Value Co-Creation in Industrial Buyer-Seller Partnerships ... - Doria

In the light of this, one could say that the “ incentive to buy” as proposed by Anderson andNarus (1998) in long-term relationships cannot be seen purely as the difference betweenvalue and price, at least not in this case. Rather the incentive is dependent on the logic usedfor assessing benefits and sacrifices. In the empirical case presented the assurance ofavoiding incurring damage, and thereby great costs, was high on the priority scale. Thepartner, who manages to convince the buyer of being able to take care of him in the long runi.e. share risk and help out in avoiding damage and improve life-cycle cost, is likely to bethe chosen partner. In the case presented price was treated merely as a technical,administrative tool for the resource exchange.In most industrial buyer-seller relationships, pricing should be viewed as aninteractive phenomenon. It is not the task of the seller to set a price and expect the buyer topay the amount. As companies are involved in interaction over time and there isinterdependence between the parties, price becomes an issue of co-creation. An illustrativeexample of this is that the case between the focal buyer and seller where the price on spareparts is dependent on how much in advance the part is ordered. If the part is ordered well inadvance there is a discount compared to if the part is needed fast. By ordering well inadvance the Seller can plan better and economize on spare parts. The advantage that isgained is shared with the customer by providing discounts. Another example is when thesupplier can cut its marketing costs and the buyer can share its R&D costs by beingcommitted to a long-term relationship. This leads to cost savings for both parties andconsequently affect the price.In the value co-creation framework price is included either as a benefit or a sacrifice,or as both. Price paid or price received is only one aspect of the perceived benefits andsacrifices in a business relationship. It is not the seller alone who sets the price but bothbuyer and seller who together make decisions that affect the costs and revenues for bothparties.Value in a long-term business-to-business, buyer-seller relationship cannot be said tobe only about cost reduction as might be the case regarding transactions. Value in arelationship context is a complex trade-off between issues that are perceived either assacrifices or benefits. In the same way the pricing issue should be viewed as an interactiveissue and something that is based on a subjective assessment of cost and revenue, based onan economic logic applied. If safety and reliability are the most important considerations forthe customer, then the customer is most likely willing to pay a higher price for the fact thatthere is a highly skilled person monitoring the performance of the equipment than would bethe case if the issues at stake were of lesser criticality. Moreover value cannot be seen onlyto be related to cost reduction or price in a long-term business-to-business relationship. Theempirical case reveals that value can be related to public visibility and fostering a positive153