Developing Buyer-Seller Relationships: F. Robert Dwyer, Paul H. Schurr, Sejo Oh

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F. Robert Dwyer, Paul H.

Schurr, & Sejo Oh

Developing Buyer-Seller
Relationships
Marketing theory and practice have focused persistently on exchange between buyers and sellers. Un-
fortunately, most of the research and too many of the marketing strategies treat buyer-seller exchanges
as discrete events, not as ongoing relationships. The authors describe a framework for developing buyer-
seller relationships that affords a vantage point for formulating marketing strategy and for stimulating
new research directions.

S UMMARIZING 15 years of debate on the con-


ceptual domain of marketing, Hunt (1983a) con-
cludes that ". . . the primary focus of marketing is
change serves as a focal event between two or more
parties. Second, exchange provides an important frame
of reference for identifying the social network of in-
the exchange relationship" (p. 9; also see Ferber 1970; dividuals and institutions that participate in its for-
Kotler 1972; Kotler and Levy 1969; Kotler and Zalt- mation and execution. Third, it affords the opportu-
man 1971; Luck 1969, 1974). The relative perma- nity to examine the domain of objects or psychic entities
nence of that view has been instituted by the recent that get transferred. Finally, and most important, as a
theoretical advances it has fostered. Examples include critical event in the marketplace it allows the careful
Frazier's (1983a) framework for interorganizational study of antecedent conditions and processes for buyer-
exchange, Bagozzi's (1975, 1979) developing theory seller exchange.
of exchange, and Weitz's (1981) contingency model Despite the importance generally ascribed to the
of selling. Exchange also occupies a central role in idea of exchange, marketing research has largely ne-
the unfolding political economy framework (Achro1, glected the relationship aspect of buyer-seller behav-
Reve, and Stem 1983; Arndt 1983; Stem and Reve ior while tending to study transactions as discrete
1980) and a host of more specialized empirical stud- events. The lack of attention to antecedent conditions
ies, and processes for buyer-seller exchange relationships
Each of the works cited relies on the notion of is a serious omission in the development of marketing
exchange for four key conceptual benefits. First, ex- knowledge.
Ongoing buyer-seller relationships take many dif-
ferent forms. Arndt (1979) noted the tendency of or-
ganizational exchange to be circumscribed by long-
F. Robert Dwyer is Associate Professor of Marketing and Sejo Oh is a
doctoral student in marketing, University of Cincinnati. Paul H. Schurr term associations, contractual relations, and joint
is Associate Professor of Marketing, State University of New York, Al- ownership. Dubbing these phenomena "domesticated
bany. The authors thank Chuck Brunner and the JM reviewers for help- markets," he argued that within such ongoing rela-
ful comments on previous drafts. Partial funding for this research was tions "transactions are planned and administered in-
provided by the College of Business Administration, University of Cin- stead of being conducted on an ad hoc basis" (p. 70).
cinnati.
Arndt correctly emphasized the prominence of ex-

Journal of Marketing
Vol. 51 (April 1987). 11-27. Developing Buyer-Seller Relationships / 11
change relationships in industrial and institutional . tions are characterized by very limited communica-
markets, but the notion of relationship management tions and narrow content. The identity of parties to a
may also apply to consumer markets. Arndt's exten- transaction must be ignored or relations creep in. A
sive list of relational bonds in business marketing con- one-time purchase of unbranded gasoline out-of-town
trasts with his seemingly perfunctory illustrations of at an independent station paid for with cash approx-
consumer relations: ". . . consumer cooperative so- imates a discrete transaction.
cieties in Great Britain and Scandinavia, . . . book
or record clubs, season tickets for sports and the arts, Re~tionalExchange
and, in a way, subscriptions to newspapers and mag- It is the departure from the anchor point of discrete-
azines, and credit cards" (p. 71). Let us take note of ness that underlies a strong customer franchise (or,
other pervasive consumer behaviors: frequent flyer from a buyer's standpoint, a reliable team of sup-
programs, church and professional club memberships, pliers). We posit that a strong customer franchise (or
personal service patronage (lawyers, barbers, physi- supplier base) depends on the nature of the relational
cians), and the implicit bonds that underlie brand loy- contract between a buyer and seller.
alty. Thus, both business marketing and consumer Macneil (1978, 1980) differentiates discrete trans-
marketing benefit from attention to conditions that foster actions from relational contracts, relational exchange,
relational bonds leading to reliable repeat business. along several key dimensions. Most important is the
fact that relational exchange transpires over time; each
transaction must be viewed in terms of its history and
Objectives its anticipated future. The basis for future collabora-
Our principal goal is to outline a framework for de- tion may be supported by implicit and explicit as-
veloping buyer-seller relationships. First we briefly sumptions, trust, and planning. Relational exchange
contrast discrete and relational exchange using con- participants can be expected to derive complex, per-
cepts from modem contract law. Because the contract sonal, noneconomic satisfactions and engage in social
law conception of discrete exchange is an idealized exchange. Because duties and performance are rela-
fiction, we suggest problem areas and issues where it tively complex and occur over an extended time pe-
seems judicious either to overlook or underscore re- riod, the parties may direct much effort toward care-
lational dimensions. We rely on Macneil's (1980) fully defining and measuring the items of exchange.
provocative work to suggest what relational properties Third parties may be called in to adjudicate, and other
may be of consequence in buyer-seller exchange. Then, customized mechanisms for collaborating and resolv-
after brief conjecture about the benefits and costs of ing conflict may be designed.
relational exchange, we propose a five-phase model Table 1 summarizes Macneil's characterization of
by which relationships are formed. Utilizing the work discrete and relational polar archetypes of exchange
of Scanzoni (1979), Thibaut and Kelley (1959), and on 12 contractual dimensions. Consistent with the
other exchange theorists, we emphasize hypothesized preceding discussion, for example, a consumer might
transitions and key distinctions between phases. Fi- buy peaches at farmers' market or a grocer may buy
nally, we pivot on the framework to propose a mar- bags in quantity from any of several sources. The
keting research agenda and outline three key facets of products can be easily evaluated, paid for with cash,
managing buyer-seller relationships. and carted away. There is no prolonged negotiation,
paying cash for the goods consummates the transac-
tions, and the mutual dependence situation quickly
Discrete and Relational Exchange ends. All situational and process characteristics ap-
proximate a discrete transaction.
Discrete Transactions
Table 1 suggests that relational aspects start to ap-
The idea of a discrete transaction is the foundation on pear when the buyer pays by check or the seller sched-
which concepts of relationship are built. According to ules delivery for next week. That is, dependence is
Macneil (1980, p. 60), the archetype of discrete trans- prolonged, performance is less obvious, uncertainty
action is manifested by money on one side and an leads to deeper communication, the rudiments of co-
easily measured commodity on the other. operative planning and anticipation of conflict arise,
Discreteness is the separating of a transaction from
and expectations of trustworthiness may be cued by
all else between the participants at the same time and personal characteristics.
before and after. Its [pure form], never achieved in Though a detailed review of Macneil's dimensions
life, occurs when there is nothing else between the is beyond the scope of our article, Table 1 serves two
parties, never has been, and never will be.
important purposes. First, it dramatizes the multidi-
Notice that the concept of discrete transaction specif- mensionality of exchange. Within marketing, our
ically excludes relational elements. Discrete transac- eventual needs for theory and practice may require

12 / Journal of Marketing, April 1987


TABLE 1
A Comparison of Discrete Transactions and Relational Exchange"
Contractual Elements Discrete Transactions Relational Exchange

Situational characteristics
Timing of exchange Distinct beginning, short duration, Commencement traces to previous
(commencement, duration, and and sharp ending by performance agreements; exchange is longer
termination of exchange) in duration, reflecting an ongoing
process
Number of parties (entities taking Two parties Often more than two parties
part in some aspect of the involved in the process and
exchange process) governance of exchange
Obligations (three aspects: sources Content comes from offers and Content and sources of obligations
of content, sources of obligation, simple claims, obligations come are promises made in the relation
and specificity) from beliefs and customs plus customs and laws;
(external enforcement), obligations are customized,
standardized obligations detailed, and administered within
the relation
Expectations for relations (especially Conflicts of interest (goals) and little Anticipated conflicts of interest and
concerned with conflicts of unity are expected, but no future future trouble are
interest, the prospects of unity, trouble is anticipated because counterbalanced by trust and
and potential trouble) cash payment upon instantaneous efforts at unity
performance precludes future
interdependence

Process characteristics
Primary personal relations (social Minimal personal relationships; Important personal, noneconomic
interaction and communication) ritual-like communications satisfactions derived; both formal
predominate and informal communications are
used
Contractual solidarity (regulation of Governed by social norms, rules, Increased emphasis on legal and
exchange behavior to ensure etiquette, and prospects for self- self-regulation; psychological
performance) gain satisfactions cause internal
adjustments
Transferability (the ability to Complete transferability; it matters Limited transferability; exchange is
transfer rights, obligations, and not who fulfills contractual heavily dependent on the identity
satisfactions to other parties) obligation of the parties
Cooperation (especially joint efforts No joint efforts Joint efforts related to both
at performance and planning) performance and planning over
time; adjustment over time is
endemic
Planning (the process and Primary focus on the substance of Significant focus on the process of
mechanisms for coping with exchange; no future is anticipated exchange; detailed planning for
change and conflicts) the future exchange within new
environments and to satisfy
changing goals; tacit and explicit
assumptions abound
Measurement and specificity Little attention to measurement and Significant attention to measuring,
(calculation and reckoning of specifications; performance is specifying, and quantifying all
exchange) obvious aspects of performance, including
psychic and future benefits
Power (the ability to impose one's Power may be exercised when Increased interdependence increases
will on others) promises are made until promises the importance of judicious
are executed application of power in the
exchange
Division of benefits and burdens Sharp division of benefits and Likely to include some sharing of
(the extent of sharing of benefits burdens into parcels; exclusive benefits and burdens and
and burdens) allocation to parties adjustments to both shared and
parceled benefits and burdens
over time
"Adapted from Macneil (1978, 1980).

Developing Buyer-Seller Relationships / 13


fewer than 12 dimensions, but clearly the limited fo- ting. In fact, research analyzing the interpersonal at-
cus of past research (on power, personal relations) re- traction and the interdependence relationships be-
flects less than full consideration of the properties of tween husbands and wives provides an apt framework
exchange. Thus, the characterization of polar trans- for describing the evolution of buyer-seller relations.
actional archetypes on 12 dimensions prompts us to As McCall (1966, p. 197-8) points out:
consider sweeping arrays of diverse transactional forms,
Marriage [is a] restrictive trade agreement. The two
Second, Table 1 should underscore the need to make individuals agree to exchange only with one another,
"practical" distinctions between discrete and rela- at least until such time as the balance of trade be-
tional exchange-especially in the present embryonic comes unfavorable in terms of broader market con-
siderations.
stages of inquiry. As our simple examples of the
farmers' market and cash-and-carry grocery bag trans- Within the husband-wife relationship the benefits
actions establish, the notion of instantaneous ex- of companionship, intimacy, procreation and parent-
change between anonymous partners who will never ing, personal growth, shared household maintenance,
interact in the future is an abstracted model that does and social support are only one side of the ledger. On
not exist in the real world. Even the simplest model the other side marriage typically forecloses social and
of discrete exchange must postulate what Macneil sexual options, brings expanded responsibility, de-
(1980) calls a "social matrix": an effective means of mands care and nurturance, and can entail costly dis-
communication, a system of order to preclude killing solution.
and stealing, a currency, and a mechanism for en- Buyer-seller relations involve analogous benefits
forcement of promises. Hence, some elements of a and costs. The former include reduced uncertainty,
"relationship" in a contract law sense underlie all managed dependence (Spekman, Strauss, and Smith
transactions. 1985), exchange efficiency, and social satisfactions
This argument does not mean we should discard from the association. Foremost is the possibility of
the concept of discrete exchange. Indeed, Goldberg significant gains in joint-and consequently individ-
(1979) suggests that treating exchange as a discrete ual-payoffs as a result of effective communication
transaction directs attention to three important issues: and collaboration to attain goals. The buyer's percep-
(1) how do economic actors make choices from an tion of the effectiveness of the exchange relation, then,
array of alternatives, (2) what market outcomes will is a significant mobility barrier and a potential com-
result from the simultaneous choices of individual ac- petitive advantage for the seller that insulates the latter
tors, and (3) how do outcomes depend on the structure from price competition.
of alternatives (competition)? It "is an extremely use- It is possible, however, that real or anticipated costs
ful analytic construct and should properly be viewed outweigh the benefits of relational exchange. Main-
as a special case-a subclass of exchange. . . . [I]n tenance of the association requires resources. Parties
many contexts explicit recognition of relational ele- with highly divergent goals may spend considerable
ments adds heat but sheds no light" (p. 95). economic and psychic resources in conflict and hag-
gling processes. More important may be the oppor-
Relational Marketing: The Marriage of Buyer tunity costs of foregone exchange with alternative
and Seller partners. A titanium fabricator that ties up 25% of next
To the extent that relational exchange contributes to year's shop capacity at a 20% margin may lock itself
product differentation and creates barriers to switch- out of another large job yielding a 25% margin. Al-
ing, it can provide a competitive advantage (Day and ternatively, a consumer who opens a checking ac-
Wensley 1983). Despite this potential, sellers com- count but orders only a small quantity of checks may
monly fail to see the necessity of managing their re- be hedging against the possibility of an opportunity to
lationships with customers. Noting that exchange ac- bank elsewhere for reduced charges or expanded ser-
tivity typically intensifies subsequent to the initial sale vice.
in financial services, consultancy, maintenance/re- Jackson (1985) has given principal attention to in-
pair/operating (MRO) supply systems, and capital dustrial marketing situations like the latter example in
goods industries, Levitt (1983, p. 111) states that which the buyer incurs high switching costs. She fo-
cuses on switching costs related more to the techno-
. . . the sale merely consummates the courtship. Then logical and usage characteristics of the product (e. g. ,
the marriage begins. How good the marriage is de- computers and communication systems requiring on-
pends on how well the relationship is managed by
the seller. going service or technical extension) than to the per-
fonnance level of the exchange partner. Among other
Though asymmetrical in his assignment of re- factors, we suggest that the buyer's anticipation of high
sponsibility for relationship management to the seller switching costs gives rise to the buyer's interest in
(only one "spouse"), Levitt's marriage analogy is fit- maintaining a quality relationship.

14 / Journal of Marketing, April 1987


Figure 1 goes farther to delineate the realm of pos- of buyer-supported relationships and bilateral rela-
sibilities of dyadic motivations for relational ex- tionship maintenance, Figure 1 suggests contingent
change. Framed in the exchange theory language of seller roles. Toyota shares its production schedules with
Thibaut and Kelley (1959), the axes define each par- suppliers and has carefully knit the Toyota City man-
ty's motivational investment in (the expected net ben- ufacturing complex. Similarly, NASA and a home-
efits from) a relationship. The model has been devel- owner exemplify buyer-managed exchange as they or-
oped recently in considerable detail in the analysis of chestrate contractor performance in rocket assembly
marketing channel member relations (Anderson and and major remodeling, respectively. Seller attempts at
Narus 1984). Thibaut and Kelley theorize that a party leadership roles in these associations seem unneces-
assesses the overall costs and rewards from the total sary and ill advised. Also, bilateral relationship main-
association against the level of outcomes available from tenance seems the essence of Shapiro's (1985) "stra-
alternatives outside the association. They use the terms tegic partnership" between buyer and seller, and is
"comparison level" (CL) and "comparison level for illustrated by industrial joint ventures.
alternatives" (CLalt ) , respectively, to denote the two Finally, Figure 1 allows transactions devoid of
bases for evaluating relationship outcomes. For ex- significant relational elements. In these instances for
ample, for the Metro Theater's season ticket holder, either or both of the parties, CL and CLo1t are ap-
CL includes certainty of priority seating for the full proximately equal. Exchange still may occur, but when
array of plays, perhaps a discount from the single show one party's access to alternatives (CLalt ) is greater than
rate, an efficient purchase process, plus a possible the other's, one of two possible situations of asym-
deepening identity with the playhouse and resultant metric power obtains (cf. Dwyer and Walker 1981).
prestige in the "arts community." The seller's CL For completeness we depict the realm of "no ex-
comprises the dependable, certain ticket revenue, ef- change." There are no concessions or inducements that
ficiently generated by season ticket sales, and espe- one party is willing to offer that will provide sufficient
cially renewals. satisfactions for the other to motivate exchange
By highlighting the mutual motivational invest- (Alderson 1965, p. 84).
ments of the parties, Figure 1 reveals that Levitt's As a map of exchange possibilities, Figure 1 pro-
(1983) discussion of seller-managed relations covers vides a good representation of the topography. It is
only one of several exchange forms. This fact should not a road map, however, in that it offers little detail
not denigrate the significance of seller-managed re- on the routes to the northeast quadrant. Obviously,
lational exchanges. Rather, by illuminating situations many of the costs and benefits from buyer-seller re-
lations cannot be assessed on an a priori basis. Using
the marriage analogy once more, we need to consider
FIGURE 1 how practically discrete transactions (casual dating)
The Hypothesized Realm of Buyer-Seller might progress into more durable associations sup-
Relationships ported by shared goals, planning, and commitment to
the relationship.
SeHer's motivational
investment in relationship

High The Relationship Development


\ Seller-maintained
I Process
\,
'-r
relation
:'
,/
Bilateral
Relationships evolve through five general phases
identified as (1) awareness, (2) exploration, (3) ex-
\ ,//
\\ / relationship

mOint"\:~/. pansion, (4) commitment, and (5) dissolution (cf.


Buyer's market
\ // ..., ... , ........, Scanzoni 1979). Each phase represents a major tran-
'\ ,/ ......
'\\ . sition in how parties regard one another.
\,[ .
........... Buyer-maintained
Phase I. Awareness
.......... relation

········.t. Awareness refers to party A's recognition that party


B is a feasible exchange partner. Situational proximity
................
between the parties facilitates awareness. Just as a
family is more likely to be acquainted with adjacent
No
Seller's neighbors than with those down the street, buyers are
apt to become aware of local merchants and brands
market
Exchange

advertised in frequently viewed media.


Low Interaction between parties has not transpired in
phase 1. Though there may be "positioning" and

Developing Buyer-Seller Relationships / 15


"posturing" by the parties to enhance each one's own • Other's attitude similarity as a reinforcement of
attractiveness to a specific (or general) other, these own competence, e.g.,
actions are unilateral. Any type of bilateral interac- -sales representative builds identity bonds with
tion-even tacit coordination (Schelling 1960)-marks prospect
the beginning of the next phase of possible relation-
ship development. Communication and bargaining. Bargaining is de-
fined as the process whereby in the face of resistance
Phase II. Exploration parties rearrange their mutual distributions of obli-
gations, benefits, and burdens. Perceived willingness
Exploration refers to the search and trial phase in re- to negotiate may be a significant aspect of attraction
lational exchange. In this phase potential exchange which, by itself, signals that the potential exchange
partners first consider obligations, benefits and bur- partner sees possible value in an exchange relation-
dens, and the possibility of exchange. Trial purchases ship. There are dramatic relational consequences when
may take place. The exploration phase may be very the parties actually bargain.
brief, or it may include an extended period of testing
and evaluation. Seller S may give buyer B due con- A significant indicator of development or progressive
change in any association is found at the point where
sideration in promotions and store placement; B may partners perceive that the potential rewards are great
attend to S's ads and linger at the display. This eval- enough to take the trouble, go to the bother, and ex-
uation may result in a trial purchase, but the explor- pend the psychic and physical energies necessary to
negotiate (Scanzoni 1979, p. 72).
atory relationship is very fragile in the sense that min-
imal investment and interdependence make for simple Within developing relations there is often some re-
termination. The exploration phase is conceptualized luctance to engage in bargaining. Initially, parties talk
in five subprocesses (cf. Scanzoni 1979): (1) attrac- around the issues, hinting at their preferences or stat-
tion, (2) communication and bargaining, (3) devel- ing them offhandedly while evidencing interest in the
opment and exercise of power, (4) norm develop- other's goals (Leigh and Rethans 1984; Pruitt 1981).
ment, and (5) expectation development. Through questions and answers, buyers and sellers
develop a process of turn taking, making interaction
Attraction. Attraction is the initiating process of
easier (Knapp 1978; LaFrance and Mayo 1978). To
the exploration phase. It results from the degree to
know each other very well, they may try to reveal
which buyer and seller achieve-in their interaction
specific information about themselves, their needs, or
with each other-a reward-cost outcome in excess of
their resources. If the relationship is to survive this
some minimum level (CLalt ) (Secord and Backman
stage, intimate disclosure must be reciprocated (Cozby
1974). Rewards are derived from the tangible and in-
1973; Davis and Skinner 1974). Later, when the par-
tangible gratifications of association; costs include
ties are both projecting their association into the fu-
economic (money, inconvenience) or social deter-
ture, there may be a lesser need for strict-reciprocity
rents.
accounting in that the future holds ample opportunity
The interpersonal attraction literature has given
for and expectations of balancing.
principal attention to rewards. They may be rooted in
Now we risk diluting the contended significance
perceived similarity of beliefs, values, or personality.
of bargaining and communication in relationship de-
Also, complementary resources, including money, in-
velopment. We note that the behaviors described-
formation, services, legitimacy, and status, encourage
though typical in business-to-business exchange-seem
favorable perceptions of benefits and burdens. Rec-
characteristic of only a portion of consumer transac-
ognizing both contingent and noncontingent reward
tions, namely those involving high priced durable goods
sources (John 1984; Lusch and Brown 1982), Lott and
and complex services (cf. Dwyer 1984, p. 680). On
Lott (1974) catalog several types of rewards that may
the surface, administered pricing and mass merchan-
lead to attraction.
dising for low priced items seem to preclude explicit
• Rewards directly provided by other, e.g., bargaining. We emphasize, however, that uncertainty
-customer provides payment and the "stakes" of the exchange have important ef-
-seller's product delivers functional benefits fects on the extent and nature of bargaining. That is,
a consumer may explicitly negotiate a quantity dis-
• Characteristics of other as a source of reward, count on doughnuts when setting up an after-church
e.g., breakfast reception (high stakes); a single roll (low
-sports prowess of alma mater sparks alumni stakes) will probably involve no haggling-unless the
pride baker attempts to sell an unfamiliar variety (uncer-
- "we were the first. . . McDonnell Douglas" tainty) when sold out of the consumer's favorite.
-"an official sponsor of the 1984 Olympics" There are obvious selling efficiencies from ad-

16/ Journal of Marketing, April 1987


ministered pricing. Also, administered pricing is use- consent, against B's will, or without B's understand-
ful for managing the aspirations of millions of con- ing (Buckley 1967; Raven and Kruglanski 1970). Ex-
sumers linked to the bargaining "stance" of the seller ercise of a just power source, in contrast, implies vol-
(see Raiffa 1982, p. 13). Thus, for good reason com- untary compliance and behaviors for the promotion of
munication is less than complete in this setting. Bar- collective goals.' Thus, when A attempts to dominate
gaining and efforts at coordination are largely tacit or coerce B into some behavior without providing suf-
(Alderson 1957, p. 130; Schelling 1960). Sellers in- ficient rewards-direct or indirect (Lusch and Brown
teract with "representatives" of the market constitu- 1982)-to lead B to perceive that compliance is
ency when they enlist focus group participants and worthwhile, B may elect to terminate the association.
survey respondents. Furthermore, purchase postpone- With minimal interdependencies at this stage, break-
ment, stockpiling, and the like are subtle forms of tacit off is fairly easy. If, however, A's power exercise is
bargaining for low priced consumable goods that have perceived as "just," and B complies, the association
dramatic consequences when summed across millions passes from one "where individualistic interests are of
of households. The rare instances of explicit bargain- prime concern to one where [joint] interests are taking
ing-as in suggestions, complaints, and redress re- on importance" (Scanzoni 1979, p. 75). Indeed, the
quests-should be especially highly regarded by sell- successful exercise of power may be a crucial dis-
ers; they reflect consumer goals, priorities, and tinction for locating a relationship on a continuum be-
relational involvement with the brand or store. tween the exploratory and expansion phases. The fol-
Finally, we emphasize that negotiation, by itself, lowing examples clarify this point.
does not lead to an enduring relationship. It is pos- As deregulation intensified competition in finan-
sible for haggling to transpire in what is practically a cial services in the early 1980s, many banks increased
discrete transaction, such as an estate sale or flea mar- their efforts to segment markets and partition oper-
ket. In such cases, neither party expects a future with ating costs. The result was a diversity of approaches
the other (Weitz 1981), and the style and tone of their to encourage small depositors to use automatic tellers
negotiation strategies reflect this fact (Raiffa 1982). instead of expensive bank personnel. Some banks im-
We therefore propose that, though it is possible posed up to $1 charges for teller-assisted withdrawals
for buyers and sellers to bargain over terms to what from small accounts. Others emphasized education and
is essentially a discrete contract, a relationship seems prize incentives for using automatic tellers. Applying
unlikely to form without bilateral communication of the relationship development framework, we would
wants, issues, inputs, and priorities. Especially as the predict poor account retention by the former ap-
parties themselves change over time and their respec- proach. No matter what explanation of economic real-
tive environments exert variable demands, it is inev- ities is used to support the program, its coercive, self-
itable that the valuation of outcomes in the buyer-seller serving flavor jeopardizes its legitimacy. In contrast,
association fluctuates. By looking for or granting ac- the education/reward approach addresses joint goals.
commodation within a current rather than a new ex- In turn, it expands the interdependence of the parties
change association, the buyer and seller verify their as the bank has a more profitable market segment and
mutual investment in the relationship. account holders have made relational transaction-spe-
cific investments by learning to use the automatic tell-
Power and justice. Though convenient for discus- ers.
sion, separating the adjoining processes of bargaining Norm development. The norms and standards of
and power is impossible in reality. With a richer tra- conduct that mark a relational contract take form in
dition in marketing than the former, power is con- the exploration phase of relationship development.
ceived as the ability to achieve intended effects or goals Norms provide "guidelines for the initial probes that
(Dahl 1957). Party A's power over B is determined potential exchange partners may make towards each
by B's dependence on A for valued resources. B's other" (Scanzoni 1979, p. 68). Norms are "expected
dependence on A is high when there are limited al- patterns of behavior" (Lipset 1975, p. 173). By adopt-
ternative sources of those valued resources (Emerson ing norms and establishing standards of conduct,
1962; Thibaut and Kelley 1959). Thus, concessions emerging exchange partners start setting the ground
are granted or obtained as a result of power brought rules for future exchange.
to bear in bargaining.
Resources mediated by A on which B is dependent
can take many forms (cf. French and Raven 1959), 'Buckley (1967) uses the terms "legitimate" and "nonlegitimate"
but for our purposes it is useful to conceive of their power where we use "just" and "unjust." Our choice of terminology
application as "just" or "unjust" sanctions. Exercise is intended to avoid confusion with French and Raven's (1959) tax-
onomy of power sources (expert, referent, legitimate, etc.), which has
of an unjust power source would control or influence been used frequently in sales and channels research (cf. Gaski 1986;
the action of B to promote A's own goals without B' s Spiro and Perreault 1979).

Developing Buyer-Seller Relationships / 17


The concept of norms that exist "prior to, and are include buyers' maintenance of good credit standing
brought into the social [exchange]" (Ekeh 1974, p. and sellers' use of implicit stimulants of trust (e.g. ,
45) is illustrated in the script theoretic work of Leigh brand names, trademarks, logos) and explicit guar-
and Rethans (1984). More than 40% of the purchasing antees (Schurr and Ozanne 1985). However, direct
agents in their sample described the following ex- experience is likely to be the principal basis for judg-
pected activities in a "post quotation negotiation pro- ing trustworthiness in the exploratory phase. It is a
cess": (1) salesperson arrival at purchasing agent's of- key facet of Swan's (Swan and Nolan 1985; Swan,
fice, (2) exchange greeting/small talk, (3) buyer opens Trawick, and Silva 1985) conceptual framework for
negotiation on price, (4) salesperson response, . . . the salesperson's development of customer trust.
(7) exchange of parting comments. Such generalized In summary, the five subprocesses are important
expectations guide perceptions of social exchange and aspects of the exploration phase because they enable
exert powerful influences on behavior. each party to gauge and test the goal compatibility,
Once parties come together and begin to exchange integrity, and performance of the other.
rewards, they often establish nonns that did not exist
prior to the interaction. Thus, "spontaneous consen- Phase III. Expansion
sus" (Fox 1974) may support initial exchange be- Expansion refers to the continual increase in benefits
tween customer and barber, but at the same time the obtained by exchange partners and to their increasing
experience will shape expectations for the next trans- interdependence. The five subprocesses introduced in
action (Brickman 1974). Very much in harmony with the exploration phase also operate in the expansion
our notion of "just" power, Fox (1974) indicates that phase. The critical distinction is that the rudiments of
persons "who share common goals are capable of al- trust and joint satisfactions established in the explo-
locating roles among themselves in the light of what ration stage now lead to increased risk taking within
they perceive as 'functional necessities'" (p. 86). the dyad. Consequently, the range and depth of mu-
tual dependence increase. "[T]he association has de-
Expectations development. Relational expecta- veloped or evolved significantly from one character-
tions concern conflicts of interest and the prospects ized by probing, testing examination, and so on, to
for unity and trouble. These expectations may either one characterized by continual enlargement of the kinds
enhance or diminish contractual solidarity. Trust is an of rewards that partners supply one another, and thus
important concept in understanding expectations for increased interdependence" (Scanzoni 1979, p. 791).
cooperation and planning in a relational contract. Go- Frazier (1983a,b) has framed the expansion pro-
lembiewski and McConkie (1975) go further to sug- cess as a consequence of each party's satisfaction with
gest that "perhaps there is no other single variable which the other's role performance and its associated re-
so thoroughly influences interpersonal and intergroup wards. That is, exchange outcomes in the exploratory
behavior" (p. 131). Trust is a concept only recently phase provide a test of the other's ability and will-
brought into the focus of buyer-seller interaction re- ingness to deliver satisfaction (Blau 1964). When a
search. Schurr and Ozanne (1985) rely on Blau (1964) party fulfills perceived exchange obligations in an ex-
and Rotter (1967) to define trust as "the belief that a emplary fashion, that party's attractiveness to the other
party's word or promise is reliable and a party will increases (Thibaut and Kelley 1959). Hence motiva-
fulfill his/her obligations in an exchange relation- tion to maintain the relationship increases, especially
ship" (p. 940). In a simulation of industrial purchas- because high-level outcomes reduce the number of al-
ing, Schurr and Ozanne found that buyers' expecta- ternatives an exchange partner might use as a replace-
tions about trust and bargaining stance significantly ment (Frazier 1983b, p. 159). The resulting percep-
affected attitudes and behavior toward their current tions of goal congruence and cooperativeness lead to
supplier. Low trust stimulated less favorable attitudes, interactions beyond those strictly required at the out-
communications, and bargaining behavior with re- set.
spect to the current supplier. The intensive business growth strategies of market
Pruitt (1981, p. 101) believes trust and a desire to penetration and product development (Ansoff 1957)
coordinate with another party are closely related. He depend on the process of expansion. For example, Ci-
suggests that a party desiring coordination with a trusted tibank used newspaper ads and mail directed toward
other is likely to take high-risk coordinative behav- current loan customers to attract applicants for an in-
iors. Examples of high-risk moves include (1) a large novative second mortgage product in Baltimore. The
concession that seeks reciprocation, (2) a proposal for program built Citibank market presence in an histor-
compromise, (3) a unilateral tension-reduction action, ically weak area and, more importantly, enabled Ci-
and (4) candid statements about one's motives and tibank to use the process for "upselling." That is, ap-
priorities. plicants increased their loan amounts and purchased
Examples of sustained measures to engender trust other financial services after discussions with a Citi-

18 / Journal of Marketing, April 1987


bank loan officer (Advertising Age 1986). In a similar, The expectations of franchisee continuation derive
buyer-managed expansion Procter & Gamble has from nonrefundable franchise fees, covenants not to
deepened its relationship with a telemarketing distrib- compete, and anticipated relocation expenses from
utor to (1) sell diapers to parents of premature infants, franchisor-owned sites. Royalties based on a percent-
(2) serve incontinent adults, and (3) most recently, age of gross receipts reflect a sharing formula that
identify key decision makers at prospective accounts makes termination in a "hot" market less attractive for
for institutional cooking oils. a franchisor than would a flat rate for all franchisee
services. In consumer markets, similar investments
Phase IV. Commitment
seem evident in security deposits, delayed rebates, cu-
Commitment refers to an implicit or explicit pledge mulative purchase credits, and the like.
of relational continuity between exchange partners. At
this most advanced phase of buyer-seller interdepen- Consistency. The third aspect of commitment is
dence the exchange partners have achieved a level of the consistency with which the inputs are made to the
satisfaction from the exchange process that virtually association. In terms of the other's expectations, when
precludes other primary exchange partners who could a party's input levels fluctuate the other party will have
provide similar benefits. The participants have not difficulty predicting the outcomes from exchange. In-
ceased attending to alternatives, but maintain their consistency on the part of the former reflects low
awareness of alternatives without "constant and fre- commitment and leads to a reduced reliance by the
netic testing" (Scanzoni 1979, p. 87). Customer (seller) latter on the outcomes of the exchange. A key dis-
loyalty is achieved. tinction of the commitment phase is that the parties
Typically the notion of commitment connotes sol- purposefully engage resources to maintain the rela-
idarity and cohesion, but these synonyms are vague. tionship. Indeed, Levinger and Snoek (1972) anal-
We need to consider three measurable criteria of com- ogize that just as physical-chemical bonds tend toward
mitment (Scanzoni 1979): inputs, durability, and con- entropy, social bonds tend to weaken and dissolve un-
sistency. less actively maintained.
Many forces can strain a relationship, including
Inputs. The first criterion of commitment is that increased costs of transaction, decreased obstacles as-
the parties provide relatively high levels of inputs to sociated with interacting with an alternative exchange
the association (Blau 1964). Significant economic,
partner, and changing personal or organizational needs
communication, and/or emotional resources may be resulting in diminished valuation of rewards. In con-
exchanged. trast, pressure to adjust rather than dissolve a rela-
Durability. Second, there should be some dura- tionship is fueled by the ongoing benefits accruing to
bility of the association over time. According to Macneil each partner. These benefits include the certainty from
(1980, p. 95), "organic solidarity consists of a com- mutually anticipated roles and goals, the efficiency
mon belief in effectiveness of future exchange." stemming from amelioration or role or identity bar-
A persevering relationship itself mayor may not gaining (McCall and Simmons 1966), and the confi-
have content stability, depending on the environmen- dence in exchange effectiveness that comes from trust.
tal adjustments required and the willingness of the
participants to make such adjustments (Scanzoni 1979). Phase V. Dissolution
Durability presumes the parties can discern the ben- The possibility of withdrawal or disengagement has
efits attributable to the exchange relation and antici- been implicit throughout our relationship development
pate an environment that will abet continued effective framework. That is, not every dyadic linkage of which
exchange. Given these expectations, the parties can the buyer or seller is aware enters the exploration phase,
bond themselves in such a way as to encourage their and not every relation probed and tested in exploration
continued investment in the relation. Williamson (1983) enters expansion or becomes soldered by commit-
argues in this vein that exchange of "hostages" (bi- ment. To this point we have merely relied on the basic
lateral exchange of transaction-specific human or exchange theory calculus (Emerson 1962; Raven and
physical assets) communicates credibility of commit- Kruglanski 1970; Thibaut and Kelley 1959; Figure 1)
ment to the relationship, and thus supports expanded to explain breakup. This model is a powerful analyt-
alliance and exchange. The predominant problem in ical perspective, but it leaves unexplained the pro-
franchising illustrates this point. cesses of dissolution.
Such processes have great consequence when they
Franchisees invest in the franchisor's inventories,
signs, and promotion. Franchisors train their dealers occur after parties have reached the status of high
and provide specialized knowledge on business tech- interdependence characteristic of the expansion and
niques. Neither party would incur these costs without commitment phases. Termination of personal rela-
at least some expectation that the relationship will
continue long enough for him to recoup his expen- tionships is a significant source of psychological,
ditures (Goldberg 1979, p. 99). emotional, and physical stress (cf. Bloom, Asher, and

Developing Buyer-Seller Relationships / 19


White 1978; Hill, Rubin, and Peplau 1976). From an- that might diminish or magnify mutual motivations-
ecdotal evidence, the dissolution of commercial re- perceptions of costs and benefits from sustained ex-
lationships extracts parallel tolls. Consider the trauma change-we propose a framework for relationship de-
of Coca-Cola's attempted discontinuation of "old" velopment.
Coke, Kodak's costly exit from instant photography, Figure 2 is a skeletal summary of the model that
and the lengthy process of antitrust litigation that often highlights primary transitions and phase characteris-
ends distribution channel relationships (e.g., Mon- tics. Awareness is a unilateral, pre-exchange process.
santo Co. v. Spray-Rite Service Corp. 1984). Mutual considerations and dyadic interactions initiate
Unfortunately, little is known about disengage- the exploration phase, which is basically a testing pe-
ment. There are probably several trajectories for dis- riod for the relationship. Repeated exchange may re-
solution and we risk oversimplification by devoting flect an extended testing period. The exchange asso-
four stages to relationship development while consol- ciation is easily terminated at this stage. However, if
idating termination into a single phase. Though some the parties effectively communicate, negotiate roles
scholars have found it useful to conceive of dissolu- that reflect "just" inputs from the parties, and form
tion as the reverse of relationship formation (cf. Alt- expectations for promising future interactions, the as-
man and Taylor 1973; Miller and Parks 1982), we think sociation enters the expansion stage. The five subpro-
it productive to depart from such reasoning. Figure 1 cesses support a new trajectory of deepening inter-
and our framework emphasize bilateral (though not dependence in the expansion phase. The commitment
necessarily equal) efforts for relationship develop- phase then supports high levels of mutual dependence
ment; dissolution, in contrast, is more easily initiated by circumscribing the exchange relation with value
unilaterally. Furthermore, the accumulating evidence structures and contractual mechanisms that ensure its
seems to contradict the reversal hypothesis. durability. Disengagement from the highly interde-
Much of the empirical work has been conducted pendent phases of expansion and commitment is not
by Baxter (1979, 1983; Baxter and Philpott 1982), po- a reversal of the process. It may be complex and costly.
sitioned within a four-stage conceptual framework from It is a poorly understood strategic marketing process.
Duck (1982). This model posits that dissolution be- We caution that the model is built primarily on
gins with an intrapsychic stage in which one party pri- conceptual foundations and empirical evidence from
vately evaluates his or her dissatisfactions with the other exchange theory and its offspring-marital theory,
party, concluding that costs of continuation or mod- bargaining theory, and power theory. Much remains
ification outweigh benefits. Subsequently, the rela- to be done in distinguishing commercial, work, and
tionship enters an interactive phase in which the par- romantic relations. Also, the model is presented ab-
ties negotiate their unbonding. Dissolution then is stractly. It lacks conceptual detail and obvious ways
presented publicly in the social phase. Finally, "grave to operationalize key variables.
dressing," social and psychological recovery from the In this abstract form, however, the framework has
breakup, concludes the process-though neither party advantages. We attempt to offer a model that has suf-
returns to their prerelationship state. ficient generality to cover both interfirm and con-
Emphasizing the interactive phase in her studies, sumer relationships. Though the emphasis of modem
Baxter (1985) identifies two key dimensions of strat- contract law seems to be on interfirm behaviors, the
egies for disengagement: directness and other-orien- process model has its roots in interpersonal phenom-
tation. Direct strategies explicitly state to the other party ena. Multiparty decision making and higher stakes
one's desire to leave a relationship; indirect strategies distinguish interfirm from consumer relationship de-
try to accomplish breakup without an explicit state- velopment, but similar factors may come into play in
ment of the aim. "Other-orientation captures the de- certain consumer buying situations and seem easily
gree to which the disengager attempts to avoid hurting accommodated by the framework. Thus, we contend
the other party in the break-up" (p. 247). The parsi- that the model supports the "logic of discovery" (Hunt
mony of Baxter's distinctions makes them a promis- 1983b, p. 21-5) by suggesting ideas and categories
ing starting point for examining dissolution of buyer- for grouping phenomena. Like the buying center con-
seller relationships. cept, the model affords a framework for unifying and
extending our understanding. To illustrate we pose di-
Advantages and Disadvantages of the Model rections for research and managerial efforts.
We argue that marketing research has largely ne-
glected relational elements of buyer-seller exchange. Research Directions
Macneil's (1980) depiction of contrasting features of
discrete and relational exchange leads to our concep- Transitions
tion of dyadic motivations for alternative exchange Initial research efforts should confront the basic prem-
forms, Figure 1. To account for interactive processes ise of the relationship development framework, grad-

20 / Journal of Marketing, April 1987


FIGURE 2
The Relationship Development Process

Relationship
phase Phase characteristics

1. Awareness 1. Unilateral considerations of


potential exchange partners.

2. Exploration Enabling Subprocesses for Deepening Dependence 2. Dyadic interaction occurs. A


gradual increase in inter-
dependence reflects bilateral
testing & probing. Termination
of the fragile association is
simple.
3. Expansion 3. A successful power source
exercise marks the beginning
of Expansion. Mutual satis-
faction with customized role
performance supports deepening
interdependence. Additional
gratifications are sought from
the current exchange partner,
rather than from an alternative
partner.
f Shared values and
0- 4. Commitment governance structures 4. Contractual mechanisms and/or
'9. support joint investment in relation. shared value systems ensure
='
CCI sustained interdependence.
Cl:I Mutual inputs are significant
c & consistent. Partners resolve
conflict & adapt.
1 a Saller's dependence on buyer Buyer's dependence on seller a
if
if'
i
~
~.
<,
N
....
ual expansion of interdependence. With an historical distributor network, anticipating an expanded product
emphasis on transactions as discrete events, market- line in the next decade.
ing has made significant progress toward understand- Finally, it is important to note that a great number
ing the transition from awareness to exploration. This of enduring exchange situations may compress explo-
progress is well illustrated in Smith and Swinyard's ration and expansion phases. Jackson's (1985) "lost-
(1982) review and integration of information response for-good" category of exchange, characterized by high
models. Importantly, in their integrated model they buyer switching costs, is illustrative. Reasoning prin-
note the significant role of behavioral experience with cipally from Williamson's (1975) transaction cost
the product in the formation of higher order beliefs economics, she proposes that factors tending to impel
and affect. internalization also favor relational exchange over re-
We know relatively little, however, about the im- current spot contracting. Briefly, such factors include
portant probing and testing processes of the explora- frequent interactions, auditability /certainty of perfor-
tion phase. Do the parties apply hypothesis testing mance, and the high degree to which durable trans-
heuristics? If so, what are the origins of their expec- action-specific investments are required. In such cases
tations? Do the "stakes" affect the "power" of the tests? we might expect extended negotiations between the
What is the latitude of "just" power exercise across parties and relatively high reliance on reputations of
power sources and exchange partners? trustworthiness, contingent claims contracts, and third-
If a relationship survives the exploration and ex- party mediational mechanisms.
pansion stages, the transition to commitment requires
high levels of goal congruence or "airtight" enforce- Negotiation
ment mechanisms (hostages or other sanctions). The second item on the research agenda is the study
Because inherently imperfect human information pro- of buyer-seller interactions as bargaining processes.
cessing transpires in complex and uncertain environ- Negotiation provides an excellent framework for re-
ments, it may be impossible to engineer fully self- search on relational exchange because its rich tradi-
enforcing mechanisms to support the deepening in- tions address important antecedent conditions, com-
terdependencies of commitment. Thus, relationship munications, and power structures affecting exchange
evaluation in the antecedent phases may emphasize partners who must divide benefits and burdens, re-
attributed motives over quality role performance. solve conflicts, plan, and exercise power.
Negative transitions, relationship terminations or Arndt (1979) amplified Johnston and Bonoma's
rollbacks, merit careful study also. Especially for the (1977) designation of negotiation as a fundamental re-
commitment phase, the marital metaphor and the evi- sponsibility of marketing. Negotiations have been given
dence offered by Baxter (1985) compel us to frame little attention in the marketing literature, but some
disengagement as something other than the reversal of progress has been made (cf. Clopton 1984; Dwyer
development. Uncoupling from this stage of high 1984; Schurr and Ozanne 1985). These studies have
interdependence tends to render transaction-specific been of a transactional (tactical) nature and more must
investments obsolete or leave deep sentimental scars be done to study what Arndt has called "contractual"
that may block out intermediate relational levels. Even and "structural" negotiations. The former cover the
in bilateral agreements for "fading away" or "pseudo- terms of exchange over a period of time; the latter
deescalation" the parties "maintain the pretense of a apply to the "form and intensityof long-term and deeply
continuing relationship, meanwhile intending total non- committing interorganizational relations" (p. 73).
contact with one another" (Baxter 1985, p. 248). Again, we posit the possibility of more subtle, per-
The transition from the expansion back to the ex- haps tacit, parallel forms in consumer relations.
ploratory phase may be less dramatic. Scaling back The negotiation laboratory may be a suitable start-
may not make relationship investments totally obso- ing point for development and evaluation of measures
lete or leave deep scars. Perhaps neither party wishes of key constructs in the framework. Within the con-
to foreclose the possibility of deeper interdependence trolled environment, measures can be efficiently ad-
in the future, though the current situation warrants a ministered and tested for their sensitivity to experi-
winding down. Obviously, when parties hold differ- mental manipulations of dependence, role performance,
ent perceptions of the status of the relationship, dis- and communication. Three constructs seem critical at
engagement may be troublesome. A distributor who the present stage of our understanding of the process
has built his business on a particular equipment line of relationship development: trust, commitment, and
sees the manufacturer's direct sales efforts as a neg- disengagement.
ative transition that obviates any state of high depen-
dence in the future. Meanwhile, the manufacturer may Trust. As a pivotal facet of expectations devel-
have intended the move merely to complement the opment, trust deserves priority attention. Its role is

22 / Journal of Marketing, April 1987


perhaps best summarized by Sullivan and Peterson knowledge the stream of research on micro aspects of
(1982, p. 30): " . . . where the parties have trust in consumer satisfaction/dissatisfaction (cf. Oliver 1980),
one another, then there will be ways by which the two there has been no systematic study of the uncoupling
parties can work out difficulties such as power con- of parties from highly evolved relationships. Anec-
flict, low profitability, and so forth." We offer this dotally, the lure of treble damages in the antitrust arena
logic in our discussion of transitions to commitment. seems to prompt many acrimonious interfirm sepa-
That is, it might be impossible to cover all contin- rations that might otherwise have been avoided or re-
gencies in a formal contract for sustained cooperation, solved peacefully via negotiation or contract arbitra-
but if the partners have trust it may be unnecessary to tion (Goldberg 1979). In the Baxter (1985) framework,
cover all contingencies. antitrust disengagement is direct and not other-di-
Recent work on trust in marketing (Schurr and rected. In contrast, GM and Toyota have prearranged
Ozanne 1985; Swan and Nolan 1985) has only scratched termination for their Nova joint venture; it is direct
the surface of its rich conceptual and empirical foun- and other-directed. Is this a fruitful taxonomic scheme
dations in interpersonal and small group research (cf. for evaluating consumer and interfirm breakups? What
Worchel 1979; Zand 1972). As an outcome measure other environmental structures support or discourage
of dyadic interaction, the trust scale developed by Sul- dissolution? Again, Macneil (1980, 1978) and the
livan et al. (1981; Sullivan and Peterson 1982) has marriage metaphor (Scanzoni 1982) are suggestive.
shown reliability and nomological validity. Its appli- Exploratory, inductive work that classifies many
cation to buyer-seller relations, especially interfirm relationship dissolutions seems potentially productive
relations (trust as an organizational, vis-a-vis per- for evaluating the efficiency and effectiveness of the
sonal, facet), warrants careful evaluation. processes. We anticipate that dyadic perceptions of
Finally, trust in the relationship development the process may not be congruent and that, in the face
framework provides a vantage point for unifying the of resistance, one party's other-directed efforts at dis-
research traditions on marketing channel power and solution may revert to self-defense.
conflict (cf. Gaski 1984; John 1984). Much of the
channels work is replete with implicit reference to trust Decision Models
as an aspect of expert and referent power, coopera- There are significant differences in the managerial
tion, and the reliability of threats and promises. In- evaluation of discrete and relational transactions. Es-
deed, John's article seems key for wedding the insti- sentially, evaluation of the former works from a stim-
tutional economists' concern with market failure from ulus-response model (Arndt 1979; Johnston and
opportunism and the social psychologists' concern with Bonoma 1977) and that of the latter from a capital
ineffective group performance due to lack of coop- budgeting model (Day and Wensley 1983). Customer
eration and risking (trust). The former researchers re- acquisition costs can be considered as investments offset
gard opportunism as an inherent human characteristic by discounted "lifetime" customer valuation of ben-
that surfaces whenever it is unchecked by competitive efits and burdens (Jackson 1985). Market segmenta-
structures or governance modes fitting the complexity tion then is based more explicitly on response patterns
and uncertainty in the environment. The latter em- and other relational considerations. We call on the
phasize social learning as a route to trust, expanded power of advanced mathematical models to structure
interdependence, and group/system effectiveness. this complexity in relationship marketing.
Commitment. Commitment represents the highest Morrison et al. 's (1982) model of retail customer
stage of relational bonding and has been defmed clearly behavior at Merrill Lynch illustrates the research di-
in terms of three measurable dimensions: inputs, du- rection we are affirming. More specifically, we see
rability, and consistency. Seemingly, these facets can great promise from enhancements to their model,
be applied with great versatility to the study of inter- namely a customer grouping algorithm, an expanded
firm and consumer relations. Relatively auditable and transition matrix, and response functions for different
trackable operationalizations provide criteria and sys- marketing inputs. The last would model the marketing
tem status measures that make possible the careful study programming impact on the transition probabilities for
of relationship processes such as conflict manage- the groups between each phase of relationship devel-
ment, joint decision making/coordination, and sys- opment.
tem adaptation. Comparative analysis across power
systems, lifestyle segments, and product technologies Applying the Framework
likewise is supported.
Even in its propositional form the model makes two
Dissolution. Our discussion of disengagement contributions to managerial action. First, it affords
processes is the most speculative. Though we ac- compelling post hoc explanations for the success or

Developing Buyer-Seller Relationships / 23


failure of many current marketing practices. Second, Conflict Management
it stimulates thinking in new directions of marketing
programming. Our model of relationship development highlights a
The brief sections that follow are richer in pro- process of ever-expanding interdependency between
gram affirmation than program generation. Modest in- buyer and seller. Indeed, each party's gratifications
novations seem more in tune with the embryonic char- from the other's role performance and increasing re-
acter of our model. Nevertheless, we see great promise liance on role expectations secure the parties in a web
in creative imitation of some of the relational mar- of interdependencies. Conflict-divergence of goals
keting practices exemplified in our three groups of and role preferences (pondy 1967)-is predictable
managerial issues: performance metering, conflict within the relationship just as periods of resource
management, and erecting exit barriers. scarcity, misperceptions, and changing values and
concepts of fair play are inevitable (cf. Stern and
Performance Metering Gorman 1969; Thomas 1976).
Consistent with the managerial charge for perfor-
Within any sustained association it is incumbent upon mance metering is our second managerial concern, the
the parties to appraise their current satisfaction and constructive role of buyer-seller conflict. The destruc-
signal each other of changing outcome priorities, role tive consequences of conflict seem well catalogued:
requirements, and growth opportunities. Two funda- hostility, bitterness, strikes, violence, polarization of
mental managerial tactics offer sensible approaches. third parties, and isolationism. However, total
First, the seller can improve the conduits of com- suppression of conflict means a relationship has lost
municationfrom customers. Warranty cards, demon- its vitality or parties are separating before fully ex-
strations and exhibitions, the retailer's customer ser- ploring the promise of their continued association
vice desk, and product use (e.g., recipe) contests are (Hirshman 1970). We emphasize here the purported
standard in this effort. Toll-free hotlines and sales- functional benefits of conflict (cf. Assael 1969;
person followup are less common essentials of this Rosenberg 1974), which include (1) more frequent and
aspect of relational marketing (Peters and Austin 1985). effective communications between the parties and the
The second approach is to obtain, unobtrusively, establishment of outlets to express grievances, (2) a
high-quality information on customer priorities and critical review of past actions, (3) a more equitable
satisfactions within the exchange association. For distribution of system resources, (4) a more balanced
meaningful relational marketing the seller needs to power distribution in the relationship, and (5) stan-
know whether purchases are intensifying or waning, dardization of modes of conflict resolution.
expanding or contracting. Further, to the extent pos- These are hardly pioneering ideas, yet the current
sible, the seller will want to anticipate each custom- state of affairs does not appear to yield this full spec-
er's changing lifestyle, or business emphasis, and trum of benefits. A national survey has shown that the
consequent shifts to new products and services. Low majority of dissatisfied consumers who enlist the help
cost databases are making it operationally possible to of government agencies have made unsuccessful at-
track an increasing proportion of such behaviors un- tempts to obtain redress from the seller (Harris and
obtrusively on an industrial account and household Associates 1977). In part, buyer redress attempts with
level. Rebate requests, coupon redemptions, credit card the seller fail because buyers and sellers have incon-
purchases, and registration data are rich with rela- gruent norms of redress (Dwyer and Dornoff 1981).
tional marketing potential. When these data are com- Relationship marketing demands the establishment of
bined with other data bases (e.g., Simmons and mutually accepted redress norms.
PRIZM) for media and lifestyle profiles, a new level Further, Weick (1979) has suggested that the cus-
of buyer-seller intimacy is opened-even for products tomer service department in some organizations has
historically mass marketed. They afford improved evolved into being primarily a buffer to insulate man-
marketing efficiency from account clustering and pro- agement from bad news from customers. In contrast,
gram targeting, plus better and expanded customer the possibilities for preserving and deepening the re-
service and satisfaction. AT&T has taken this ap- lationship by wholesome redress procedures and out-
proach for targeting new programs of packaged long- comes ought to fuel significant conflict management
distance services and networking opportunities for activity. Tracking the "back-end" profitability of cus-
owners of personal computers. In contrast, a pack- tomers for whom they have quickly resolved com-
aged goods marketer has coded and stored correspon- plaints versus that of customers who have not com-
dence from 8 million brand users, but has initiated no plained, Omaha Steaks-a purveyor of choice meats
analysis or followup relationship marketing since the through the mail-finds the former are more profit-
initial response to each letter. able (Kesler 1985). Thus, customer access to stan-

24 / Journal of Marketing, April 1987


dardized procedures that reflect informed considera- particular, status rewards or social recognition for re-
tion of customer redress norms deserves highest priority. lational longevity offer promise. Like the Gallon Do-
nor in blood marketing or the President's Council in
Exit Barriers fund raising, there could be value in recognizing 5-,
Relational marketing requires an exchange structure 10-, and 25-year subscribers to Time or three-time Buick
that makes termination of the association unattractive. buyers. In comparison, dissolution is encouraged by
Consistent delivery of economic and psychosocial record clubs that reward termination (not loyalty) with
benefits in each transaction is critical but, as further attractive (re)enrollment offers.
motivation for the parties to resolve conflict to main-
tain their relationship, it may be helpful to create Conclusion
structural disincentives for relational dissolution.
Exit barriers seem less common in consumer mar- Prompted by Arndt's (1979) and Macneil's (1980)
kets than in industrial and organizational markets. Still, contrasts of discrete and relational exchange, our prin-
the prevalence of exit barriers in consumer relations cipal goal is to develop a framework for developing
and their strategic utility compel recognition. Con- buyer-seller relationships. We emphasize three im-
sider the following examples. portant caveats. First, though all transactions have some
relational properties, it makes sense to consider many
• Frequent flier programs effectively maintain re- exchanges as "practically discrete. " Second, there are
lational bonds when "bonus miles" are awarded bilateral sets of costs and benefits to relational ex-
in proportion to the flier's number of alternative change; a durable association is not necessarily desir-
carriers to each destination. able. Third, because the model's eclectic conceptual
• Delayed rebates support ongoing exchange, such and empirical origins are not proximal to marketing,
as accumulated proof of purchase seals used as it is highly propositional.
currency in a manufacturer's gift catalogue. The marital metaphor seems parsimonious and
• Rental deposits are essentially performance generative. For example, it directs research attention
bonds. to the inherently dyadic process of power and bar-
gaining, flags trust as a pivotal specific expectancy,
• A consumer durable goods "investment" ties the
and underscores our ignorance about disengagement.
customer to frequent repurchase of specific con-
Practically, the model affirms and suggests several
sumable supplies.
avenues for relational marketing conduct. We are hard
We believe there are many additional opportuni- pressed to identify anything more central to market-
ties for implementing and tuning these practices. In mg.

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