are more conducive for transferring knowledge to customers. In fact, the marketing literature identifies several forums where information exchange occurs more easily and perhaps with greater understanding than others. In some studies, the authors even warn of associated risks in these settings or processes. Typical contexts of concern, summarized in Table 1, are discussed next.
Procurement Bidding Process
Buyers use the bid process primarily as a means of reducing product costs. For less powerful sellers, this is a real problem. If they do not participate in the bid, they will lose their existing business. Moreover, by ignoring the bid invitation, they show a lack of commitment to the buyer-seller relationship long-term. If they do participate and actually win the business, they do so at the expense of reduced pricing (i.e. from bidding low). Ultimately, the fear of losing the relationship (and sales revenue) encourages participation. Yet, when sellers do participate, the buyer learns a great deal. Specifically, the bid process offers a clear "apples-to-apples" comparison for buyer and hence educates the buyer as to similar competitive offerings (Klein, 2002). Buyers are often not aware of competitive brands before a bid process, and thus the bid process provides a clearer picture to the purchaser than perhaps ever before. Additionally, the bid process encourages the overuse of document exchange to questions generated from the bid evaluation process (Williams, 2002). Sellers might tend to be too free with information to please the buyer in this situation. Finally here, Porter (1999) articulates the bid process may foster unethical intentions as customers may eventually share information with competitors they want to win the bid. The sharing may be unintentional as well, but regardless, the information is released.
Collaboration in Product Development Process
The process of collaboration encourages the sharing of knowledge, particularly as the groups work together on new innovative product designs (Cannon and Perreault, Jr., 1999; Lambe and Spekman, 1997). The concern here is similar to that in the bid process. Working together in the research and development setting allows buyers to compare (i.e., "apples to apples") proprietary details about the product and its use. These same research scientists are working with competitive brands as well. Thus, while the intent of collaboration is worthy, the information shared in the context of product development may provide too great an understanding of the product's makeup and capabilities long-term.
In the B2B setting, the use of presentations is a very effective means for closing sales. The seller informs the buyer of the products benefits, often providing specifics about product offerings. The buyer appreciates the detail of this information. The seller has the opportunity to "touch" a number of key personnel involved in the buying decision. The seller also has the opportunity to alleviate any concerns about products with the entire buying group in attendance. Thus, the chance to make a presentation to a buyer is generally considered a great opportunity. Unfortunately, this method of information transfer may offer an extensive level of product information to the buyer prior to the sale (Meldrum, 1998; Dorsch et al., 2001). Product line details, application ideas, and cost information may be shared during presentations.
In summary, only three of a number of possible contexts have been discussed here suggesting the context of the information exchange provides a risk to the seller. In each example, the relationship is a goal, but perhaps at a cost. Thus, we propose:
Proposition 6: The context of the information exchanged from the seller to the buyer may contribute to enriching the relationship in the short-term, but diminishing the relationship in the long-term.
Risk Dynamics of Information Exchange Expanded
In order to better understand the risk dynamics of information sharing by the seller, it requires taking a broad-based view of the buyer-seller relationship. It also requires an understanding of how important the relationship is to the seller in the B2B setting. Knowing this, this paper offers a "who, what, where, when, why, and how" depiction of buyer-seller environment that hopefully describes how shared information is diffused through the channels within an organization and beyond. This information is displayed in Table 2.
The "who" in this scenario are the seller's contacts in B2B setting. Of particular importance here is how these contacts use the information shared by the seller. Typical contacts include operations, engineering, R&D, purchasing, and management. Each function has different motivations. It is important for the seller to understand these motivations such that they may use caution when working with these groups. The "what" dynamic in table 2 involves the types of information shared. This obviously includes product information, but also service/solution information relative to processes and practices. The "where" dynamic involves the locations that are suggested to be vulnerable for unintended information exchange by the seller. These include the customer's facility, the seller's facility, conference settings, and entertainment settings. The "when" scenario involves the time at which the seller tends to share information. This involves the selling process, but also the recovery process. That is, when the buyer has difficulty with the seller's product, the seller will share more information to help the buyer eliminate the problem. The "why" dynamic is directed at the seller's motives. Clearly, this includes making the sale (economic), promoting his/her expertise (image), and maintaining business friendships (emotional). Finally, the "how" dynamic shown in table 2 describes how information is transferred. This involves both verbal and written communication. For the latter, salespeople will use brochures, product data sheets, letters, emails, etc., to help promote their product(s) to the customer. Obviously, this practice must be monitored such that it is not uncontrolled.
CONCLUSIONS AND FUTURE RESEARCH DIRECTIONS
This paper hopefully offers a unique perspective on seller information exchange and the potential negative ramifications for sellers in the B2B setting. Clearly, the seller needs to build relationships and information exchange is often a necessary technique in this process. Thus, we must understand the dilemma of short-term gains versus long-term losses as discussed in this paper. It is important to recognize that the amount, type, and context of the information exchange are relevant in understanding how information is used by the buyer. Moreover, this paper recognizes the need to take a broad-based view of the information sharing environment such that sellers understand all the dynamics of the information shared.
This paper has generated a number of thoughts for future research. First, an empirical study for the ideas proposed in this paper seems warranted. Interestingly, while we take a darker view of the practice of sharing information with buyers, there would also expect to be long-term influences for buyers sharing information with sellers. A framework for that process could prove insightful. Future research could include development of a taxonomy system for the types of information exchange that occur. While we suggest in this paper that information exchange may be present in different forms (i.e. product, financial), there may be a number of information exchange types that warrant identification in the marketing literature.
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William W. Hill, Mississippi State University
Table 1. Typical Risk Contexts Noted in Marketing Literature Context Citations in Area Summary of Findings Procurement Williams (2002) Overuse of document exchange Bidding to address issues during Process supplier bid evaluation process. Klein (2002) Avoid invitation of bids where "apples-to-apples" comparisons can be made between products. Porter (1999) Ethical Behavior 1) Purchasing shares confidential product information with others. 2) Purchasing requires bid process to drive down price when the supplier choice has already been made. Collaboration Cannon and Perreault, Both parties share important, Product Jr. (1999) even proprietary information. Development Activities might include involving the customer in product design. Srivastava, Shervani, Sharing of information through and Fahey (1999) customer relationship management process. Lambe and Spekman Buyers benefit from suppliers (1997) ideas for new or improved products and better customization of the products or services they purchase. Presentations Meldrum (1998) Suggests presentations offer a great deal of "free" information for the customer and can be used for building relationships. Dorsch et al. (2001) Sales efforts to generate customer resource investments include using fact-based presentations to customer Table 2. Risks Dynamics of Information Sharing with Customers in B2B Selling Domain Description Relevance Concern Who? Operations Informs major user and Operators actually use application specialist your product/service of the product/ offerings. They have service. access to competitive products and know how apply them. This knowledge dilutes differentiation. Engineering Informs decision- Engineers work with maker with user and product/service application knowledge. offerings and make decisions based on this information. Information provided will be compared to competitive brands. R&D Informs a highly R&D has access to scientific group with competitive product access to specific information and they comparable attributes. perform scientific studies comparing products. Purchasing Informs a price Purchasers are conscious function "bargain shoppers." with information that They will seek to will be price homogenize products compared. and that could lead to price erosion. Management Informs chief Chief information decision-makers who collectors and have access to synthesizers. Paid to information from all make decisions about functions. product/servicing offerings. What? Product Product information Products can be Information such as costs, product compared. If they can makeup, procedures, be compared, the can and applications of be copied. Thus, use are included. sustaining a differentiated competitive advantage is more difficult. Service Service information Services are copyable Information includes costs, as well. Finding good processes, hiring highly skilled people practices, training, is hard to achieve. etc. Protect this information. Where? Customer Salespeople share Salespeople are Location information during vulnerable at customer sales calls at locations to sharing customer locations. information to Information is shared impress. There can be on their turf. a big audience, so one mistake travels to all channels. Seller The seller may have Salespeople invite Location customer at its own customers to their facility to show facilities to show product capability and capabilities. The knowledge. customer is exposed to details in the product/service offering. Conference Conferences are forums Conferences provide a Settings for meeting many hub for information customers at the same transfer--Information time. Presentations, is shared in both meetings, business and social entertainment, etc. settings Thus, caution occur. must be used during at these events. Entertainme Salespeople often use Selling entertainment nt Settings leisure entertainment activities often as an informal way to result in stronger share information. relationships, even friendships. As a result, the seller may be vulnerable to sharing unnecessary information. When? Selling Salespeople Sellers tend to flood Activities disseminate customers with information to gain information to make sales opportunities. the sale. This Customers want to make information is often informed decisions. more than necessary and may be compared with competitive offerings. Recovery Salespeople are The seller will be Activities challenged to sustain compelled to share a business when great deal of products/services information to help fail. the customer solve their problem. Why? Economic The sharing of Again sharing information is based information for on economics (i.e., short-term gains may generating sales). result in long-term loss of differentiation. Image The sharing of The salesperson is knowledge promotes the trying to make a great seller's and company's impression on the image. customer by sharing knowledge. Emotional Strong relationships Selling friendships and friendships with and crisis situations customers exist. Also, lead to information crisis situations exchange. For the evoke emotion. latter, the customer is seeking answers to solve a problem. How? Verbal Information shared in The seller must use Exchange presentations, restrain when meetings, phone compelled to offer conversations, information as a part entertainment of the selling activities, etc. process. There are many tempting situations. Written Information shared via The selling party Exchange call reports, often floods the buyer handouts, product data with literature as a sheets, MSDS sheets, means of getting the brochures, letters, buyer's attention email, etc. beyond the face-to- fact service call.…
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Publication information: Article title: Information Sharing with B2B Customers the Seller's "Double-Edged Sword". Contributors: Hill, William W. - Author. Journal title: Academy of Marketing Studies Journal. Volume: 14. Issue: 1 Publication date: January 2010. Page number: 27+. © 2008 The DreamCatchers Group, LLC. COPYRIGHT 2010 Gale Group.