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This article describes a new concept called reverse marketing, which is changing the conventional buyer—seller relationship and has important implications for the traditional role of the industrial marketer.
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How Reverse Marketing
Changes Buyer-Seller
Roles
David L. Blenkhorn
Peter M. Banting
This article describes a new concept called reverse mar-
keting, which is changing the conventional buyer-seller re-
lationship and has important implications for the traditional
role of the industrial marketer.
INTRODUCTION
Industrial marketers since the 1950s have subscribed
to the marketing concept, the principal feature of which
is a customer orientation within the marketer’s firm. This
orientation is an integral part of most definitions of mar-
keting. The marketing concept holds that the central aim
of the organization is to define the needs of a target market
and to adapt products and services to satisfy those needs
more effectively than competitors [ 11. Peter Drucker sug-
gests that the whole business should be seen from the
perspective of its final result and “this is from the cus-
tomer’s point of view” [2]. However, many industrial
marketers seem to be more concerned with product spec-
Address correspondence to David L. Blenkhom, School ofBusine\s, Wilfrid
Laurier University, Waterloo. Ontario. Canada N2L 3C.5.
Industrial Mnrketing Management 20, 185% I9 I ( I99 I )
0 Elsevier Science Publishing Co., Inc., 1991
655 Avenue of the Americas, New York, NY 10010
ifications than how these specifications respond to cus-
tomer needs [3]. Similarly, Theodore Levitt points out
that too many firms are product oriented rather than cus-
tomer oriented [4].
It is our contention that industrial marketers are more
concerned about their performance relative to competitors
than about their capability to satisfy their customers’
needs as completely as possible. To the extent that this
is true, they are using the wrong benchmarks to measure
their effectiveness and performance. Their relative per-
formance vis-a-vis their competitors should be secondary
to their performance in satisfying their customers’ re-
quirements. They are abdicating their responsibility to
the customer even while they are espousing the marketing
concept. If those business-to-business marketers really
were paying attention to customers’ needs, procurement
people would not have to develop aggressive materials
acquisition strategies. Rather, they could be passive and
rely on their suppliers’ sensitivity to their needs, sup-
pliers’ research, and suppliers’ directions for technolog-
ical development to anticipate their requirements and
offer solutions before problems develop.
This trusting situation has been the case among tradi-
tional procurement people. However, during the past
185
0019-8501/91/$3.50
decade a new corporate acquisition environment has de-
veloped and is gaining momentum. The vanguard of this
movement has been identified in our research in both
North America and Japan, embodied in dedicated and ag-
gressive individuals in the procurement function in orga-
nizations of all sizes, both profit and nonprofit. A new
breed of buyer is evolving who could pose a serious threat
to nonresponsive in-suppliers but offer unexpected oppor-
tunities to both cooperative in-suppliers and willing out-
suppliers. Before we give examples of reverse marketing
in action, it would be useful to briefly review the literature
on traditional business-to-business relationships.
TRADITIONAL BUSINESS-TO-BUSINESS
RELATIONSHIPS
Researchers in the past have examined supplier-user
relationships and how industry buys in many different
ways. Perhaps a good starting point is the behavioral
theory of the firm, which describes actual rather than
theoretical operations of the firm [5], while Buckner ex-
amined buyer-seller relationships in one country-Brit-
ain [6]. Webster and Wind’s Model of Organizational
Buying Behavior introduced the notion that there were
multiple forces constituting spheres of influences on buy-
ing decisions [7]. The Marketing Science Institute’s Buy-
grid Model and its buyphases offer guidance for the
business marketer [g]. Bonoma and Johnson’s exchange
model of business marketing is based on dyadic inter-
actions at the individual firm level [9].
From Europe the IMP (Industrial Marketing and Pur-
chasing) [lo- 141 group put forth the interaction approach
to explain the complexity of customer-supplier relation-
ships and their attendant environments, based on empir-
ical work in four Western Europe countries. Their
findings point out the clear distinction between formal
organizations existing between suppliers and buyers, such
as the use of distributors, sales agents, and sales subsi-
diaries, and the informal organization characterized by
the various levels of personal contacts and relationships
between buyer and supplier staff. These informal net-
DAVID L. BLENKHORN is Associate Professor of Business In
the School of Business and Economics at Wilfnd Laurler Uni-
versity in Waterloo, Ontario, Canada.
PETER M. BANTING IS Professor and Chairman of Marketing
and International Business in the Faculty of Business at Mc-
Master University in Hamilton, Ontario, Canada.
186
works, which form part of “relationship marketing,”
may be more important than the formal organizations.
Heide and John describe a model of OEM (original
equipment manufacturer)-supplier ties which identities
specific dimensions of these relationships [ 151. They
draw on a normative approach labeled transaction cost
analysis (TCA) supplemented with descriptive theories
from organizational research. They conclude that bilateral
governance (mutual cooperation) is not universally de-
sirable. It is useful only when specific assets and uncer-
tainty evoke a need to protect and to adapt. They posit
that selling is not simply the flip side of purchasing and
that different safeguards need to be crafted by the various
parties involved in a relationship.
The authors above have researched and described nor-
mative relationships which exist between buyers and sell-
ers but do not address the recent phenomenon which we
label reverse marketing, in which the initiative, by de-
fault, must be taken by the buyer to achieve organiza-
tional goals. Some examples will illustrate.
TWO CASES IN POINT’
Reverse Marketing to Acquire Materials
John Thomas, Vice-President of Purchasing of the
Malston Bakery, a major bread producer, was concerned
over the cost-price squeeze generated mainly by relentless
increases in flour costs, which represented 55% of the
total cost of producing bread. Repeated attempts to ne-
gotiate against price increases with the company’s six
flour suppliers were futile. However, research conducted
by John Thomas prior to, during, and after multiple mill
visits convinced him that the millers might have offered
discounts given Malston’s volume of purchases.
When Peter Hellibell, the new owner of a small soft
wheat flour mill expressed an intrest in expansion, John
Thomas saw an opportunity for developing a new flour
source to alleviate his material-cost problem. For Hel-
libel1 to expand from soft wheat (cake and cookie) flour
to hard wheat (bread) flour he needed financing, which
would depend upon the assurance of guaranteed large
volume sales and technical and quality assurance advice.
Thomas could offer all these and convinced Hellibell both
to expand and to accept a 7%-below-market price for all
hard wheat flour supplied to Malston Bakery.
‘All inf’ommation if’ factual. yet names have been changed to preserve
confidentiality.
The application of reverse marketing by John Thomas
resulted in the development of a new and loyal supplier,
brought the other six previously unwilling hard wheat
suppliers into line with price reductions, and generated
combined savings on all Malston’s flour purchases of
$924,000 per year.’
Reverse Marketing to Acquire Technology
Another example of reverse marketing involves Mega
Technologies Inc., a small family-owned firm which pro-
duces special parts for packaging machines used by man-
ufacturers of beer, liquor, shampoo, etc. The parts
produced by Mega-cams and feedscrews-are crucial
to the packaging process as they precisely align containers
to be filled or for label application. Paul Hill, the firm’s
president, pondered the idea of applying computer tech-
nology to the traditional machinery used in his industry,
which had changed little over the past decade. He en-
visioned this project giving his firm a competitive edge
in its industry.
When Hill approached five North American equipment
manufacturers with his proposal, several initially shared
his enthusiasm, but they soon lost interest when they
realized its complexity and the degree of commitment
that would be required. Subsequently, Hill joined forces
with a German manufacturer which had used the tech-
nology envisioned by Hill but for vastly different types
of machines. Next, a match was made with a computer
manufacturer with an excellent record in working with
machines of this type.
The ensuing project took seven years to come to frui-
tion. Hill acted as the catalyst for the two large offshore
suppliers. The ultimate success of this initiative is clear:
after being rebuked by five suppliers, Mega Technolo-
gies, a small firm short of resources, was able to link
with two large, offshore suppliers to produce a leading-
edge product. Indeed, the ultimate benefits to the sup-
pliers even may have outweighed those accruing to the
purchaser.’
The frustration experienced by procurement officers
such as John Thomas and Paul Hill has forced them and
many others in similar situations to become aggressive,
to take the initiative to make sure that they obtain what
‘A more detailed description of the M&ton Bakery experience can be
found in Leenders and Blenkhom [ 161, 36-52.
‘A more detailed description of the Mega Technologies Inc. case can be
found in Leenders and Blenkhom [ 161, 88-94.
their firms need but have not been getting from their
suppliers.
New Behavior Patterns
This proactive behavior of industrial procurement peo-
ple is a departure from the stereotypically passive pur-
chasing agent. Procurement people are adopting a new
approach in the performance of their jobs and, indeed,
their role within the organization. This new concept of
purchasing has been given the name reverse marketing
1161.
WHAT IS REVERSE MARKETING?
Reverse marketing involves a reversal of traditional
buyer-supplier roles. Traditionally, the supplier has taken
the initiative (Figure 1A). In reverse marketing the buyer
tries to persuade the supplier to provide exactly what the
buyer’s organization needs (Figure 18). Without this
The Traditional Supplier-Purchaser Relationship
selling
Initiative
i
buying
SUPPLIER* +. _ _ _ _ ,&,
*The supplier tries to persuade the purchaser to buy.
Reverse Marketing
I I providing
SUPPLIER . . .._..._.. ___~
I T
reverse marketing
*The purchaser tries to persuade the supplier to provide
INITIATIVE
(B) 1
FIGURE 1. Traditional (A) and Reverse (B) Marketing
Relationships
187
buyer initiative from the purchasing side of the dyad, the
supplier is unlikely to offer specifically what the buyer
requires.
The reverse marketing concept described here comes
as a result of research conducted by the authors [ 161 in
North America and Japan to identify and describe an
emerging phenomenon in the purchasing function. The
following captures the essence of reverse marketing:
1. Reverse marketing is an aggressive and imaginative
approach to achieving supply objectives. The pur-
chaser takes the initiative in making the proposal.
The goal is to satisfy both short- and long-term
supply objectives.
2. Reverse marketing requires close work with an ex-
isting or a new vendor to meet ambitious supply
objectives. This may involve persuading a reluctant
vendor to become a supplier; persuading managers
inside the purchaser’s organization to make what
was formerly purchased, or vice versa; persuading
users to try a new product, service, or system while
persuading a vendor to do likewise; and a host of
other tasks. The key is in the two words “initiative”
and ‘persuasion. ’ ’
3. The rewards are many. Savings in the 5 to 30 per-
cent range are not uncommon. Reverse marketing
permits procurement to contribute effectively to the
organization’s objectives and strategy. Successful
reverse marketing requires cooperation from all lev-
els and most functions in the organization; hence,
it enhances the role of the supply function. Reverse
marketing is future oriented and requires careful
planning and research. It may permit the achieve-
ment of seemingly impossible objectives in terms
of quality, quantity, price, delivery, and service.
4. Reverse marketing is more than just a technique or
tool. It represents a different perspective on the role
of supply and how it should be managed so as to
contribute effectively to organizational goals and
strategies [ 161.
The activities in reverse marketing comprise an 1 l-
step process (Figure 2) ranging from fundamental re-
search at the commencement of the reverse marketing
idea to reverse marketing options undertaken at the proj-
ect’s completion. Reverse marketing involves a great deal
of negotiation and frequently aggressive behavior to en-
able the supply function to achieve its goals, which usu-
ally include adding directly to bottom-line profitability.
188
FIGURE 2. The Reverse Marketing Process
I
2.
3
1.
5
6.
7.
x.
9.
IO.
II.
I--undamenral Ke\earch
Specific Kesearch
Key Dectawn Point
Design
Orguni~ational Support
Design Rcvicw (Rehearsal)
Negotiation
Agreement m Principle
Wrttten Agreement
Contract Admim\tratlon
Reverse Marketing Options
n Direction of possible loopmg
v Dwxtion of typical phase sequencing
The above diagram illustrates that up to and including the Negotiation phase
it is possible to go back (to loop) and revw any or all of the preceding phases.
However, once Agreement in Principle has been reached, it is possible only
to proceed forward through pha\eh 9. IO. and I I, and not loop backward.
THE OLD AND THE NEW
The research suggests that individuals in the buying
function might be positioned a long a spectrum anchored
by the traditional purchaser at one end and the reverse-
marketing-oriented purchaser at the other. Certain per-
sonal characteristics such as perceptions, attitudes, and
purchasing style appear to be correlated with the pro-
pensity to engage in reverse marketing. For example,
Dion and Banting found that effective purchasing agents
are more highly motivated, more satisfied with their jobs,
and more certain of what constitutes good performance.
They favor open, honest, and cooperative relationships
and avoid opportunistic and short-term gains [ 171. Per-
due, Day, and Michaels suggest that a collaborative prob-
lem-solving negotiating style among purchasing agents
achieves the objective of maximizing the joint transaction
payoff for both parties [ 181. Leenders and Blenkhorn
isolated a number of similar characteristics which were
common among buyers practicing reverse marketing
1161.
TABLE 1
Purchaser Profiles
TraditIonal Reverse-Marketing
Crltenon Purchaser Orlented
Action orientation Responsive Proactive
Outlook-way of Unidimenaional thought Multidimensional
thinking thought
Functional analysis Routine approach Creative approach
Perception of role Functionally limited Organizationally
within organization view integrated view
Attitude toward supplier Adversarial “them vs. Cooperative partnership
US”
Temporal horizon
Payoff horizon
Negotiation approach
Motivation
Short-term perspective Long-term perspective
Immediate and Continuing and
satislicing optimizing
Passive Assertive
Accepts status quo Highly motivated
These studies suggest that the characteristics of the
purchaser likely to engage in reverse marketing can be
contrasted with those of a traditional purchaser as shown
in Table 1.
IMPLICATIONS FOR THE
INDUSTRIAL MARKETER
Understanding the buyer is a basic precept of industrial
marketing. Thus, it is important that the message found
in Table 1 be recognized if industrial marketers are to
adjust to a newly developing procurement environment.
By being able to distinguish reverse-marketing-oriented
procurement people from traditional purchasers, the in-
dustrial marketer will be better able to form a mutually
beneficial cooperative partnership resulting in increased
long-run sales and an enhanced bottom line. The char-
acteristics of reverse-marketing-oriented purchasers
shown in Table I will now be examined for their rele-
vance to the business-to-business marketer.
Proactive. A purchaser with a proactive action ori-
entation knows what his organization needs and will have
a good idea of how to go about achieving organizational
requirements. The marketer must recognize that this ag-
gressive proactive procurement stance cannot be ignored
or deflected, must listen attentively, and be prepared to
respond to the buyer’s initiative.
Multidimensional thought. The reverse-marketing-
oriented purchaser typically thinks of the implications of
a purchase on several difference planes: How will this
item affect my company’s future flexibility: Can other
departments also use this process? The buyer can envision
many interrelationships and how they interact with the
current problem. The strategy for the marketer is not only
to offer solutions to the most pressing problem but also
to demonstrate how these solutions may affect other op-
erations, other decisions, and other issues of concern to
the buying organization, both in the present and in the
future.
Creative approach. The purchaser who practices re-
verse marketing thinks in terms of the whole organiza-
tional system, rather than of just one functional area at
a time. This broader view translates into being able to
perceive how purchasing decisions fit into the framework
of the entire organization, both in its form today and that
of the future. Facing this kind of buyer, the marketer’s
strategy should be to position his product or service ac-
curately within the buying organization’s system and its
possible future scenarios and, where feasible, educate the
purchaser regarding other possible applications or new
dimensions of use. The industrial supplier must recognize
that the offering will be viewed by the buyer from a
systems perspective. This implies that the industrial sup-
plier should recognize that in sourcing its own purchases,
the supplier’s supplier may also play a critical role in the
reverse marketer’s system.
Cooperative partnership. Buyers who engage in re-
verse marketing want a long-term relationship with their
suppliers. They seek suppliers who are willing to share
the ups and downs of the business. The old adversarial
Machiavellian style of relationship is passe in reverse
marketing. The purchaser is looking for a long-term mar-
riage rather than a short-term affair. This may force the
industrial marketer to sacrifice short-term profit for long-
term profitability. The business-to-business marketer’s
strategy should be to use “relationship marketing.”
Long-Term Perspective. Being able to envision the
impact of today’s purchasing decision on the long-term
welfare of the organization is a characteristic of the pur-
chaser who is a proponent of the reverse marketing con-
cept. Solutions to immediate problems are important, but
the reverse marketer avoids many short-term crises
through successful long-term planning and execution.
The industrial marketer must also think in a long-term
mode when assessing the needs of this industrial customer
and how his products can solve problems, not only current
189
problems, but also challenges facing the customer in the
future.
Continuing and optimizing. Allied with a long-term
perspective, the reverse marketing practitioner seeks con-
tinuing satisfaction in a relationship with the supplier.
Immediate gains through purchasing may be sacrificed in
order to develop longer-term optimal gains as part of a
mutually beneficial, stable, collaborative purchaser-
supplier relationship. Industrial marketers who are too
quick to close a sale, offer little or no after-sale follow-
up, or are not willing to adjust sufficiently to the buyer’s
needs, should heed the warning that the numbers of re-
verse marketers who won’t tolerate insensitive or “here
today, gone tomorrow” suppliers are growing.
Assertive. The reverse marketer knows what he
wants and will not take “no” for an answer. He artic-
ulates his special needs well and will not waste time on
inflexible suppliers who are not sincerely interested in
reaping greater potential rewards by being part of a rc-
verse marketing project. It is this assertive, no-nonsense,
and almost doggedly persistent approach which charac-
terizes the reverse marketing practitioner. It is imperative
that the business-to-business marketer do his homework
in preparation for meetings with the reverse-marketing-
oriented buyer. The procurement person is no longer pas-
sive, uncritical, or dependent upon the seller’s perceived
expertise. The business-to-business marketer must be
well-prepared, thorough in his presentations, sensitive
and adaptable to the buyer’s requirements and objectives,
and cogent.
Mori~vlriotl. A highly-motivated reverse marketer is
willing to pursue his goals vigorously, despite supplier
resistance. The purchaser is more willing to explore al-
ternative sources and solutions for his purchasing re-
quirements, even though he may prefer to single-source.
The business-to-business marketer can no longer rely on
buyer inertia to maintain a foothold with the customer,
but must reciprocate the enthusiasm encountered in the
reverse-marketing-oriented buyer’s office and dcmon-
strate willingness to “go the extra mile.”
CONCLUSION
The exciting aspect for marketers in this new buyer-
seller relationship called reverse marketing is the prospect
of developing a new, more open relationship with pur-
chasers. As the purchaser initiates more problems to be
solved and new situations to be explored, the creative
190
industrial marketer has the opportunity to build stronger
and longer-lasting relationships with his customers, re-
sulting in greater mutual benefit. Some of the unexpected
benefits to the marketer include the identification of new
product opportunities, the ability to translate innovative
reverse marketing solutions to a broader customer base,
the possibility of building cooperative ventures with other
suppliers, and the prospect of greatly expanding sales.
Industrial suppliers might begin thinking not in terms of
supplier-buyer relations, but in terms of marketingIre-
verse marketing relations.
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Purpose In industrial procurement, the concept of supplier satisfaction has gained increasing attention. Satisfied suppliers have been found to provide better prices, more innovations and priority in bottleneck situations. This paper aims to analyses in how far the concept of supplier satisfaction can be transferred to the public procurement domain. Design/methodology/approach Two large quantitative data sets are compared, one from a sample of suppliers evaluating their industrial clients, the other from a public customer being evaluated by its suppliers. Findings The same criteria which explain supplier satisfaction with its customer, which are relevant in the private and industrial case also hold true for the public case, namely, growth opportunity, profitability, relational behaviour and operative excellence are important criteria for distinction. Only relational behaviour by the customer scored significantly higher in the public sample, indicating that this is more an influencing factor for public organisations. Research limitations/implications Showing the relevance of supplier satisfaction also for the public domain paves the way to further research better understanding how to measure satisfaction and how to increase suppliers’ satisfaction. Practical implications Buying organisations are asked to apply a form of “upstream marketing”, in which they actively try to promote their organisation with their suppliers and increase its attractiveness. This is a new way to get access to better services from suppliers. Social implications Analysing supplier satisfaction, on the one hand, allows to improve public purchasing acts, which generate social benefits in better using public money. On the other hand, caring for the well-being of suppliers is per se contributing to a socially more desirable world. Originality/value Supplier satisfaction is a new concept in the public procurement domain. This is the first paper to introduce this approach.
... 2 Due to the standardised procurement of contributions to joint-esteem formation techniques (Carter and Carter, 1998) in a reversal process of marketing (Blenkhorn and Banting, 1991) and where the procurer association deals mutually with suppliers. ...
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  • Thayer
Thayer. G.H., Jr., Industrial High Tech Poaltiomnp: How to Choox the Competitive Battlefield. Imhsfriul MtrrkrrinR 67. 60-6X (June 1982).