pranay kumar 96 info sharing

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Academy of Marketing Studies Journal, Volume 14, Number 1, 2010

INFORMATION SHARING WITH B2B CUSTOMERS

THE SELLERS DOUBLE-EDGED SWORD

William W. Hill, Mississippi State University

ABSTRACT

The goal of this paper is to recognize the potential problems for sellers who share

information with customers in the business-to-business (B2B) setting, a perspective counterintuitive

to previously discussed in the marketing literature. In doing so, the author hopes to broaden the

understanding of information exchange from the seller to the buyer, providing a perspective to the potential harmful long-term effects. The author proposes relationships are enhanced through

information sharing in the early stages of the relationship, but eventually these relationships often

peak and diminish as expert knowledge is transferred from the seller to the buyer. Also discussed

is the sellers paradox in sharing information to build trust, while taking the risk of diffusing

valuable knowledge to the buyer over the extended relationship.

INTRODUCTION

In the selling domain, it is clear that for the seller to survive, he/she must develop and

maintain long-term relationships with the customers. Indeed, the marketing literature acknowledgesthe importance of the buyer-seller relationship toward sustaining competitive advantage (Hunt,

1983a; Ferber, 1970). Further, the stream of research relative to relationship marketing reinforces

the importance of this strategy (Morgan and Hunt, 1994, Wilson, 1995). One factor noted for

cultivating buyer relationships is information exchange (Cannon and Perraeult, Jr., 1999). Previous

research suggests information exchange fosters customer satisfaction (Cannon and Perraeult, Jr.,

1999), builds trust (Anderson and Weitz, 1992; Morgan and Hunt, 1994; Anderson and Narus, 1990;

Doney and Cannon, 1997), and offers a perception of commitment (Dorsch and Carlson, 1996;

Morgan and Hunt, 1994) for both parties. Information exchange has been suggested to have a

positive impact on the internal functions within an organization (Buckman, 1998) and to be a

constructive influence within alliances and joint ventures (D Aspremont and Jacquemin, 1988;Kamien, Muller, and Zang, 1992). Moreover, in the supply chain, companies often share knowledge

to improve visibility in chain operations resulting in innovative solutions between channel partners

(Im and Rai, 2008).

Yet, surprisingly, previous research in this area has given minimal consideration to the

negative influence of information exchange long-term. Specifically, do negative outcomes exist for


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the seller? Is there a limit to the amount of information that should be offered to the buyer? Are

certain types of information too confidential to share? Are there specific contexts where the

information offered is more detrimental to the business than others? Clearly, from this view, the

answer to these questions is fundamentally yes. There seems to be a genuine sales dilemma insharing information to build trust that runs the risk of transferring valuable knowledge to the buyer.

This does not suggest that information sharing can always be avoided, nor does it imply that every

scenario will necessarily lead to negative outcomes. This paper simply offers another perspective

that is believed to be real. Thus, this view is counterintuitive to the belief that information sharing

by the seller is always good approach for building relationships. In fact, the author suggests it can

have serious impacts to the value of the seller and the products and services offered by the selling

company. Since this issue has been given minimal notice in the marketing literature, this paper

provides needed insight in this area.

INFORMATION EXCHANGE IMPACTS TO RELATIONSHIPS AND PRODUCTS

Not surprisingly, firms seek innovative products as a means of achieving competitive

advantage. A part of this process is being unique and difficult to imitateclearly a key factor in

sustaining companies against competitive challenges. Yet, while firms strive to differentiate, many

find this goal problematic. A key problem here is competitive substitutes eventually become

available in the marketplace. We know this is not uncommon even for the most successful

companies. This issue of avoiding commodity status is particularly difficult within some raw

material channels. Take, for instance, the mineral industry. Kaolin clays are mined, processed,

cleaned, bleached, filtered, chemically treated, etc. prior to being shipped as clay slurries to the

paper and paint industries. These industries use these mineral slurries and other raw materials tomake coating recipes that, when applied to the surface of paper (or the living room wall), give

optical properties that are appealing to the buyer. While many of these recipes are innovatively

unique, in the world of manufacturing where formulating recipes is as much an art as a science,

the likelihood that customers or competitors will discover other mineral combinations that could

provide similar benefits, is a strong possibility. Another example here (in the industrial setting) is

in the control of the pH. There are a variety of chemicals that work adequately in the control pH

beyond the standard industrial acids and bases sold for this purpose. So as you can see, even at the

simplest process level, it is constant battle for the seller to differentiate products to make a valued-

difference to the buyer. Substitutes are often just around the corner.

Because of this challenge, sellers are forced to compete largely through relationships. Indoing so, sellers strive to enrich relationships by sharing information about the product, services,

applications, etc. to secure trust, commitment, and to demonstrate seller expertise to the buyer. For

the latter, the seller is not just selling the product, but the knowledge that can be offered. They are

selling solutions involving their product. This is generally smart businessparticularly with


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products that are otherwise considered commodities. Recall IBMs effective slogan Solutions for

a small planet (i.e., the PC is the commodity). Initially, the buyer will respect the seller for the

knowledge that is shared and the relationship should prosper. Yet, over time, the seller is vulnerable

to sharing valuable knowledge to the customer. In a sense, the seller, at some point, is giving awayexpertiseinformation that accelerates the commodity status for even new products in the market.

Wilsons (2000) depiction of the case of the vanishing salesperson, alludes to this concern.

Wilsons (2000) view suggests that the role of the salesperson is diminished with deep relationships,

and we agree. However, we suggest deep relationships often occur as the result of information

exchange. That is, information exchange reduces the importance of the seller because the buyer has

become knowledgeable of the product and how it is used. Of course, this added knowledge about

the product to the buyer, surely reduces the uniqueness of the product over time. Based on this

discussion, we offer the following propositions.

Proposition 1: For buyer-seller relationships that prosper, informationexchange from the seller is likely a key factor stimulating the

enrichment of that relationship in the short-term. As a result,

the sellers perceived value to the buyer should initially

increase.

Proposition 2: For buyer-seller relationships that prosper, information

exchange from the seller is likely a key factor diminishing

that relationship long-term. As a result, the sellers perceived

value to the buyer should eventually decrease.

Proposition 3: Information exchange by the seller to the buyer to secure and

nurture relationships is likely a key factor in reducing the

timeframe that product remains unique to the market.

INFORMATION EXCHANGE PATHS

Information exchanges can occur through a variety of different exchanges, but as we have

alluded to thus far, the most obvious path is from the seller to the buyer. As a guide to this

discussion, see Figure 1. Here, we illustrate how information is transferred from the seller to the

buyer and, then eventually in several directions. Of course, information can be transferred throughverbal exchange in the selling process, but it also can occur when employees change jobs between

sellers and sellers, buyer and sellers, sellers and buyers, etc. We know that many firms require

employees to sign agreements preventing them from working for competitors, but these agreements

have time limits and preventing an employee from permanently working for a competitor is difficult.


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Moreover, agreements are less common with employees who change jobs between selling and

buying companies and vice versa. Undoubtedly, the information paths exist and must be

acknowledged.

Figure 1. Information Exchange Paths in B2B Setting

Original Seller Original Buyer

Seller

(Competitor)

Seller(Competitor)

Seller

(Competitor)

Buyer

(Competitor)

Buyer(Competitor)

Buyer

(Competitor)

At this point, the discussion moves more specifically to the topic of information exchange,how it is defined, and the aspects of information exchange that are detrimental to the seller.

Information Exchange

Cannon and Perreault, Jr. (1999, p. 441) define information exchange as expectations of

open sharing of information that may be useful to both parties. Moreover, it is suggested here that

the risks associated with information exchange can be grouped into three areas: amount of

exchange, type of exchange, and the contextof the exchange. A discussion of each is addressed in

the following sections.

Amount of Information Exchange Risk Relative to the Relationship

We suggest that the amount of information transferred from the seller to the buyer should

serve to enhance the relationship until it reaches a peak. At some point in that exchange, it is


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proposed the relationship dampens (see Figure 2). That is, eventually, as more information is

exchanged, this giving away of knowledge serves to transfer expert status from the seller to the

buyer. The greater the information transferred, the better the buyer is educated, and the buyers need

for the seller is diminished. This does not infer the relationship is dissolved or it is at a lower levelthan at relationships initiation, just that it is lessened from its peak.

Figure 2. Information Sharing and Relationship Level

Enriching the Relationship Diminishing of Relationship

Amount

of

Information Shared

Relationship Level

(Seller Advantage)

Thus, it is proposed that

Proposition 4: The amount of information exchanged from the seller to the

buyer may contribute to enriching the relationship in the

short-term, but the diminishing the relationship in the long-

term.


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Types of Information Exchange Risk

It also evident that the type of information shared by the seller influences the quality of the

knowledge exchange (i.e., some information is more valuable than others). The marketing literaturemost commonly identifies product and financial information exchange as primary areas subjected

to the sharing environment (Dorsch et al., 2001; Srivastava et al., 1999). For product information,

this may include product data characteristics (i.e., physical and chemical properties), product

makeup, process/production knowledge, etc. Financial exchange could involve pricing, production

costs, product revenue, etc. These types of information are certainly more valuable to the buyer

than other information. Thus, sellers, against their better judgment, often share this information to

help the short-term value of the relationship. Therefore, we propose:

Proposition 5: The type of information exchanged from the seller to the

buyer may contribute to enriching the relationship in theshort-term, but the diminishing the relationship in the long-

term.

Contexts of Information Exchange Risk

Some business contexts are more conducive for transferring knowledge to customers. In

fact, the marketing literature identifies several forums where information exchange occurs more

easily and perhaps with greater understanding than others. In some studies, the authors even warn

of associated risks in these settings or processes. Typical contexts of concern, summarized in Table

1, are discussed next.

Table 1. Typical Risk Contexts Noted in Marketing Literature

Context Citations in Area Summary of Findings

Procurement

Bidding

Process

Williams (2002)Overuse of document exchange to address issues

during supplier bid evaluation process.

Klein (2002)

Avoid invitation of bids where apples-to-

apples comparisons can be made between

products.

Porter (1999)

Ethical Behavior

1) Purchasing shares confidential product

information with others.

2) Purchasing requires bid process to drive

down price when the supplier choice

has already been made.


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Table 1. Typical Risk Contexts Noted in Marketing Literature

Context Citations in Area Summary of Findings


Collaboration

Product

Development

Cannon and Perreault, Jr. (1999)

Both parties share important, even proprietary

information. Activities might include involving

the customer in product design.

Srivastava, Shervani, and Fahey

(1999)

Sharing of information through customer

relationship management process.

Lambe and Spekman (1997)

Buyers benefit from suppliers ideas for new or

improved products and better customization of

the products or services they purchase.

Presentations

Meldrum (1998)

Suggests presentations offer a great deal of

free information for the customer and can be

used for building relationships.

Dorsch et al. (2001) Sales efforts to generate customer resourceinvestments include using fact-based

presentations to customer

Procurement Bidding Process

Buyers use the bid process primarily as a means of reducing product costs. For less

powerful sellers, this is a real problem. If they do not participate in the bid, they will lose their

existing business. Moreover, by ignoring the bid invitation, they show a lack of commitment to the

buyer-seller relationship long-term. If they do participate and actually win the business, they do soat the expense of reduced pricing (i.e. from bidding low). Ultimately, the fear of losing the

relationship (and sales revenue) encourages participation. Yet, when sellers do participate, the buyer

learns a great deal. Specifically, the bid process offers a clear apples-to-apples comparison for

buyer and hence educates the buyer as to similar competitive offerings (Klein, 2002). Buyers are

often not aware of competitive brands before a bid process, and thus the bid process provides a

clearer picture to the purchaser than perhaps ever before. Additionally, the bid process encourages

the overuse of document exchange to questions generated from the bid evaluation process (Williams,

2002). Sellers might tend to be too free with information to please the buyer in this situation.

Finally here, Porter (1999) articulates the bid process may foster unethical intentions as customers

may eventually share information with competitors they want to win the bid. The sharing may beunintentional as well, but regardless, the information is released.


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Collaboration in Product Development Process

The process of collaboration encourages the sharing of knowledge, particularly as the groups

work together on new innovative product designs (Cannon and Perreault, Jr., 1999; Lambe andSpekman, 1997). The concern here is similar to that in the bid process. Working together in the

research and development setting allows buyers to compare (i.e., apples to apples) proprietary

details about the product and its use. These same research scientists are working with competitive

brands as well. Thus, while the intent of collaboration is worthy, the information shared in the

context of product development may provide too great an understanding of the products makeup

and capabilities long-term.

Presentations

In the B2B setting, the use of presentations is a very effective means for closing sales. Theseller informs the buyer of the products benefits, often providing specifics about product offerings.

The buyer appreciates the detail of this information. The seller has the opportunity to touch a

number of key personnel involved in the buying decision. The seller also has the opportunity to

alleviate any concerns about products with the entire buying group in attendance. Thus, the chance

to make a presentation to a buyer is generally considered a great opportunity. Unfortunately, this

method of information transfer may offer an extensive level of product information to the buyer

prior to the sale (Meldrum, 1998; Dorsch et al., 2001). Product line details, application ideas, and

cost information may be shared during presentations.

In summary, only three of a number of possible contexts have been discussed here suggesting

the context of the information exchange provides a risk to the seller. In each example, therelationship is a goal, but perhaps at a cost. Thus, we propose:

Proposition 6: The context of the information exchanged from the seller to

the buyer may contribute to enriching the relationship in the

short-term, but diminishing the relationship in the long-term.

Risk Dynamics of Information Exchange Expanded

In order to better understand the risk dynamics of information sharing by the seller, it

requires taking a broad-based view of the buyer-seller relationship. It also requires an understandingof how important the relationship is to the seller in the B2B setting. Knowing this, this paper offers

a who, what, where, when, why, and how depiction of buyer-seller environment that hopefully

describes how shared information is diffused through the channels within an organization and

beyond. This information is displayed in Table 2.


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The who in this scenario are the sellers contacts in B2B setting. Of particular importance

here is how these contacts use the information shared by the seller. Typical contacts include

operations, engineering, R&D, purchasing, and management. Each function has different

motivations. It is important for the seller to understand these motivations such that they may usecaution when working with these groups. The what dynamic in table 2 involves the types of

information shared. This obviously includes product information, but also service/solution

information relative to processes and practices. The where dynamic involves the locations that

are suggested to be vulnerable for unintended information exchange by the seller. These include the

customers facility, the sellers facility, conference settings, and entertainment settings. The when

scenario involves the time at which the seller tends to share information. This involves the selling

process, but also the recovery process. That is, when the buyer has difficulty with the sellers

product, the seller will share more information to help the buyer eliminate the problem. The why

dynamic is directed at the sellers motives. Clearly, this includes making the sale (economic),

promoting his/her expertise (image), and maintaining business friendships (emotional). Finally, thehow dynamic shown in table 2 describes how information is transferred. This involves both

verbal and written communication. For the latter, salespeople will use brochures, product data

sheets, letters, emails, etc., to help promote their product(s) to the customer. Obviously, this practice

must be monitored such that it is not uncontrolled.

Table 2. Risks Dynamics of Information Sharing with Customers in B2B Selling

Domain Description Relevance Concern

Who?

Operations Informs major user and application

specialist of the product/service.

Operators actually use your product/service

offerings. They have access to competitive

products and know how apply them. This

knowledge dilutes differentiation.

Engineering Informs decision-maker with user

and application knowledge.

Engineers work with product/service offerings

and make decisions based on this information.

Information provided will be compared to

competitive brands.

R&D Informs a highly scientific group

with access to specific comparable

attributes.

R&D has access to competitive product

information and they perform scientific studies

comparing products.

Purchasing Informs a price conscious function

with information that will be price

compared.

Purchasers are bargain shoppers. They will

seek to homogenize products and that could lead

to price erosion.

Management Informs chief decision-makers who

have access to information from all

functions.

Chief information collectors and synthesizers.

Paid to make decisions about product/servicing

offerings.


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What?

Product

Information

Product information such as costs,

product makeup, procedures, and

applications of use are included.

Products can be compared. If they can be

compared, the can be copied. Thus, sustaining a

differentiated competitive advantage is more

difficult.

Service

Information

Service information includes costs,

processes, hiring practices, training,

etc.

Services are copyable as well. Finding good

highly skilled people is hard to achieve. Protect

this information.

Where?

Customer

Location

Salespeople share information

during sales calls at customer

locations. Information is shared on

their turf.

Salespeople are vulnerable at customer locations

to sharing information to impress. There can be a

big audience, so one mistake travels to all

channels.

Seller

Location

The seller may have customer at its

own facility to show product

capability and knowledge.

Salespeople invite customers to their facilities to

show capabilities. The customer is exposed to

details in the product/service offering.

Conference

Settings

Conferences are forums for meeting

many customers at the same time.

Presentations, meetings,

entertainment, etc. occur.

Conferences provide a hub for information

transferInformation is shared in both business

and social settings Thus, caution must be used

during at these events.

Entertainme

nt Settings

Salespeople often use leisure

entertainment as an informal way to

share information.

Selling entertainment activities often result in

stronger relationships, even friendships. As a

result, the seller may be vulnerable to sharing

unnecessary information.

When?

Selling

Activities

Salespeople disseminate information

to gain sales opportunities.

Customers want to make informed

decisions.

Sellers tend to flood customers with information

to make the sale. This information is often more

than necessary and may be compared with

competitive offerings.

Recovery

Activities

Salespeople are challenged to

sustain business when

products/services fail.

The seller will be compelled to share a great deal

of information to help the customer solve their

problem.

Why?

Economic The sharing of information is based

on economics (i.e., generating

sales).

Again sharing information for short-term gains

may result in long-term loss of differentiation.

Image The sharing of knowledge promotes

the sellers and companys image.

The salesperson is trying to make a great

impression on the customer by sharing

knowledge.

Emotional Strong relationships and friendships

with customers exist. Also, crisis

situations evoke emotion.

Selling friendships and crisis situations lead to

information exchange. For the latter, the

customer is seeking answers to solve a problem.


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How?

Verbal

Exchange

Information shared in presentations,

meetings, phone conversations,

entertainment activities, etc.

The seller must use restrain when compelled to

offer information as a part of the selling process.

There are many tempting situations.

Written

Exchange

Information shared via call reports,

handouts, product data sheets,

MSDS sheets, brochures, letters,

email, etc.

The selling party often floods the buyer with

literature as a means of getting the buyers

attention beyond the face-to-fact service call.

CONCLUSIONS AND FUTURE RESEARCH DIRECTIONS

This paper hopefully offers a unique perspective on seller information exchange and the

potential negative ramifications for sellers in the B2B setting. Clearly, the seller needs to buildrelationships and information exchange is often a necessary technique in this process. Thus, we

must understand the dilemma of short-term gains versus long-term losses as discussed in this paper.

It is important to recognize that the amount, type, and context of the information exchange are

relevant in understanding how information is used by the buyer. Moreover, this paper recognizes

the need to take a broad-based view of the information sharing environment such that sellers

understand all the dynamics of the information shared.

This paper has generated a number of thoughts for future research. First, an empirical study

for the ideas proposed in this paper seems warranted. Interestingly, while we take a darker view of

the practice of sharing information with buyers, there would also expect to be long-term influences

for buyers sharing information with sellers. A framework for that process could prove insightful.Future research could include development of a taxonomy system for the types of information

exchange that occur. While we suggest in this paper that information exchange may be present in

different forms (i.e. product, financial), there may be a number of information exchange types that

warrant identification in the marketing literature.

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Journal of Marketing Research 29(February): 18-34.

Buchman, R. H. (1998). "Knowledge Sharing at Buckman Labs."Journal of Business Strategy (January/February): 11-

15.


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