Includes Purchasing Products and Then Selling Them Again Without Any Reprocessing

Abstruse

In this article, we lay out the challenges and research opportunities associated with business-to-business organisation (B2B) buying. These challenges and opportunities reflect four aspects of B2B buying that the Establish for the Report of Business organisation Markets (ISBM: www.isbm.org) has identified through a Delphi-similar process: (ane) the changing landscape of B2B buying, (2) the increasing sophistication of sellers, (iii) the impact of technological changes, and (4) the increasing importance and growth of emerging markets. For each of these four areas, we place the relevant background, primal issues, and pertinent research agendas.

Introduction: Emerging Challenges for B2B Ownership

According to the most recently published U.Southward. Department of Commerce (2010; http://world wide web.census.gov/econ/estats/2010, assessed January 2015) statistics, business-to-business (B2B) transactions account for $10.vii trillion, or nearly 42 %, of total U.S. revenues. Because the United states of america accounts for roughly 22 % of the global economy (http://en.wikipedia.org/wiki/World_Development_Indicators, 1 July 2014), global B2B buying reasonably is expected to approach $50 trillion in transactions (i.due east., $10.7 trillion/.22). Understanding these transactions—including the forces that bulldoze them and how changes in the environs touch them—is essential to the organizations that participate in this enormous global marketplace.

In improver, B2B ownership behaviors differ substantially from consumer ownership behaviors, in several ways. Starting time, B2B buying entails satisfying derived demand. Organizations buy products to meet the needs of their buyers. Impulse-buying is rare; clearly stated, objective criteria, such as coming together production needs and schedules at a minimum price, usually bulldoze the selection process. 2d, because more one person is involved in the purchase decision process, purchasing managers rarely make a buying conclusion contained of the influence of other stakeholders, whether within the buying organization or external to information technology (e.g., consultants, supplier firms, other firms in the industry). The grouping that makes the purchasing decision in turn is embedded in a network of private and organizational relationships. Third, because of the high dollar volume, number of stakeholders involved, and often circuitous, technical nature of the offerings under consideration, the B2B purchasing procedure usually takes substantial time and may involve all-encompassing bargaining and negotiations. The extended B2B purchasing process (which can take months or years) and its interactive nature (involving multiple members of both the ownership and selling organizations) make it difficult to specify the functional relationships between the marketing efforts of a supplier and the responses by a buyer. Fourth, because B2B buyers are more interested in satisfying their total need than in buying any specific product, the offer tin can exist complex and include training, technical support, financing, delivery terms, and so forth, such that neither the heir-apparent nor the seller can hands determine which offering is best for the buyer.

In Table 1, we trace some major trends in B2B buying models, which reveal that many foundational models, developed iii or 4 decades agone, are static and focused on a N American or European institutional structure. However, environmental forces emanating from technological advances and globalization are affecting the nature of B2B buying and challenging the validity of these models, along with their underlying assumptions.

Table 1 Evolution of B2B buying enquiry (Source: [31], p. 373)

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Accordingly, Wiersema's [68] B2B calendar cites the need to focus on B2B ownership as ane of the three superlative domains of concern for B2B marketers. ^{Footnote ane} Through a Delphi-like process, the Establish for the Written report of Business Markets (ISBM; world wide web.isbm.org) has identified four aspects that are of neat concern to practitioners and offer the potential for fruitful academic study:

1. 1.

   The irresolute landscape of B2B buying

2. 2.

   Increasing seller sophistication

3. iii.

   The touch of technological changes

4. iv.

   Increasing importance and growth of emerging markets

The ISBM hosted a mini-conference in Orlando, Florida, in February 2014, to bring together leading B2B scholars who could substitution ideas in each of these domains and develop a research agenda for B2B ownership. What follows are perspectives on each of these four important domains. We provide some background, identify central bug, and propose an associated research agenda for each instance. Nosotros hope in plough that this article focuses attention on and leads to further research in these important domains.

The Changing Landscape of B2B Buying

This section was primarily developed by Lisa Grand. Scheer and Robert F. Lusch.

Centralization of buying at a global level has enhanced selling firms' focus on global key business relationship management practices. Enhanced buyer noesis, power, and discretion shift the rest of power abroad from sellers; the nearly of import buyers (in terms of growth, volume, or otherwise) are often the almost sophisticated and demanding, and the limerick of the buying organization likewise seems to be changing, to include a broader representation and weight of non-procurement functions. Nonetheless no clear pic has emerged regarding what is driving such changes or, in plough, how these changes might affect buying processes.

BuyGrid Dimensions: Revisited and Adjusted

For nearly v decades, the BuyGrid model ([47]; see Fig. ane) has proven useful for understanding B2B buying, even so more recent macro-trends take significantly altered the B2B buying process [71], at an accelerating rate of change. First, political initiatives and regulations such as the U.N. Global Meaty on Kid Labor, U.S. legislative provisions regarding international accounting standards (i.eastward., the Dodd–Frank Act), and the EU's Attain (Registration, Evaluation, Authorization, and Brake of Chemicals) and RoHS (Restriction of Hazardous Substances) standards for hazardous substances pose new, plush challenges that require buyers to carefully vet, document, and monitor global networks of suppliers, to an unprecedented caste. Second, the evolution of data and communication technologies has major implications for B2B buying [33]. Sharing data previously demanded plush, time-consuming efforts; now it tin exist transmitted at minimal costs and instantaneously, without geographic or temporal bounds. New technologies enable electronic marketplaces, data interchanges, and rich interactive collaborations among afar entities. Presently, physical objects embedded with digital processors will interface in the "Cyberspace of Things" too (see http://store.elsevier.com/production.jsp?isbn=9780124076846). These and other substantive business environment changes call for a revisitation and update to the BuyGrid.

Fig. one

The BuyGrid model

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The BuyGrid's sequential buying process indicates a comprehensive serial of decision-making stages ("buyphases"). Modern B2B buying instead comprises four ongoing processes: implementation, evaluation, reassessment, and confirmation. Implementation encompasses all deportment undertaken to acquire and receive appurtenances and services directly, within the parameters of the current ownership decision. Evaluation entails examining the conformance, effectiveness, and efficiency of all buying activities implemented within the parameters of the deal, such as rating seller performance or tracking acquisition cost metrics. Reassessment is scrutiny of the foundations on which current B2B buying decisions are based, including conclusions drawn from the evaluation of current ownership activities; changes to the buyer's internal capabilities, needs, or priorities; and external factors, such as emerging opportunities and threats, offers from potential suppliers, or evolving market place or regulatory demands. This strategic reassessment and so leads to confirmation of the heir-apparent's decision, whether as a renewal or minor modification of the existing buying decision or else the investigation, negotiation, and specification of a new one.

These processes are contemporaneous rather than sequential, with activities ongoing in each phase. Buying activities continue while other processes progress, and changes occur only when a new buying decision has been confirmed. Information are gathered and key metrics examined constantly to evaluate current buying activities. Sales proposals are examined, and heir-apparent employees or hired consultants continually scan the environment for emerging opportunities. The degree to which buyer resources are invested in each procedure changes with the varying internal or external factors. For case, regulations strength buyers to document their ownership activities more than fully, investigate suppliers more extensively, and reevaluate profitable current buying relationships using new criteria. Buyers' ability to compare prices instantaneously prompts them to seek ways to squeeze supply chain costs. Globalization also introduces proposals from new suppliers, generating more extensive strategic reassessments. When buyers and sellers assemble extensive information, information technology alters their priorities and the nature of their negotiations. Developments in automation, the Internet, and data technologies also enable fully mechanized ownership systems and face up-to-confront collaboration across vast distances.

In addition, BuyGrid's buying center concept highlights the importance of relevant buyer personnel. By building on this concept, we can glean insights from identifying the constellation of buying participants involved in each buying process, including buyer personnel, individuals and organizations external to the buyer (eastward.g., electric current and prospective suppliers, auditors, regulators), and inanimate entities and systems that perform activities formerly undertaken by people. The parties who confirm the buying decision and set the parameters for buying arrangements ofttimes differ from those who implement the buying activities. Analysts evaluate buying activities and pass their conclusions on to managers, who reassess the buying decision. Within negotiated parameters, buyer systems may communicate directly with supplier systems, implementing buying tasks without human interest. The persons engaged in evaluation, reassessment, and conclusion making; the arrangement pattern teams responsible for establishing mechanized buying systems; and the parties that implement the ownership activities are geographically located co-ordinate to various criteria and come together just as needed and frequently virtually, using telepresence technologies.

Despite the endurance of the BuyGrid classification of buying situations as new tasks, modified rebuys, and straight rebuys, the weaknesses of this model have long been noted (e.1000., [70]). In an surroundings in which technologies create a global marketplace, information technology is more useful to consider the consistency versus degree of difference in the buying elements that constitute the characteristics of the buy. These ownership elements arise from 4 factors: (1) the goods and/or services acquired, (2) the terms of trade, (3) the selling business firm, and (4) the ownership house. The buyer can seek to learn the same products, like products (east.thou., new coincident services, customized version of current product), or very different products (due east.g., co-production, service solution vs. appurtenances purchase) than previously bought. The terms of merchandise also might exist identical, vary slightly in several aspects (e.g., price, delivery location, payment policy), vary greatly in i aspect, or differ on all terms. The buyer can deal with the same seller in exactly the aforementioned mode, the aforementioned seller through a different interface (e.grand., new salesperson, electronic organisation), a new concern unit of the same seller, a new seller through the same interface (e.g., follow a salesperson to a new company, same electronic marketplace but a new seller), or a new seller through a new interface. The ownership firm may change the personnel involved in the buying process, its buying interface, its corporate policies, and and then on.

When considering the myriad buying elements, identical rebuys likely occur only through the implementation of previously negotiated and confirmed ownership arrangements. On the flipside, seldom does a buyer experience a completely new buying state of affairs, with no consistency in the ownership elements. Thus, the nigh pertinent focus for our attention is analyzing (1) which buying elements are constant or in flux, (2) the degree of change in the inconstant elements, and (3) whether the changes are sought specifically by the buyer or seller, imposed by external parties, or occur naturally due to obsolescence or compunction.

Although information technology is helpful to reconsider the BuyGrid's dimensions as ongoing and maybe evolving buying processes, including both human and inanimate buying participants, other elements as well merit attention: increasing globalization, government intervention in markets, value chain disruption, technological advances, and informed, empowered, demanding downstream buyers. All of these elements promote greater interdependence betwixt buyer and seller firms [71], suggesting the need to consider the diverse interorganizational relationships through which B2B buying occurs.

Modes of B2B Buying: Toward a New BuyGrid

As heir-apparent–seller interdependence increases, the nature of the buying relationships becomes more disquisitional. In Table 2, we summarize 3 B2B buying modes that vary in the relationships betwixt buyer and seller, the locus and nature of the buying decisions and their implementation, and other purchase-related factors.

Table ii Modes of B2B buying

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Routinized Exchange Relationships

When acquired goods and services are consistent and predictable, routinized substitution relationships (RERs) are likely. In RERs, buying activities involve repetitive, routine interactions between authorized entities. The implementers enact standard ordering, receiving, and replenishment procedures within established parameters that accept been devised by others, who confirm the buying determination and delineate the domain of authorized rebuying activities. Buying in RERs may be undertaken by private boundary spanners representing the buyer and the seller, simply increasingly, these routine activities are conducted by automated systems. In either case, RERs arise if the buyer and seller have a significant degree of interdependence; the establishment of the RER buying arrangement farther increases this interdependence, particularly when it includes systems integration.

Many decisions are necessary before implementing a networked electronic ownership system though, including the specific appurtenances and services to be acquired, the initial seller partner(s) involved, specifications for authorizing additional partners, procedures for adding new products, which algorithms can implement buying activities, the parameters within which automatic buying operates, which factors trigger human being intervention, and schedules for periodic homo oversight. For ordering and some fulfillment activities (due east.g., automated distribution centers), machines, systems, and algorithms perform the tasks, supported by a human technical staff that monitors ongoing processes, investigates exceptions, and exercises limited decision-making authority, within established parameters. At an extreme, RERs involve human representatives only in arrangement cosmos, routine maintenance, and investigation of exceptions or performance outliers beyond established boundaries. As more physical goods gain "smart" capabilities, the viability of RERs should increase for a wider variety of purchasing contexts.

Organic Buying Relationships

Some B2B buying contexts are non amenable to routinization, so at the other end of the spectrum are organic ownership relationships (OBRs), which crave ongoing human interest, interpersonal interactions, and adjustments betwixt buyer and seller firms. Examples of OBRs include integrated solutions (e.g., paying for miles of use rather than buying tires), heir-apparent–supplier product codevelopment, and fundamental account relationships that enable the heir-apparent to achieve customized appurtenances, enhanced services, more consistent supply, or cost savings through operational integration. Negotiations with solutions providers probable remain centralized, considering of the far-reaching organizational changes required to pursue solutions rather than but buy appurtenances. Codevelopment projects with critical suppliers ofttimes are centralized; codevelopment with a niche supplier or that focuses on smaller-scale, market-specific innovations may be located regionally though. To customize goods and services for empowered, demanding, evolving local markets, distributed buying that is located closer to these markets can lead to better detection of emerging trends and heighten capacities to secure authentic, reliable supply sources. Prior buyer–seller interdependence might exist, but the evolution and implementation of an OBR tends to increase both the heir-apparent's and the seller'due south dependence on its counterpart [xxx].

For centralized ownership decisions, advisory teams representing various functions reassess buying decisions, consider external and internal factors, and devise recommendations; final decision-making authority still typically resides with a single individual or minor executive group. The implementation of confirmed ownership decisions unfolds over time, requiring ongoing interpersonal contacts through numerous interfaces between buyer and seller (e.g., buying and sales agents, distribution, and traffic managers). Managers of boundary spanners evaluate the ongoing buying activities and conform the implementation programme. When buying decisions are decentralized to local levels, individuals oftentimes participate in multiple buying processes. For example, the party who makes buying decisions may differ from those who implement buying activities, but the same manager likely evaluates current buying, reassesses the buying conclusion, and confirms the electric current human relationship or selects a replacement supplier. In some cases, this director, and other boundary spanners, also implements the buying activities.

Transactional Buying Operations

Finally, ownership may occur through transactional buying operations (TBOs), divers as one-time agreements that impose neither obligation nor expectation on buyers and sellers to engage in future business. Examples include spot markets, auctions, bids for specified goods or services, and other advert hoc buyer–seller interactions. In contrast with the other modes, TBOs have a short fourth dimension horizon: Decisions are confirmed; components and aspects of the deal are finalized quickly, and fulfillment is completed presently thereafter. Demand is unpredictable, or products are relatively unimportant, so the tangible and intangible investments required to create and operate a RER would not be warranted. The appurtenances and services are not complex, novel, or of import plenty to justify organizational and personal investments to create, cultivate, and nurture an OBR. Transactional ownership tends to exist centralized for high-volume buys only local for low-volume, low-price buys. In TBOs, a single person may perform all buying processes, every bit long as functioning metrics meet acceptable standards. Evaluation, reassessment, and confirmation past a supervisor likely occur simply on a periodic schedule.

In such TBOs, buyer–seller interdependence is low, and investments in an RER or OBR cannot be justified by the importance of a product or the criticality of the partner. These TBOs also may occur in conditions of loftier interdependence asymmetry; the more dependent party may adopt an RER or OBR, just its less dependent counterpart has the power to insist on operating at a transactional level and thus can continually scan for alternatives. We anticipate that, over time, a smaller share of buying volition be conducted through these TBOs. As Net competition grows, buyers and sellers increasingly seek to form RERs and OBRs to achieve competitive advantages that they could not obtain through transactional ownership. This shift bodes a more than strategic role for B2B buying, because both RERs and OBRs are inherently longer-term decisions, involving non-recoverable, relationship-specific investments. Furthermore, both RERs and OBRs highlight the need to integrate the construction and organization of the buying decision strategically with its implementation. That is, a full accounting of ownership must include the difficulties and costs associated with this implementation.

Toward a Enquiry Calendar

Diverse inquiry possibilities arise from the four dimensions of buying: implementation, evaluation, reassessment, and confirmation. In particular, nosotros demand descriptive inquiry to describe and understand the current state of buying, as summarized in the following potential inquiry questions:

• Are at that place circumstances in which the four ownership processes are not contemporaneous? What subactivities and entities are involved in each process?

• Are they decentralized physically merely integrated virtually?

• Will charting the cast of characters—animate and inanimate—involved in each buying process, across dissimilar contexts, reveal interesting differences or patterns?

• Can developing visual representations of the ownership elements' consistency or variation reveal prototypical configurations in which specific sets of elements tend to covary?

• When and where do we detect these modes of B2B buying?

• What market, macro-environmental, selling business firm, and buying firm factors are associated with each mode?

• Are there other modes?

• Tin enquiry offer support for the implicit conjectures and theorizing presented in Tabular array ii, or will information technology uncover other ways in which the modes are similar or differ?

Beyond descriptive assessments, B2B analytics research could model the performance implications of deploying different modes of buying and the associated types of relationships, of centralized versus decentralized buying decisions, and of centralized versus decentralized buying activities. Simulations might approximate the value-added contributions of different types of ownership relationships, such equally RERs or OBRs compared with TBOs.

In addition, empirical modeling or survey research should consider whether unexamined contextual factors modify the effectiveness or efficiency exhibited by different buying participants and in unlike modes of B2B buying. For case,

• What factors indicate that an automatic RER volition perform better than a human-implemented RER?

• In which conditions does local ownership outperform centralized ownership activities?

• What performance indicators should inform comparisons of the strengths and weaknesses of different buying modes?

As the strategic importance of buying and buying relationships increase, research attention to these and many other issues will offer significant potential to inform practice. Because B2B ownership is an inviting area, in demand of theory development and creative research, we hope this discussion prompts moves toward either a BuyGrid two.0 or some other relevant framework.

Increasing Sophistication of Sellers: The Trend toward Solutions

This section was primarily developed by Sundar Bharadwaj and Robert Spekman.

With few exceptions, B2B suppliers face up increasing buyer power, as more buyers source on a global scale and actively seek to reduce their supply base [51]. As a result, for many suppliers, a small subset of big buyers accounts for a asymmetric share of sales, such that these buyers constitute critical strategic avails for the suppliers. Viewing buyers every bit strategic assets leads to the immediate consequence that suppliers must prefer a new mindset when dealing with key buyers. In addition to seeking a more collaborative relationship, suppliers increasingly are expected to cocreate value with and for buyers, such that they move beyond standard cost and quality improvements and seek to provide unique collaborative solutions. However, many traditional suppliers are not well positioned to accost the solution- and cocreation-related challenges that crave managing buyers every bit strategic assets [51]. Using Merton'southward [37] motivation–ability framework, we therefore attempt to identify and classify the trends that are moving sellers abroad from a product-centric view and toward a more collaborative, relational view of customer solutions.

Motivation-Based Trends

Global Competition

Competition on a worldwide level forces movements toward commoditization. For case, the commoditization of the personal computer (PC) industry was a major commuter of IBM's decision to sell its PC business to Lenovo. Commoditization trends in general stalk from two related factors: Outset, buyers seek to source products from the lowest price suppliers, which frequently are located in emerging markets, to reduce their purchasing costs. 2nd, many suppliers take failed to differentiate their products, then buyers focus on price, which reduces the supplier margins.

Fiscal Pressures

These pressures on margins also crave suppliers to manage their portfolios of buyers better. Successful suppliers tend to focus on assisting and avert unprofitable buyers. With this focus on profitable buyers, suppliers work to help buyers meliorate their financial performance. That is, buyers seek suppliers not for their brand proper noun or marketplace share but for the supplier's ability to piece of work closely with them to create win–win situations.

Survival of the Smartest

Both these pressures, together with a tendency among buyers to outsource their noncore activities, provide opportunities for suppliers that sympathise how to cocreate value with buyers, because they tin can differentiate themselves from competitors. Such "smartness" is axiomatic in Dow Corning's decision to create the Xiameter brand to serve toll-sensitive buyers, so that its flagship "Dow Corning" make could target buyers seeking solutions that cocreated value.

Ability-Based Trends

Increasing Network Thinking Capabilities

Rather than an internal focus, sellers at present pursue cocreation, such that both the heir-apparent and seller are responsible for bringing new technologies to marketplace. Such elaborate collaboration requires new skills (east.g., relationship building) of the seller. Considering buyer–seller relationships involve multiple contacts between firms (eastward.g., sales reps and purchasing managers, sales managers and buyer financial officers, engineers in the ii firms), network thinking becomes more prominent; in addition to interfirm buyer–seller networks, networks within both buyer and seller firms impact each specific relationship.

Increasing Buyer Knowledge

Advances in customer human relationship direction systems and other methods for obtaining deeper client knowledge grant B2B firms greater ability to build collaborative relationships with key buyers. Such relationships go beyond the purchasing department, to include other functions and levels within the buying organization, and thus pb to increasingly sticky connections. Buyers seek knowledge-based value from their suppliers, who thus must bulldoze interfirm relationship value.

Improved Segmentation Skills

As segmentation skills ameliorate (e.yard., demand-based segmentation with Xiameter by Dow Corning), suppliers can better differentiate solution-seeking buyers from price-seeking ones. Suppliers must enhance their skills and ability to serve the segments they decide to target. For solution-seeking buyers, relationship-building skills are disquisitional. For toll-seeking buyers, an analytics-based approach is needed, and skills with managing big information are paramount.

Research on B2B Solutions

3 research streams have dominated prior literature on B2B solutions. Commencement, some studies seek to distinguish betwixt product–service bundles [49, 53] and true solutions that tend to distinguish products and services [62, 64]. These latter customer solutions typically involve outcome-based, contractual agreements that ensure specific performance achievements (e.g., number of miles instead of truck tires sold, tons of iron ore excavated instead of earth-moving equipment bought, flight hours instead of jet engines leased).

Second, ecology and firm-level factors might motivate the adoption of services. For case, Reinartz and Ulaga [45] note that firms suffering declining equipment sales increasingly focus on equipment installation and maintenance contracts, such that their revenues from service contracts can far exceed their previous equipment sales. Other studies similarly document performance improvements due to such service-focused strategies (e.k., [16, 17]).

3rd, research has attempted to identify ability-related factors and the moderating conditions that determine their efficacy. For example, Tuli et al. [62] develop propositions about supplier processes and buyer characteristics that may relate to customer solution effectiveness. Using a theory-in-apply methodology, Ulaga and Reinartz [64] identify the resources and capabilities necessary for the successful delivery of customer solutions. However, a shift to solutions does not automatically result in improved profitability or firm value [17]. Some suppliers of standalone products have transitioned successfully to customer solutions strategies, but many firms go on to struggle to offering assisting solutions [26, 58]. Two mutual internal roadblocks hinder the successful implementation of customer solution strategies: (ane) the business concern that such offerings expose firms to higher levels of take chances and (2) fear of the loss of profits from their core goods [68, 72].

Toward a Inquiry Agenda

Further research should provide a systematic validation and extension of the factors that prior enquiry has identified as related to the increasing sophistication of sellers and solutions selling. Some key research questions include:

• What are the antecedents of a solutions strategy, along the dimensions of organizational structure, relational assets, and contracting ability?

• Which ability-related factors, strategies, and tactics are needed to develop the markets for customer solutions and ultimately sell to target segments effectively?

• As suppliers cooperate more to bring unique solutions to their buyers, who owns the buyer?

Beyond motivation and ability-related aspects, enquiry on moderating weather condition and outcomes should evidence fertile. The B2B buying procedure for customer solutions oft differs essentially from that for product selling. For example, the greater complexity and college perceived take chances associated with solution selling means that these decisions oft take identify at a higher organizational level and involve stakeholders of more diverse functional backgrounds, with potentially conflicting requirements. Therefore, fruitful research could investigate:

• How does the buying process differ betwixt products and solutions?

• How does the selling process differ between products and solutions?

• How does the interaction betwixt the buying team and selling squad differ between products and solutions?

• What is the office of branding in solutions selling? Do firms use a single brand approach or adopt a cobranded/ingredient branding approach?

Because buyers may choose to acquire a complete solution from a single supplier or pursue it from multiple suppliers, to leverage best-of-breed sets of components from each supplier, and suppliers similarly may provide the complete solution or collaborate with other suppliers to create a solution, some other inquiry questions include the following:

• When should sellers collaborate in solution selling? What function should they play in the sale?

• In which circumstances (products, markets, levels of sophistication) are buyers better off amalgam solutions from multiple sellers versus purchasing from a unmarried supplier?

• What touch on does partnering in solutions selling have on sellers' innovation?

Finally, insufficient empirical research explores the outcomes of a solution strategy, which provides an opportunity for research on metrics of solutions effectiveness and organizational adaptations to solutions. Some research questions include:

• What are the operation outcomes of solution selling at the offering, buyer, and selling firm levels?

• What organizational changes, at the buying firm and selling firm level, are needed to accommodate solutions selling?

• How practise these changes and performance metrics shift over time?

The Impact of Engineering science on B2B Buying Behavior

This department was primarily developed by Sundar Bharadwaj, Pranav Jindal, Murali Mantrala, Aric Rindfleisch, and Shrihari Sridhar.

In this section, we focus on the impact of changing engineering on B2B buying behavior. A classic view of decision stages from the industrial goods buying process (due east.g., [47, 67]) broadly encompasses three phases: information gathering (for need identification, establishing specifications, searching for alternatives, and setting buy and usage criteria), product evaluation/negotiation (setting budgets, evaluation of alternatives, negotiating with suppliers), and buy/usage. This process reflects the concept of "creeping commitment," such that conclusion making involves a sequence of incremental choices, each of which eliminates some alternatives from further consideration [47]. But even 25 years ago, Wind and Thomas [seventy] speculated that the classic buying process would be affected past developments in information technology. At that time, Wind and Thomas [70] had more than questions than answers and could hardly foresee the accelerated technological developments and diffusion brought near in the adjacent two decades. In particular, nosotros note ii forms of emerging digital technologies with disruptive effects on the classic industrial buying phases: digital information technologies (DIT) and digital manufacturing technologies (DMT).

With DIT, we refer to the integration of telecommunications (eastward.k., smartphones, wireless technology), estimator systems (e.one thousand., software, audio-visual systems), and data that enable firms to access, store, transmit, and manipulate data pertinent to their daily business concern operations. Examples of DIT include Net-enabled technologies such as social media, deject computing, the Internet of things, smart mobility, and large data that assist users admission, curate, manipulate, and transmit information in real time, thereby improving firms' business process productivity. For DMT, nosotros focus on the technologies themselves, such every bit digital pattern software, digital scanners, and 3D printers. These technologies enable firms to design, manufacture, and acquire objects independently, rather than ownership them from an external supplier. Thus, auto manufacturers such as Ford use 3D printing to quickly prototype calorie-free automotive components that can increase fuel economy and become them more rapidly to market [13]. General Electric uses 3D printers to manufacture parts for its turbines [xv].

Both DIT and DMT are enabled by the spread and power of the Internet, which has dramatically contradistinct the nature of B2B buying past allowing firms to larn rich, detailed product data from manufacturers, fellow buyers, or 3rd-party reviewers. This data may include elements of a product's design, including its actual design files, which can be downloaded, printed, and even modified by buyers with access to DIT [iii, 32]. According to Anderson [3], new technologies thus have the potential to usher in a new industrial revolution. Despite their potential role as game changers, the impact of DIT and DMT on B2B buying behavior has received relatively little scholarly attention—even as B2B marketing strategies, structures, and tactics are all likely to be radically altered past the emergence of these new technologies. To illustrate these likely effects, we discuss six B2B-related trends that DIT and DMT are likely to shape in the virtually futurity: (1) the growth of social buying and online communities, (2) desires for solution provider websites, (3) heir-apparent-driven seller interventions, (4) desires for engaging sales interactions, (v) increased B2B buying center sizes, and (6) increasing uses of analytics.

To provide a conceptual framework for this discussion, we employ the classic BuyGrid model (Fig. 1). Although we take proposed a new BuyGrid framework (Table 2), to sympathise the changing mural of B2B buying, the simpler, archetype BuyGrid model is sufficient. Accordingly, in this section, nosotros focus on the ownership process (or buyphases) outlined at the outset of this department every bit a key reference bespeak.

Impact of Technological Trends on B2B Buying and Selling

In Tabular array 3, nosotros detail how the vi cardinal trends associated with the emergence of DIT and DMT affect the iii wide stages (data gathering, evaluation/negotiation, and buy/usage) of the ownership process.

Table 3 Impacts of changing trends on BuyGrid dimensions

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Information Gathering

The emergence of social buying has led to the formation of two segments of B2B buyers: traditional ones and social buyers, who rely extensively on social media and online communities (east.k., Information technology Knowledge Exchange) during the purchase process. Solution provider websites provide a primary source of data for buyers during the early stages of their ownership process, and search engines have get a gateway to B2B content discovery. More than seventy % of buyers begin their concern purchases with research on Google [50].

With advances in DIT, the B2B buying and selling procedure besides has become more buyer-driven than in the past. That is, B2B buyers invite B2B salespeople to appoint at the buyers' discretion, and they might choose to engage with salespeople at any stage of the buying procedure. Advances in digital and data technologies also enable B2B buyers to use information analytics and streamline their purchasing, in tune with anticipated demand for their products. Buyers plough to online sources to research seller offerings and obtain production quality evaluations, which reduces their dependence on face-to-face events such as trade shows [35]. For the seller, recent industry surveys indicate that 60 % of the ownership process in a complex sale is consummate before prospects even are willing to engage with a alive salesperson (Marketing Leadership Quango [36]). Moreover, increased information asymmetry favors B2B buyers; in one recent survey, 77 % of B2B buyers indicated they would not talk to a sales rep until they had conducted their own independent research, facilitated by DIT (2012 Demand Gen Study). ^{Footnote two}

The increased volume of production-related information available online likewise leads technology-enabled B2B buyers to expect more from sales reps. Thus, sales reps must motion across content provision to offering potential buyers new perspectives on their market place and creative solutions to their problems. Loftier-quality sales interactions are specially important when buyers face high-stakes decisions; B2B sales organizations that provide insightful solutions (rather than product data) are more highly valued.

In response, some B2B selling firms are hiring cloud-based predictive analytics providers (e.g., Lattice, Mintigo) to collate internal data sources (eastward.grand., marketing automation data) and external information (public information about companies' fiscal performance, company events, executive changes, social media activity, press releases, chore postings, patents) to identify new leads. Firms likewise employ these data to generate model-driven conversion rates, according to existing client "await-alike" traits. For instance, new building lease signings or specific task postings might bespeak the expansion of potential customers into new markets, suggesting new opportunities for supplier firms. Other analytics enable sellers to monitor buyers' browsing behaviors on websites, which and then help them understand the level of the buyer'southward readiness to purchase and transform cold sales calls to warm sales transactions, lowering their toll of sales.

The growth and diffusion of DMT is likely to have a transformative effect on how B2B buyers apply this data too. Digital manufacturing technologies such every bit 3D printers allow firms to transform their ideas into objects [3]. Thus, information is the product. For example, UPS recently announced that it had installed 3D printers in hundreds of its retail stores, as function of its small business organisation solution initiative. Using these printers, small firms can create (or download) digital files and impress them for a variety of business-related uses, such as prototypes, replacement parts, or even small batch manufacturing.

Evaluation/Negotiation

The impact of DIT and DMT on the 2nd pace has been notable also. First, advances in DIT let more than stakeholders to participate in ownership decisions. According to a contempo survey, the number of people involved in a big technology purchase increased from five in 2010 to seven in 2012 [18]. In response, sellers develop more than multiperson teams to evaluate the heterogeneous information and resource requirements [35]. With the growth of analytic tools available to B2B buyers, marketing processes also are condign more than industrialized, which enables the provision of rapid, agile insights to buyers at the decision bespeak.

2nd, growing online communities provide buyers with a treasure trove of information, such as user reviews, that can aid them evaluate lists of potential vendors. The responses by sellers include websites (e.g., Visa's Business Network, which targets small business customers) that enable customers to share ideas and respond to manufacture-specific queries. For Visa, the community features content but also generates useful leads [46]. Sellers such as Cisco and IBM leverage Twitter, Facebook, and YouTube to target social buyers and test and launch their new products.

Yet the rise of DMT also creates a new gear up of evaluation challenges, because B2B firms interested in leveraging the ability of this new technology will gain options to rely on (internal) digital tools to design and craft their own components, rather than buying them from external suppliers.

Purchase/Usage

Online communities impact the B2B buying and selling process, equally a form of both DIT and DMT. That is, these communities correspond sources of valuable information, and they also provide access to digital designs that can be downloaded or modified for directly manufacturing. The digital design sharing site Thingiverse contains more than 500,000 designs, accessible for free, that users can industry with a desktop 3D printer. These designs provide a foundation for (potential) buyers to avoid the buying process entirely, or else enter into a singled-out procedure in which they accept their designs made to order by a 3D manufacturing house such as Shapeways, Ponoko, or Amazon.com.

Analytics also will play an of import role in how DMT affects the purchase and usage stage of the ownership procedure. The Cyberspace of things can produce digitally manufactured products that feature rich sets of analytics, such as the time and place of manufacture, the identity of the machines used in their manufacturing, or their specific tolerances [32]. Moreover, the Net of things enables increased connectivity among devices, creating new opportunities for firms to monitor and deliver services remotely and beyond the world. Cisco offers building management services to large business organisation clients from remote locations at significantly lower costs; DuPont promises smart crop monitoring using RFID devices included in seed packs.

Sellers also accept begun to exploit DIT, such as in online forums, panels, blogs, webinars, and online demonstrations to share best practices and encourage cross-client learning. Such actions enable them to enhance not only usage but as well customer satisfaction, with significantly lower investments. A related implication is the increase in the ratio of inside-to-outside sales forces [35].

Toward a Research Agenda

In contrast with the substantial attention devoted to DIT and DMT in popular publications, such every bit The Economist, The New York Times, or Wired [ii, threescore, 65], scholarly enquiry on these technological trends is thin [35]. Literature in digital and information technology domains largely focuses on macro-level studies of the development and functioning of B2B e-commerce (e.g., [52]), organizational participation [20], governance issues in B2B markets [19], or open up product sourcing [34]. Little research investigates how DIT influences B2B buyer behavior inside buying organizations or the related implications for B2B sellers and sales organizations. Likewise, we find little academic research that considers the concern implications of DMT, though a notable exception is Berman's [7] overview of 3D printing technology and its potential marketing implications. This paucity of extant research leaves considerable opportunities for marketing scholars to investigate the effects of advances in both DIT and DMT on B2B buying beliefs. In line with the structure of this section, nosotros divide our recommendations into the 3 stages of the buying procedure:

• Information Gathering

  • Are B2B buying centers irresolute in size, composition, or complexity due to the influence of advancing DMT and DIT? Which buying center roles are increasing or decreasing in importance, and why? How do these changes vary past the blazon of product, purchase, or buyer–seller exchange human relationship?

  • Do engineering science-enabled interactions change the nature of marketing–sales relationships in B2B markets? Are marketing departments more important, as enablers of marketing communications content?

  • How does DMT alter the nature and type of information acquired by B2B firms?

• Evaluation/Negotiation

  • What is the optimal B2B sales organisation structure, in the face up of technology-induced changes in B2B buying beliefs?

  • How will the ratio and role of inside-to-outside sales forces modify due to DIT?

  • What new competencies are required by B2B selling organizations? Does the sales force need more analytical skills? Are persuasive skills less relevant?

  • What implications do technology-induced changes in B2B buying beliefs have for the organization, staffing, training, deployment, and compensation of sales organizations?

• Buying/Usage

  • How are advances in DMT changing the nature of B2B ownership? Which types of firms are using this emerging applied science to brand products rather than ownership from a supplier?

  • How are B2B heir-apparent–seller interactions changing due to advances in technology? Are new technologies making interactions more transactional, consultative, or collaborative?

  • Is the nature of products existence sold changing, from appurtenances to services? How does the buying and selling process for B2B services differ from that for B2B products?

The Growth of Emerging Markets

This department was primarily written past Ujwal Kayande, Robert W. Palmatier, and Sundar Bharadwaj.

The growth of emerging markets such as China and India has dramatically reshaped the global marketplace, including primary demand, merchandise flows, and business concern practice. Although nosotros know that accounting for the environmental context in which business organisation transactions are embedded is critical to understanding B2B buying behavior, academic research and managerial best practices that largely reside in developed markets oft become directly and inappropriately practical to emerging markets. Well-established literature on the standardization versus accommodation of marketing strategies suggests that B2B buying frameworks developed in what Henrich et al. [22] call the WEIRD nations (Western, Educated, Industrialized, Rich, and Democratic), when used with piddling adaptation or recognition of the economic, cultural, and regulatory differences between markets, lead to mixed results [eleven, 40, 56]. Thus, we need research to sympathise when extant B2B buying behavior frameworks tin be extended to emerging markets and, even more of import, when and how they should be adjusted.

Differentiating Emerging from Developed Markets

Emerging markets are market economies that are large in terms of their population size, are rapidly growing, and have a depression per capita income. The International monetary fund's [25] World Economic Outlook estimated, on the basis of the 2011 International Comparison plan survey by the World Bank that emerging market economies account for about 56 % of the share of the earth's gross domestic product (Gdp) at purchasing power parity. In dissimilarity, in 1990, emerging markets accounted for only one-tertiary of the world's Gross domestic product. Brazil, Russia, Republic of india, and China (the BRIC nations) are generally recognized every bit the largest emerging markets; they account for 40 % of the earth's population. In the past decade, their combined Gross domestic product (at purchasing power parity) grew at an annual rate of 6 %–12 %, compared with a combined GDP growth rate for the G7 ^{Footnote 3} of −3 % to iii %. These differences largely refer to consumer markets, but a critical distinguishing trait of emerging markets is that government spending as a percentage of Gdp, on average, is lower than that in adult markets [61]. Yet, because other B2B buyers in emerging markets are smaller and fragmented, governments remain, on a relative calibration, the largest non-consumer buyers, which have important implications for B2B sellers.

Size and growth rates are the well-nigh prominent differences betwixt emerging and developed markets, simply many other differences also might influence interfirm beliefs. In Tabular array four, we identify some critical points of distinction (drawn from [9, 56]). Because these meaning differences between the two types of markets and the recognition that nigh growth in the global economy in the almost future will come from derived demand from emerging market consumers, a key question that arises is how these differences influence extant models of B2B buying behavior.

Table 4 Key differences between emerging and developed markets

Total size tabular array

Emerging Versus Developed Market B2B Buying Behavior Research

A 2012 McKinsey study, comparing the growth rates of firms headquartered in emerging and developed markets, showed that firms in emerging markets accept a 13 % growth charge per unit reward on average [v]. Only 3.4 % of that advantage tin be attributed to the smaller size of emerging market firms compared with developed market place firms. Thus, there is something well-nigh the behaviors of emerging market firms that enables them to grow faster. The aforementioned study suggested three possible causes:

1. one.

   Higher reinvestment rate, such that emerging marketplace firms reinvest more income into their businesses and pay lower dividends than developed marketplace firms.

2. 2.

   Agile asset reallocation, such that emerging market firms reallocate resources to higher growth charge per unit areas more dynamically than do developed market firms.

3. three.

   Growth-oriented concern models, such that emerging market firms tend to select lower toll, faster growing, larger markets, whereas developed market firms appear to select higher margin, smaller, more mature markets.

Various conceptual articles also explicate the differences between emerging and developed markets, besides every bit what those differences might imply for research in marketing and in other concern disciplines (east.m., [9, 56]). In one of the few articles dealing directly with B2B buying, Gu et al. [21] note the impact of network ties in People's republic of china, and specifically the guanxi system, on firm functioning. Beingness part of an informal guanxi network provides a market access reward to members, though it also implies obligations that can hinder performance. The informal, noncontractual nature of the relationships in these emerging markets implies a different model of B2B buying behavior that depends more on personal networks, trust, and obligation than on formal, contractual agreements. Sheng et al. [54], studying business and political ties in China, also show that business ties have stronger effects than political ties on firm performance, only all the furnishings depend on the institutional and market environments. Economics research reinforces the notion that institutional differences are cardinal drivers of economical growth variances across countries [1].

Prendergast et al. [42] examine B2B buying in the context of advertising bureau–client relationships in Cathay and conclude that extant B2B buying models do a poor job explaining B2B buying in emerging markets. In a meta-analysis, based on countries representing 82 % of global Gross domestic product, Samaha et al. [48] find that relationship marketing is more than effective exterior the United States than within: The relationship consequence on performance "is 17 %, xv %, 38 %, and 55 % more than effective in Brazil, Russian federation, India, and China" than in the United states of america" (p. 21). This study and others like information technology demonstrate substantial differences in the efficacy of human relationship marketing between emerging and developed markets. Ignoring these differences can lead firms to make poor marketing decisions. For case, in the retail industry, many successful retailers from developed markets have exited or significantly scaled dorsum their operations in Communist china, due to their failure to transplant their adult marketplace channel strategy into emerging markets [40].

What is articulate from this discussion is that the extant models built in developed markets practise non necessarily describe B2B buying behavior in emerging markets. The important question to ask thus is, which differences between emerging and developed markets (Table 4) have the potential to fundamentally alter B2B buying behavior models, and which merely affect the scale of activities within extant models? Of the wide differences on 4 levels—aggregate market place, individual consumer, institutional environment, and business context—the first two are perhaps more relevant to consumer markets, with at all-time indirect impacts on B2B buying through derived demand. The latter two differences instead could fundamentally change extant models of B2B ownership, due to 4 elements: (one) the relative size and nature of government versus concern buying, (two) underdeveloped legal systems, (3) the noncontractual, extensive webs of business relationships and their influence over the firm's power to perform, and (4) the influence of business and political ties. The potential business risks created past these differences for adult market B2B firms are exacerbated past the relatively volatile political environments in many emerging markets.

Toward a Inquiry Agenda

To develop an calendar for future research in this area, we classify B2B buying relationships into categories, according to where each partner in the relationship is located, as nosotros show in Table 5.

Table v Inquiry needs on organizational buying beliefs within and beyond markets

Full size table

In Cell 1, breezy relationships dominate, because firms located in emerging markets buy from firms also located in the same or a different emerging market. Although some state-specific research describes how business is conducted in emerging markets, equally we cited previously, little enquiry investigates how emerging marketplace firms buy from firms located in other emerging markets. Considering the high book of trade flows across emerging markets (e.g., China and Republic of indonesia are among Republic of india's largest trading partners), this question underlies an important category for further research into B2B buying beliefs:

• How do firms in emerging markets buy from other firms in emerging markets, including their own?

Cell 2 contains make–cost transitions, or firms in emerging markets that sell in developed markets. Whereas emerging market firms traditionally built their businesses on price advantages (e.k., labor cost arbitrage), every bit wages increment in these markets, such advantages are disappearing. In turn, the challenge for firms in emerging markets is to adopt higher margin strategies and deliver higher value production offerings. Some emerging market firms have successfully addressed this claiming, such as Embraer, Huawei, and Tata. Related research questions include:

• How can firms in emerging markets adapt to B2B buying practices in adult countries?

• What factors facilitate successful navigation upward the value chain for selling firms in emerging markets?

• How tin firms in developed markets modify their B2B buying practices to accept reward of the lower costs offered by firms from emerging markets?

In Cell 3, contractual relationships boss; this is the developed marketplace context to which researchers have devoted the virtually attending. However, significant trends call for enquiry fifty-fifty within this jail cell. For example, other sections in this review have identified the increased centralization of buying, sophistication of sellers, and advances in applied science and analytics every bit major trends that already influence B2B buying beliefs and demand further enquiry attention.

Finally, Cell iv involves relationship transitions, or firms in developed markets that sell to firms in emerging markets. It is likely to describe the almost interest among both researchers and selling organizations in developed countries. Some key research questions are as follows:

• How should developed market sellers adapt their sales processes to address emerging market place buyers in different geographies and industries?

• Can developed marketplace firms learn to form relationships that drive business organisation success in emerging markets? Are structures from adult markets, such as global account direction, appropriate for emerging markets?

• Should firms partner with government-endemic enterprises that are fiscally constrained? More generally, considering the notable function of governments in emerging markets, what is the best way to understand and address their part in unlike emerging markets?

• Should B2B firms in developed markets form public–private partnerships in emerging markets? If so, how?

• What are the drivers of demand in different emerging markets and diverse sectors within those markets?

Conclusion

Our goal with this article has been to provide new perspectives and an extended enquiry agenda for each of the iv main areas of B2B buying. Each of these areas offers keen potential for academic research and invokes high practitioner involvement—splendid recommendations indeed for enquiry. Just there is little low-hanging fruit here. The B2B buying cycles are lengthy; samples are small, and much of the research we have called for will need to be conducted in multiple, far-reaching geographies. However, the rewards for taking on these research challenges promise to exist rich, and we hope many researchers respond to these calls.

Notes

1. The other two domains are B2B innovation and B2B customer analytics.

3. Canada, French republic, Germany, Italy, Nippon, the UK, and the United States

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Author data

Affiliations

1. Kenan-Flagler Business concern Schoolhouse, University of North Carolina, Chapel Hill, NC, USA

   Rajdeep Grewal & Pranav Jindal

2. Smeal College of Business, Pennsylvania State University, Academy Park, PA, United states

   Gary Fifty. Lilien & Shrihari Sridhar

3. Terry College of Business, University of Georgia, Athens, GA, USA

   Sundar Bharadwaj

4. Melbourne Business School, Academy of Melbourne, Melbourne, Commonwealth of australia

   Ujwal Kayande

5. Eller Higher of Management, University of Arizona, Tucson, AZ, USA

   Robert F. Lusch

6. Robert J. Trulaske, Sr. College of Business concern, Academy of Missouri, Columbia, MO, USA

   Murali Mantrala & Lisa Chiliad. Scheer

7. Foster School of Business, University of Washington, Seattle, WA, U.s.a.

   Robert W. Palmatier

8. Higher of Business, University of Illinois at Urbana-Champaign, Champaign, IL, USA

   Aric Rindfleisch

9. Darden Schoolhouse of Business, Academy of Virginia, Virginia, VA, USA

   Robert Spekman

Corresponding writer

Correspondence to Rajdeep Grewal.

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Grewal, R., Lilien, G.L., Bharadwaj, S. et al. Business concern-to-Business Buying: Challenges and Opportunities. Cust. Need. and Solut. two, 193–208 (2015). https://doi.org/10.1007/s40547-015-0040-5

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• Published: 07 March 2015

• Issue Engagement: September 2015

• DOI : https://doi.org/10.1007/s40547-015-0040-five

Keywords

• B2B buying
• Sophistication of sellers
• Technological changes
• Emerging markets

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