In scholarly literature many researchers have stressed the importance of interpersonal relationships in global B2B marketing and sales to foster customer-supplier trust (Håkansson & Snehota, 1995; Håkansson & Snehota, 2001; Selnes, 1998) which eventually leads to more sales and higher profitability (E. W. Anderson, Fornell, & Lehmann, 1994; Reichheld, Teal, & Smith, 1996). But Plank et al. (1999) revealed that organizational trust is at least as (if not even more) important as trust in a C-KIBS supplier representative for the overall trust of a customer. Additionally no evidence could be provided scholarly for the influence of
interpersonal trust on overall organizational performance. (Zaheer, et al., 1998, pp. 142-143) Grayson et al. (2008) revealed that system trust and especially generalized trust has
considerable impact on the customers’ trust in ‘broad-scope trust’ cultures. The author argues that such cultures are less attractive for a C-KIBS supplier willing to approach a national market with remote communication because broad-scope trust can hardly be controlled especially by foreign organizations. Eventually in subsections 4.2.5, 4.2.6, and 4.2.7, the author sheds light on the mechanisms by which interpersonal sales and marketing activities can be replaced and which countries the most attractive are.
Interpersonal relationships are considerable expensive as they rely on frequent and face-to-face communications (Iyer, et al., 2006, p. 611) which makes a local sales force indispensable. This high investment in individuals is in the today’s dynamic economy with considerable employee mobility at least venturous (Iyer, et al., 2006, p. 612) also in regard to its differently valued impact by scholars. Furthermore studies revealed that interpersonal relationships are not always successful (Coviello, Brodie, Danaher, & Johnston, 2002; Gopalakrishna Pillai & Sharma, 2003) and organizations like Dell Computers or Marriott are successful in trust development “(…) by delivering high quality and consistent processes, products, services or outcomes rather than emphasizing interpersonal relationships.” (Iyer, et al., 2006, p. 611)
However one should acknowledge that the abdication of interpersonal contact will probably lead to a loss of a critical advantage of interpersonal contact – the identification of
future client needs (Markham, 2004) and any impending changes in the customer’s business (Kaplan, et al., 2005, p. 9) – that makes it difficult for C-KIBS suppliers to plan ahead (Marwaha, et al., 2006, p. 9). In regard to the fact that “(…) communication represents the primary strategic advantage inherent in the use of personal selling (…)” (Plank, et al., 1999, p. 63) it is at least arguable whether distance communication can be as effective as direct
communication.
The feasibility of the abdication of interpersonal sales approaches in B2B relationships is strongly correlated to the rapid evolvement of distance communication technologies, like the internet. Hence, in the following subsections the circumstances in which distance communication technologies make it possible to abdicate interpersonal relationships will be set in the context of C-KIBS relationships. The emphasis will be on the creation of trust through different sources of trust, namely trust in the delivery process, based on consistent expectations and reliability of outcomes (knowledge-based trust) and institution-based trust. However, the two strategies of consistent process and outcomes and interpersonal
relationships are not mutually exclusive. (Iyer, et al., 2006, p. 614)
The delivery of consistent processes and outcomes requires a high level of initial investment by the C-KIBS supplier but the costs for maintaining are much lower in
comparison to a local sales force, leading to higher long-term profitability. (Iyer, et al., 2006, p. 612). Furthermore the implementation, monitoring, and evaluation of process and outcomes consistency is less expensive than for interpersonal relationships (Iyer, et al., 2006, p. 613) and eventually benefits the need for measurement in a global context and also benefits the customers’ demand for simple, fast, and inexpensive transactions. The suitability of process and outcome consistency depends on the industry and exchange context, the market structure (infrastructure, cultural dimensions, institutional dimensions), and the country context. (Iyer, et al., 2006, p. 612)
For a consistent process and outcomes strategy specific and discrete transactions with stable task requirements that can be identified in advance are necessary. (Iyer, et al., 2006, p. 613) This is the case in customer-supplier relationships where the customer only fulfils the role of a consumer.
Customers prefer consistent process and outcomes buying strategies when
performance evaluation can be based on outcomes which are easy to observe and to measure. (Iyer, et al., 2006, p. 615) This is problematic at least in a pre-relationship stage, where due to the knowledge asymmetry and the complexity of the C-KIBS performance measurement is complex and customers do not have specific expectations of the service. Furthermore, in the
here investigated C-KIBS environment not the delivery of the service is the expected outcome for the customer but the performance improvements for the customer by using the service – the C-KIBS itself only fulfils the role of an artefact (Su & Jin, 2007, p. 3243). To overcome this gap and foster trust the provision of knowledge-based mechanism for trust formation are important. As the outcomes are also influenced by the customer’s circumstances (Iyer, et al., 2006, p. 615) he will only be able to get the right insights into the performance by the provision of additional information e.g. in the form C-KIBS related information he can directly apply to his specific case, and the assurance of the information quality by the KIBS supplier.
To perform a consistent process and outcomes buying strategy task-level commitments should be possible to make, like promises and guarantees for clear performance standards (institution-based mechanisms). These standards can be a delivery time but also more service specific aspects, like a service developed on basis of ‘proven best-practices’ or a maximum exploitation of the customer’s capabilities by using the C-KIBS. However it is advantageous if these promises are under full control by the C-KIBS supplier.
Furthermore to perform a consistent process and outcomes buying strategy pricing should be based on comparison of competitive products or services. The lower the level of customization the easier it is to base pricing on comparison. (Iyer, et al., 2006, p. 615) However even standardized C-KIBSs cannot be compared easily due to their complexity and role as an artefact. This makes it necessary to appoint prices primarily on basis of the value of the service (Abele, Elliot, O’Hara, & Roegner, 2002) for the customer. Thus, a marketing presentation for a C-KIBS should offer prospects the possibility to relate own circumstances to the C-KIBS functionality – thus, fostering bilateral communication directions (e.g.
marketing presentations with interactive functions).
As trust development is enabled more with known entities than with strangers
(Granovetter, 1985a) it is crucial for C-KIBS suppliers in a global context to compensate this lack of social bonds with knowledge-based mechanisms like “(…) professionalism, prior performance reputations, competence, and other readily observable factors.” (Iyer, et al., 2006, p. 615) Yoon et al. (1993) revealed that a “(…) a buyer’s response to a service is consistent with his/her attitude toward the vendor’s reputation, (…) and the effectiveness of a specific communications program can be enhanced by utilizing the company’s reputation.” (Yoon, et al., 1993, p. 215)
Company reputation is critical in successfully marketing a service (Thomas, 1978 cited according to Yoon, et al., 1993, p. 215) and interacts with information about an offering
and other elements of the marketing mix (Hagerty, 1978; Shimp & Bearden, 1982).
Reputation reflects the history of an organization’s past actions (D. M. Kreps & Wilson, 1980; Rosenthal & Landau, 1979) and affects the customer’s expectations about the offerings’ unobservable attributes, like e.g. quality (Margulies, 1977; C. Shapiro, 1982). The perceived reputation and the available information of the service offering determine the customer’s expectations (Yoon, et al., 1993, p. 216) which itself determines the customer’s purchase intention. (Crosby & Stephens, 1987; Lynch Jr, 1985)
A good reputation can enhance the customer’s expectations about the offering (Schmalensee, 1978; C. Shapiro, 1983) and can dilute customer uncertainties about the offering’s performance (Yoon, et al., 1993, p. 216) and thus a good reputation enhances rapid market penetration (Robertson & Gatignon, 1986). A positive reputation can serve as an entry deterrent for competitors (P. Milgrom & Roberts, 1982), helps to build a certain image and a loyalty relationship with the customers (Porter, 1998), and provides a strong market share position (Raj, 1985 cited according to Yoon, et al., 1993, p. 216). Thus, a certain reputation in regard to high-quality products enables companies “(…) to be more competitive in their marketing-mix implementation.” (Yoon, et al., 1993, p. 216)
A suppliers reputation can also be used to build source credibility and thus enhance communication effectiveness (McGinnies, 1973; Sternthal, Dholakia, & Leavitt, 1978); “(…) for example, pricing and advertising serve as a communicator of product quality.” (Yoon, et al., 1993, p. 217)
Reputation is of most importance for companies with services that have to be experienced by the customer because their quality is hard to observe or to verify by the customer. (P. Nelson, 1970) This is the case for C-KIBSs or more generally in cases of imperfect information (C. Shapiro, 1983), like e.g. with new-to-the-world products or simply incredible or dissuasive information. (Yoon, et al., 1993, p. 225). Then the reputation can be a means for forming a quality expectation. (Yoon, et al., 1993, p. 218) When information increases on basis of experience and word-of-mouth, the marginal value of reputation is expected to decline. (Yoon, et al., 1993, p. 218) Indeed, a supplier’s reputation has significant influence on the customer’s response to advertising as Tellis and Fornell (1988) showed that the customer’s association between advertising and offering quality was stronger during later stages of the product life-cycle. In later product life-cycle stages “(…) advertising typically becomes transformational rather than informational (…)” (Yoon, et al., 1993, pp. 216-217) because in the later stages advertising aims at enhancing the customer’s attitude towards the offering. Finally the value of reputation is high in situations of varying service quality under
one brand (C. Shapiro, 1982) or varying user-benefits across several brands of different suppliers due to competitive market (Allen, 1984).
It is important to note here that “(…) a customer’s experience with any single offering will influence his/her expectations of all other offerings by the same marketer (…)” (Yoon, et al., 1993, p. 218) and thus consistency in terms of service attributes (e.g. quality or pricing) over the whole service/product line is advised (C. Shapiro, 1983; Wolinsky, 1987). For products/services that cannot be experienced in advance institution-based mechanisms like guarantees or warranties can act as liabilities for the service performance that reduce the customer’s purchase risk and enhance satisfaction expectation. (Heal, 1977) As the performance and functioning of complex services like C-KIBSs depend not only on the supplier but for a big part also on the customer’s utilization of the service, a full guarantee is hard to justify operationally and economically. (Yoon, et al., 1993, p. 218) However
responding satisfactory to consumer complaints is always critical to enhance supplier
reputation and maintain customer loyalty which fosters subsequent repurchases. (Bearden & Teel, 1983; Day, 1984) Thus, next to offer high quality products/services, an effective information flow management enhances reputation. (Yoon, et al., 1993, p. 216).
The second pillar of reputation is information about the supplier’s identity, strategy, positioning, and market performance (Allison & Uhl, 1964; Porter, 1998; Raj, 1985; Winters, 1986) that can be diffused via direct communication between customer and supplier or by word-of-mouth between customers. (Yoon, et al., 1993, p. 218) Corporate advertising highlighting the supplier’s extensive market coverage, market share, innovativeness (Porter, 1998) or brand popularity (Raj, 1985) is helpful in image creation (Winters, 1986). (Yoon, et al., 1993, p. 218) In general the higher the service/product quality the more beneficial
advertising spending is for the supplier (Shugan, 1984) and the higher the advertising spending the higher the perceived service/product quality and its relative market prices (Kijewski, 1985 cited according to Yoon, et al., 1993, p. 219). Especially when customers experience ambiguous evidence about a service’s/product’s quality, brand advertising can have a significant effect on the supplier’s marketing image (Jacoby, Olson, & Haddock, 1971; Winters, 1986) like quality perception (Hoch & Ha, 1986). In general, experience goods like C-KIBSs need higher expenditures for advertising and transmit information primarily indirect. (P. Nelson, 1970) Overall management of the corporate and brand identity is crucial to
maintain company reputation and differentiation (Margulies, 1977 cited according to Yoon, et al., 1993, p. 219) as it leads to increased brand ratings (Allison & Uhl, 1964).
Table 5 summarizes and arranges the reputation attributes around three supplier attributes.
Table 5: Suppliers' reputation attributes (Yoon, et al., 1993, p. 222)
Innovativeness Customer-orientation Market segmentation &
coverage • Is an innovative company
• Is a leader in designing new products and services
• Offers customized packaging of services
• Provides help in solving customer’s problems • Provides consistently high-quality service • Provides personalized services • Is particularly oriented toward business customers • Has worldwide
capabilities and resources
• Is a leader in its field
• Offers a broad array of products and services Yoon et al. showed that the supplier’s reputation (e.g. as being customer oriented) directly impacts a customer’s buying intention as well as indirectly through the customer’s expectations. (Yoon, et al., 1993, p. 223) Furthermore the supplier’s reputation is as important as service information for customer expectations (Yoon, et al., 1993, p. 224) and a supplier’s reputation can even enhance the credibility of a given message. Finally, as already described before, consistency between a positive supplier reputation and product/service information leads to “(…) greater market responsiveness to advertising programs (…)” (Yoon, et al., 1993, p. 226).
Not surprising, “A good company reputation helps to generate, but does not guarantee, a positive expectation on the company’s offering, while bad company reputation typically stimulates a negative expectation on the offering.” (Yoon, et al., 1993, p. 221)
In summary by performing a consistent process and outcomes strategy the overt investments for creating interpersonal trust and social bonds are avoided by emphasizing “(…) task performance, service levels, product and service quality, and task- and
performance-related guarantees and assurances.” (Iyer, et al., 2006, p. 616)
4.2.6. Trust via a Consistent Process & Outcomes Strategy in Light of Sales Frequency &