Question

1. If partnerships are win-win, does that mean that market exchanges are win-lose? Is there an ethical difference between win-win and win-lose? Does the customer’s value equation (recall from Chapter 1; value=benefits-[selling price+time and effort] have to equal in profit to the seller’s profit equation for a transaction to be ethical?
2. A customer is very loyal to one of your competitors but the contract is expiring soon. An RFP (request for proposals) has been written and issued; but as it is written, only that competitor can win the contract renewal. You know that your product and service could satisfy the needs of the company better. Is there an ethics problem here? If so, what is it and why? If not, why not?
3. Which is more important to the seller: attitudinal or behavioral loyal? Why? What can a salesperson do to increase loyalty in buyers? How does loyalty relate to lifetime customer value?
4. There are five foundational elements to strategic partnerships. How do these differ for relational partnerships? Functional relationships? What if four of the five are the strong-what type of relationship is that?

Answer 1

1.In a win-win partnership both the parties try to help each other so that each of them do well in their fields while on the other hand in win-lose situations one party gains on the expense of the other.

The ethical difference topic is debatable as it depends on how much the other party is losing as compared to what it's counterpart is gaining. Now talking about the value equation from the buyer's perspective it is not necessary that customer value equation will be equal to the buyer's equation as it depends on the value perceived by the individual, there are cases where one particular thing has less value in someone's mind but for that same thing other might be willing to pay more.

2. This don’t seem to be an ethical problem as this is due to pre-exiting relationship between the buyer and the competitor as the competitor is serving the buyer from very beginning so buyer perceives more value and satisfaction by giving the renewed contract to the existing vendor and also even you are sure that your product will satisfy the buyer but it might be the reason that you will take more time to understand the whole business process of the customer’s business which will increase his ideal time so on the buyer side it is feasible to give the contract to the existing vendor.

3.From the buyer’s perspective Behavioral loyalty is more important in which a customer buys more and more quantity from the same seller for a very long duration of time in this way buyer can get more and fixed revenue from the same customer but to achieve this a buyer must have attitudinal loyalty which stands for emotional attachment with the buyer so that a buyer can connect with the customer and understand his need better through this he may be able to provide the right products which will entice the customer to buy the products again from the same buyer.

Sales person can increase loyalty in buyers by opting the below rules:-

a) Engage with them by providing insights and recommendations for the products to fulfil there needs.

b) Respond timely to there queries/ problems.

c) Give them gifts or offers and reward them if they buy more often from you.

d) Educate them on your new product offering and keep them up to date.

Customer loyalty is directly related to the customer life time value(CLV) .In general CLV has a formula -

CLV=No. of customers*customer loyalty*customer life*Average profit per sale

So by keeping all the other variables constant we can see that CLV is directly proportional to loyalty.

4. Relational partnerships mostly arises because of trust and personal ties between the partners, in this type of partnerships partners can communicate easily and work together to overcome any barriers .In relational partnerships partners tries to build long partnerships and they are not much concerned about the pricing but the long term relationships.

In functional relationships a connection is made between the two organizational units which are at different management levels , it depends on the specialization of one department over other in an organization. For example sales department has functional responsibility related to sales and marketing of the company which directly reports to the COO( chief operation officer) .

if four of the five are the strong then it will be called Transactional relationship