Academic journal article International Journal of Purchasing and Materials Management

Reverse Marketing: A Synergy of Purchasing and Relationship Marketing

Academic journal article International Journal of Purchasing and Materials Management

Reverse Marketing: A Synergy of Purchasing and Relationship Marketing

Article excerpt

During the last few decades many technology- and sales-oriented companies have transformed themselves into competitive customer-driven organizations. Many others need to follow their example as we approach the twenty-first century. Rapid technological developments, growing globalization of markets, and higher customer requirements have resulted in cutthroat competition in many consumer and industrial markets:

* Integration of the European market, tumbling trade barriers in countries such as Mexico and China, and democratization of eastern European countries and the former Soviet Union result in increasing investments by Japanese and American firms.

* For years now, American giants such as IBM, Gillette, Dow Chemical, Hewlett-Packard and Xerox have generated a major share of their sales from outside the United States.

* In industries like telecommunications, new technologies and deregulation eliminate traditional monopolies and create global markets.

* Emergent global markets are populated by stateless companies that try to position themselves as local firms by emphasizing local content.

In this continuously changing world, the importance of price has been reduced and quality has become a significant means of realizing sustainable competitive advantage.[1] Detailed studies have shown that product quality is a major factor in successful new product development.[2] Others report that the measurable elements of quality determine 50 percent or more of the purchasing decision[3] and that a high level of product quality often goes hand in hand with high market share and ROI.[4] Good product quality can only be achieved through incorporating quality requirements in the design of new products and in the purchase of existing ones.[5] Increasing levels of specialization have led many firms to concentrate on their core activities and outsource the production of many parts and components. This development has had a major influence on the tasks, responsibilities, and role of the purchasing function.

The existing literature emphasizes the changing character of purchasing. As early as the 1960s, some purchasing professionals discussed the need for active supplier development. In the 1980s many recommended the use of single sourcing,[6] whereas others went on to point out the long-term dangers of relying on just one supplier.[7] In 1988, Leenders and Blenkhorn introduced the term reverse marketing for an aggressive kind of purchasing that they encountered in the United States and Japan.[8] Reverse marketing describes how purchasing actively identifies potential suppliers and offers suitable partners a proposal for long-term collaboration. Others noted a similar phenomenon, variously called proactive procurement and market-driven procurement.[9]

PURCHASING AND MARKETING

The current development of the purchasing function shows remarkable similarity to the development of the marketing concept. The product/production orientation, which dominated management practice for many years, can be compared to traditional purchasing's focus on product and price. The subsequent sales orientation emphasizes the efforts of sales representatives to get customers to buy their products. This is very similar to the purchasing department, which directs its efforts toward identifying suitable suppliers that can deliver the desired products at the right time. Only when the whole organization is focused on serving the customer optimally (an integrated effort), does it really employ the marketing concept. Similarly, successful reverse marketing requires a concerted effort. Clearly, the development stage of purchasing depends on both the industry and the country.[10]

This conceptual parallel between purchasing and marketing can also be found within individual firms. First, purchasing and marketing are basically comparable activities directed at facilitating exchange transactions and relationships with external parties. …

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