The traditional view of marketing is that supplier firms will actively seek the requirements of customers and attempt to meet those needs better than the competition. This model places the initiative with the supplier. Purchasers could assume a passive dimension, relying on their supplier's sensitivity to their needs and technological capabilities to provide them with solutions to their problem. However, this trusting relationship is at odds with the new corporate purchasing situation that developed during the 1980s and is gaining momentum. Purchasing is taking on a more productive, aggressive stance in acquiring the products and services needed to compete. This process whereby the buyer attempts to persuade the supplier to provide exactly what the organization want is called reverse marketing.
The essence of reverse marketing is that the purchaser takes the initiative in approaching new or existing suppliers and persuading them to meet their supply requirements. The implications of reverse marketing are that it may pose serious threats to uncooperative in-suppliers but major opportunities to responsive in-suppliers and out-suppliers. The growth of reverse marketing presents two key benefits to suppliers who are willing to listen to the buyer's proposition and carefully consider its merits. First, it provided the opportunity to develop a stronger and longer lasting relationship with the customer. Second, it could be a source of new product opportunities that may be developed to a broader customer base later on.
Although buyers have a purchasing power to initiate commercial transactions, it is traditionally the case within organizational buying situations that sellers tend to visit buyers. This is sometimes termed transactional marketing, where the emphasis is likely to be upon a single sale and the time horizon is usually short term. Quality is generally seen to be concern of production and there tend to be on supplier emphasis on product features and price.
To re-emphasize what was said earlier, the concept of reverse marketing occurs where buyers generally take the initiative and they source suppliers (sellers) . This scenario is particularly applicable in retailing and in JIT manufacturing situations. JIT manufacturing has proved to be so economical and efficient that it will form an increasing trend in production line manufacturing situations where a relatively standardized product is being produced on a continuous basis. In this situation, buyers seek to source supplier whom they will retain for a long period of time. The main criteria being sought from suppliers rest upon the quality of their goods and reliability of their supplies as and when they are demanded. In JIT situations down-time on the production line resulting from faulty components or late delivery can prove very expensive. This view is supported by Deans and Rajagopal who says that the cheapest component procured by driving hard bargains with multiple choices is not necessarily the least expensive in the long run. Once the cost of poor quality is factored in- down time on the production line , rework, scrap , warranty work, legal fees- the cheapest may well prove to be the most costly.
Leenders and Blenhorn state that many companies take a minimum of two years to achieve acceptable quality standards from suppliers in the situation just described. To discuss contracts for six months or one year is meaningless. Purchasing development costs must be recovered and this has to be done over a longer period of time. Suppliers and buyers form a long term "co-marketing" agreement where both parties derive mutual benefits.
Kearney conducted a wide ranging study which concluded that the next wave of business improvement will not be obtained by looking at business in isolation, but by looking at the supply chain as a whole to find new opportunities to improve overall effectiveness. Additional areas of duplication and waste become evident and offer new sources of cost reduction. Service to the end of customer can be driven to even a higher standards by focusing the whole supply chain towards the goal, rather than diluting the efforts of individual companies through conflicting objectives. This broader vision is termed supply chain integration.
Kearney concludes that closer relationship between suppliers and customers will become competitive necessity. He does, however, caution that a naïve belief in an ill-defined concept of partnership as a universal panacea will be counterproductive. A level of realism is required in SCI to take account of the practical difficulties of integration, the level of sophistication of the participants and the nature of competitive advantage and power within the supply chain. Each company has a different mix (or portfolio) of supply chain relationships operating at different levels and the key is to select the right one for the right supply chain.
The trend towards reverse marketing will gather momentum. Buyers as a group are becoming more professional and indeed such professionalism is needed in JIT purchasing situations. So how does a seller cope with buyer needs once the company is an "in" supplier and a long relationship is anticipated? This bring us back to the notion of relationship marketing. Gronroos argues that implementing the traditional view of marketing is unsatisfactory. He quotes the limitations of the four Ps and claims the other Ps, such as planning, have to be added in an attempt to cover new marketing perspectives. He agrees with the concept of a company basing its activities on customer needs and wants in target markets, but argues that this still smacks of production orientation since these ideas stem from the firm and not from the marketplace. His redefinition of marketing perhaps sums up the concept of reverse marketing and the resultant cognition of relationship marketing when he states: " Marketing is to establish, maintain and enhance long term customer relationships at a profit so that the objectives of the parties involved are met. This is done by a mutual exchange of promises.
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The essence of reverse marketing is that the purchaser takes the initiative in approaching new or existing suppliers and persuading them to meet their supply requirements. The implications of reverse marketing are that it may pose serious threats to uncooperative in-suppliers but major opportunities to responsive in-suppliers and out-suppliers. The growth of reverse marketing presents two key benefits to suppliers who are willing to listen to the buyer's proposition and carefully consider its merits. First, it provided the opportunity to develop a stronger and longer lasting relationship with the customer. Second, it could be a source of new product opportunities that may be developed to a broader customer base later on.
Although buyers have a purchasing power to initiate commercial transactions, it is traditionally the case within organizational buying situations that sellers tend to visit buyers. This is sometimes termed transactional marketing, where the emphasis is likely to be upon a single sale and the time horizon is usually short term. Quality is generally seen to be concern of production and there tend to be on supplier emphasis on product features and price.
To re-emphasize what was said earlier, the concept of reverse marketing occurs where buyers generally take the initiative and they source suppliers (sellers) . This scenario is particularly applicable in retailing and in JIT manufacturing situations. JIT manufacturing has proved to be so economical and efficient that it will form an increasing trend in production line manufacturing situations where a relatively standardized product is being produced on a continuous basis. In this situation, buyers seek to source supplier whom they will retain for a long period of time. The main criteria being sought from suppliers rest upon the quality of their goods and reliability of their supplies as and when they are demanded. In JIT situations down-time on the production line resulting from faulty components or late delivery can prove very expensive. This view is supported by Deans and Rajagopal who says that the cheapest component procured by driving hard bargains with multiple choices is not necessarily the least expensive in the long run. Once the cost of poor quality is factored in- down time on the production line , rework, scrap , warranty work, legal fees- the cheapest may well prove to be the most costly.
Leenders and Blenhorn state that many companies take a minimum of two years to achieve acceptable quality standards from suppliers in the situation just described. To discuss contracts for six months or one year is meaningless. Purchasing development costs must be recovered and this has to be done over a longer period of time. Suppliers and buyers form a long term "co-marketing" agreement where both parties derive mutual benefits.
Kearney conducted a wide ranging study which concluded that the next wave of business improvement will not be obtained by looking at business in isolation, but by looking at the supply chain as a whole to find new opportunities to improve overall effectiveness. Additional areas of duplication and waste become evident and offer new sources of cost reduction. Service to the end of customer can be driven to even a higher standards by focusing the whole supply chain towards the goal, rather than diluting the efforts of individual companies through conflicting objectives. This broader vision is termed supply chain integration.
Kearney concludes that closer relationship between suppliers and customers will become competitive necessity. He does, however, caution that a naïve belief in an ill-defined concept of partnership as a universal panacea will be counterproductive. A level of realism is required in SCI to take account of the practical difficulties of integration, the level of sophistication of the participants and the nature of competitive advantage and power within the supply chain. Each company has a different mix (or portfolio) of supply chain relationships operating at different levels and the key is to select the right one for the right supply chain.
The trend towards reverse marketing will gather momentum. Buyers as a group are becoming more professional and indeed such professionalism is needed in JIT purchasing situations. So how does a seller cope with buyer needs once the company is an "in" supplier and a long relationship is anticipated? This bring us back to the notion of relationship marketing. Gronroos argues that implementing the traditional view of marketing is unsatisfactory. He quotes the limitations of the four Ps and claims the other Ps, such as planning, have to be added in an attempt to cover new marketing perspectives. He agrees with the concept of a company basing its activities on customer needs and wants in target markets, but argues that this still smacks of production orientation since these ideas stem from the firm and not from the marketplace. His redefinition of marketing perhaps sums up the concept of reverse marketing and the resultant cognition of relationship marketing when he states: " Marketing is to establish, maintain and enhance long term customer relationships at a profit so that the objectives of the parties involved are met. This is done by a mutual exchange of promises.
Note: Copyright Infringement is punishable by Law
