Relationship Marketing in International Marketing/Sales Channels

Table of contents

1 Introduction

2 Setting the stage for the Management Project
2.1 International relationships
2.2 Unit of analysis
2.3 Relationships
2.4 Research methodology
2.5 German sporting goods industry (SGI) and SME
2.6 Summary

3 Customer Relationship Management
3.1 Types of intra-channel relationships
3.2 Formation and development
3.3 Customer’s reference object
3.4 Relationship environment
3.5 Relationship economics
3.6 Summary

4 Competitive advantage (CA)
4.1 The concept of competitive advantage
4.2 Competitive advantage in the RBV defined
4.3 Relational View (RLV)
4.4 Export competitive advantage
4.5 Conclusions

5 Relationship marketing in BBC channels
5.1 Relationship marketing defined
5.2 Customer orientation
5.3 Value orientation
5.4 Time-horizon orientation
5.5 Decision orientation
5.6 Implementation – The Relationship Marketing Mix
5.7 Conclusions

6 Brand-reseller-relationship success model in export markets

7 Research Methodology
7.1 Background
7.2 Research Profile

8 Results
8.1 Findings
8.2 Conclusions
8.3 Limitations of study

9 Conceptualizing an Export Relationship Management Balanced Scorecard
9.1 Balanced Scorecard
9.2 BSc as a useful concept for relationship management
9.3 Development of an exRMBSc
9.4 Using the exRMBSc
9.5 Conclusion

10 Review

11 Appendix

Interview Guide

12 Bibliography

List of figures

Figure 2-1: International marketing channels

Figure 2-2: Definition of terms used within this MP

Figure 2-3: Different aspects of B2C and B2B markets

Figure 2-4: Terms for relationships used in this MP

Figure 2-5: Forms of export used in the German SGI

Figure 2-6: Example of mix of operation (entry) modes for one sample case

Figure 3-1: A typology of channel systems

Figure 3-2: Dark and light sides of relationships

Figure 3-3: Most often used research paradigms to understand relationship formation

Figure 3-4: The interaction approach framework

Figure 3-5: Behavioural variables used to interpret relationship success/failure

Figure 3-6: Possible benefits for BRP members

Figure 3-7: Model of partnership formation and success

Figure 3-8: The “relational capital”

Figure 3-9: The “exchange climate”

Figure 3-10: Different customer’s reference objects and implications

Figure 3-11: Inter-cultural aspects of BRR

Figure 3-12: Relationship-based cost factors

Figure 3-13: Cost factors during acquisition and retention phase by relationship type

Figure 4-1: Elements of the concept of competitive advantage

Figure 4-2: Categorization of sources of competitive advantage

Figure 4-3: Positions of competitive advantages

Figure 4-4: The relational view on competitive advantage

Figure 4-5: Categories of sources of CA with their affect on relationship formation

Figure 4-6: The scope of the seminal works towards export competitive advantage

Figure 5-1: Key elements that characterise the relational approach to marketing

Figure 5-2: Example of a possible customer requirement life cycle

Figure 5-3: CRLC based on profit

Figure 5-4: Delineation of typical customer relationship phases in an export BRR

Figure 5-5: Relationship investment dimensions

Figure 5-6: RM processes conducive to efficiency improvements

Figure 5-7: Paths to the reconciliation of the marketing mix concept with RM

Figure 5-8: The expanded marketing mix in RM

Figure 5-9: Scope of the relationship marketing mix sub-categories

Figure 5-10: Key findings in the literature about RM sub-mixes

Figure 6-1: Brand-reseller-relationship success model in export markets

Figure 9-1: The Balanced Scorecard perspectives

Figure 9-2: Contrast of issues in strategic and CRM with the BSc method

Figure 9-3: The merge of the BSc with relationship management

Figure 9-4: Typical phases of a BSc development

Figure 9-5: Concept and prototypical components for an exRMBSc

1 Introduction

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“Today, managing thecustomerrelationship has become the single most important dimension of enterprise strategy. It is based on the recognition and acceptance of a new reality and commands a proactive approach” (Kaplan and Norton, 2003).

In addressing the intellectual and pragmatic challenges of marketing in the early 1990’s Webster (1992) proposed two thrusts within research: “The first is to develop an expanded view of marketing within the firm, one that specifically addresses the role of marketing in firms that go to market through multiple partnerships. […]. The second is to develop a base of empirical research that broadens our understanding of the forces leading to the development of long-term customer relationships, strategic partnerships with vendors, […] and the issues involved in creating, managing, and dissolving these partnerships over time”. While Tuten and Urban (2001:150) hold that “Webster’s charge still provides guidance” in the new millennium and encourage further research. Among the identified needs is a more comprehensive model of relationship success than has been previously proposed.

Within this stream relationship marketing (RM) has been marked to be a new paradigm able to provide answers for the new reality. Still, confusion remains about what exactly RM is and how it can help achieve superior performance through the attainment of competitive advantages.

A basic reason for the confusion arises from the academic disagreement about the constituent elements and thus the various definitions of the term “relationship” that exist. While some scholars see customers as separate entities forming targetswithwhich products are exchanged, others recognize a whatsoever relationship between a supplier and a customerwithinwhich goods and possibly other things are exchanged.

Another part of confusion derives from the hype-like praising of RM as a new “must-do” paradigm that disregards the economic value as well as the reciprocal propensity of customers to accept a close relationship. RM is often seen universally valid across all sectors and in all situations which presumably is a result of the tendency to mingle unspecified research findings.

Equally, to date most of the literature on buyer-seller relationships has taken the perspective of large corporations operating in western business environments while close relationships have remained commonplace among SMEs, the owners of which may know each of their customers individually. Most of the principles of RM have been practiced by such businesses for a long time (Palmer, 2000).

Related to both points above, much of the confusion can also be traced to the failure, often made by academics and organizations alike, to see marketing strategically. Disregarding history and reality, the somehow defined “traditional” marketing was inappropriately conceived as a tactical means to manipulate transactions, more concerned with getting customers than keeping them.

The remaining, but not the least part of the confusion has been created by the academic reluctance to make RM operational. Although some investigations have been generated insights of how companies actually go about to make RM happen most of the research has been conducted in consumer or service markets (Eiriz & Wilson, 2004). Investigations of channel relationships, particularly in an export setting, have been extremely rare.

Such an investigation necessitates a clear definition of the domains. RM, as it is seen in this MP, is not itself a new concept, rather it is a refocusing of traditional marketing with a “greater emphasis being placed upon the creation of ‘customer value’” (Payne et al., 1995:vii). The level of its application rests on the discretion of the marketer though. If he expects to receive more value through the creation and maintenance of relationships then his marketing activities will show more relational components rather than transactional ones. Whether or not this is recognized (by practitioners) as RM, studied (by academics), or whether it is well or badly done is a different kettle of fish. A thorough literature review will make this more explicit.

Further, in order to be contributing to the knowledge of RM, rather than to the confusion, the environment and unit of analysis must be clearly defined. Export markets provide a fertile ground, not without threats, for companies to grow since they expand the business potential. Intra-channel relationships must be formed and managed. Small- and medium- sized enterprises (SME) due to their limited resource endowment are often forced to use local marketing intermediaries to reach the global consumer base. Such relationships have characteristics that differentiate them from other relationships, such as pure B2B or B2C relationships, and make them particularly interesting for a relationship management study. Although these export activities become increasingly vital for SMEs the foundations of superior performance are not well understood (Piercy et al., 1998).

This Management Project (MP) intends to be contributing to the increasing efforts towards the dissolution of confusions mentioned above. In general, it is to provide evidence to the academic community how RM is operationalised in a to-date under-researched setting (namely export channels), and generate suggestions to export managers how it may be applied more successfully (while assuring that they are already doing RM).

In this attempt, the MP reports a study of relationships between brands (exporters) and resellers (distributors) that investigated the nature and importance of RM instruments which use exporters to leverage relationships for achieving success in foreign markets.

Assisting in the exploratory venture of the MP, the literature review has also lead to the development of an export success model that “can be viewed as a first step in the direction of identifying and dimensionalizing the major variables influencing and ordering the structure and processes of social entities” (Achrol et al., 1983). It is to guide the author in his research and to enable the reader to appreciate and classify the research contributions.

Finally, because the Management Project’s “end product should be a piece of work with which the student is satisfied and which is of benefit and interest to him and [an] organisation” (MP Guidelines, 2005:5), it concludes with the application of the insights of the literature review and the study by proposing a practical management tool, the Export Relationship Management Balanced Scorecard (exRMBSc). It will enable managers and organizations to enhance their relationship management practice and thus helps to solve a frequent issue and crucial problems for many exporting businesses.

The Game Plan

Chapter 2 will provide an introduction to the chosen field of research which encompasses the export environment, the unit of analysis and the sample industry while making clear what is understood by the term relationship in this venture.

Chapter 3 discusses various key aspects of relationship management. Particular interest is given to the characteristics of the formation and development while appreciating the environment and the often forgotten economics.

Chapter 4 highlights a relational approach to the concept of competitive advantage, which is further used to look how competitive advantage is created in overseas markets.

Chapter 5 tries to make sense of the intense and heterogeneous discussion around relationship marketing with a special intention to identify potential for the application in international marketing channels. The principal research objective is defined.

Chapter 6 establishes an Export Brand-Reseller-Relationship success model (exBRR model) that is informed by the findings of the previous chapters. It helps guide the research venture.

Chapter 7 describes the research methodology applied to this venture.

Chapter 8 presents the findings of the investigation while trying to draw some useful and innovative conclusions.

Chapter 9 outlines the attempt to make the findings of the preceding chapters useful and applicable to managers. In conceptualizing an Export Relationship Management Balanced Scorecard (exRMBSc) it fulfils the problem-solving part required for the Management Project.

2 Setting the stage for the Management Project

It’s not important how fast you go, it is essential which direction you choose. Chinese

This chapter will provide an introduction to the chosen field of research which relates to international relationships, the unit of analysis and the sample industry while making clear what is understood by the term relationship in this venture.

2.1 International relationships

Motivation for internationalization

A considerable amount of research effort has been devoted to study the motivations for companies to initiate and increase their international activities. Katsikeas (1996) identified reactive and proactive stimuli, which in general terms expresses the fact that at the one hand companies try to close resource gaps and on the other hand try to seize opportunities, often both. However, the most important reasons were found to be management attitudes to seek growth and profitability outside the often small or saturated home market, the competitive advantage derived from the superiority of products or technologies, and the possibility of spreading risks (Rundh, 2001).

Mode of entry and operation

The most important international marketing decision a company must make is to determine how they should enter a market, as the commitment they make will affect every aspect of their business for many years ahead. There are advantages and disadvantages with each market entry method possible (see, for example, Hill, 2005) with respect to the cost and benefits involved, as well as with the dimensions and levels of risk. This suggests that there is no ideal market entry strategy and each company has to adopt its optimal way based on a great variety of factors (Doole & Lowe, 2004).

Direct export through distributors is a preferred form of entry by SMEs because it provides considerably expanded market potential with the advantage of immediate sales growth. In turn, it requires relatively limited involvement, fewer resources, is less costly and hazardous. Many firms do not progress beyond this stage (Rundh, 2001; Doole and Lowe, 2004), hence it is not only a preferred mode of entry but also of operation.

As Johanson and Vahlne (1990) show, market entry and further international development is a gradual process resulting more from interaction between parties and developing relationships than from market characteristics or analytical processes.

As a consequence, success may not be a choice of the right market or entry mode, but instead the ability to determine, find and develop the right relationships in a foreign market. Competing through (network) relationships regardless of entry mode and market is part of the relationship strategy (Donaldson and O’Toole, 2002) which will be discussed later.

Issues in export operations

Numerous factors – controllable and uncontrollable – affect the success of any exporter in foreign markets. Therefore, establishing and developing sustained success in export can be considered a challenging task due to the presence of geographically and psychic distance factors, the many uncertainties and risks involved, the different requirements, value, attitudes, the unfamiliar purchasing behaviour of overseas customers, as well as the various marketing strategy and organizational adaptations that companies must undertake in order to respond effectively to these challenges (Kaleka, 2002).

2.2 Unit of analysis

Within the export environment there are various channels and sequences, shaping dyadic relationships, available to a firm trying to reach the end-consumer (Figure 2-1).

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Figure 2-1: International marketing channels (author)

As explained above, SMEs frequently use the direct export as entry/operation mode and choose a distributor/reseller as marketing intermediary.

This paper focuses on the relationship between “brands” and foreign “resellers” in general, the characteristics of which are delineated in Figure 2-2.

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Figure 2-2: Definition of terms used within this MP

Similarly, the termbrand-reseller relationship (BRR)is created and used henceforth to distinguish between the various possible relationships covered in the literature, and to demarcate the special content and characteristics of relationship to deal with in this MP.

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Figure 2-3: Different aspects of B2C and B2B markets (author)

In addition, it must be noted that this specific dyad shows characteristics of market forms of both consumer goods (B2C) and industrial goods (B2B) (Figure 2-3), a fact that has surprisingly been neglected in the discussion in the pertinent literature. This should allow the creation and use of the termbusiness-to-business-to-consumer (BBC)market. That is because the products traded in BRRs are in essence consumer goods, but represent an industrial (investment) good for the reseller.

2.3 Relationships

The pertinent literature seems pervaded by an implicit assumption that writers and readers alike understand what is meant by relationship. Because only a “few academics have dared to put their heads above the parapet and define what they mean by relationship […] it is difficult to find a definition of what a relationship is in a marketing context” (Zolkiewski, 2004:25).

Considering this fairly unsolved area, for a deeper discussion around relationships it seems strongly necessary to take position and, if not only for this MP, to suggest sound definitions of the various meanings of relationship.

Some authors see relationships being constituted by mutual commitment and shared goals (for example, Hakansson and Snehota, 1995; also Grönroos, 2000 for a service marketing context and Wilson, 1995 for industrial markets).

A different approach is suggested by Jackson (1985) who uses the most fundamental activity that takes place on the market, the transaction, as a constituting element of relationships. In this sense, any act of exchange would establish a relationship for it can have dramatic implications for future dealings with that customer or another (Stone and Mason, 1997).

In essence, unless the first described “ ‘counter-intuitive’ definition of ‘relationship’ is used” (Blois, 1998:256), everybody and all organisations have relationships with their customers (Anderson and Narus, 1991). However, the depth of these relationships will vary from those where “a relationship” might be said to exist, i.e. where both the supplier and the customer recognise, accept and act on their mutuality of interest, through to situations where, although the customer and supplier do have a relationship (because they do business with one another), it is one whose characteristics are those of discrete exchange (Blois, 1998).

Typologies based on different forms of exchange have been discussed (e.g. Heide, 1994; McNeil, 1980; Mohr and Nevin, 1990). Jackson’s (1985) basic categorization suggests a continuum of working relationships between purely transactional to purely collaborative relationships.

Filling this continuum, Cannon and Perreault (1999) offer a model of industrial supplier- buyer relationships as a simultaneous combination of six relationship connectors which were identified to best appreciate the manner in which the participants interrelate and conduct commercial exchange. Prototypical combinations of connectors highlight the empirically distinct aspects of different types of relationships and were formed into eight (“nicknamed”) relationship clusters (Figure 2-4).

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Figure 2-4: Types of business relationships based on their intensity of collaboration (source: Cannon and Perreault, 1999; Jackson, 1985)

In that vein, this MP takes the view that all exchange acts and their inherent interactions with customers are relational exchanges. Moreover, different types of mutuality or commitment give way for different types of relationships that represent, as will be shown later, distinct differences in the nature and level of value either party receives.

Consistently, it seems useful for the following discussion to distinguish between three different terms indicating distinct characteristics of relationship intensity which will be used in the MP henceforth (Figure 2-5).

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Figure 2-5: Terms for relationships used in this MP (author; input from Day, 2000 and Cannon and Perreault, 1999)

With regard to the TAR it must be noted that these are not necessarily adversarial, a view that has its roots in relationship research emphasising the buyer’s side. Instead, TARs can be friendly, ongoing and satisfactory. While VAR contain certain levels of mutuality and commitment that go beyond mere deal making and handling, partnerships can be defined as “purposive strategic relationships between independent firms who share compatible goals, strive for mutual benefit, and acknowledge a high level of mutual interdependence” (Mohr and Spekman, 1994:135) and further “with each firm consequently taking actions so as to provide a coordinated effort focused on jointly satisfying the requirements of the customer place” (Anderson and Narus, 1990:42).

2.4 Research methodology

In order to answer the research question the German sporting goods industry was examined. Owing to the complex nature of relational elements a case study (multiple) approach was chosen which is appropriate for such kind of investigation (Yin, 1994). Also, in order to reduce the negative effects of what Easton (1995:379) terms “quasi-deductive theory testing”, i.e. partial support of theory, a comprehensive literature review is conducted to identify elements pertaining to the topic. This resulted in the development of a model that informs the study and helps making sense of the findings.

The industry is described in the next section while the rationale and the process of the investigation are delineated in chapter 7.

2.5 German sporting goods industry (SGI) and SME

The German SGI, as the sample industry of this paper’s research venture, should be defined as the entirety of German companies who market their own sports goods/brands nationally and internationally. Though the products may be manufactured in own plants or by contract manufacturers/suppliers within Germany or outside. By this definition, all the many international brands who market their products both in Germany and outside are precluded.

The German SGI encompasses only a few players of which two are multi-national enterprises reaching revenues well above €3bn each (adidas, Puma). In fact, all other businesses can be considered to qualify for SME.

The European Commission defines medium-sized enterprises by the number of staff (less than 250) and the revenue (less €50m) or total balance sheet (less than €43m). This definition, however, is only marginal for the purposes of this paper. The discussion instead relates to issues affecting companies which could not in any way be described as large or MNEs which typically choose a different way of internationalisation.

Definitions of sporting goods abound. The research emphasises the activities related to channel systems in direct exporting of SME and focuses on the characteristics of the resulting relationships. These are likely to be less product-specific, although each industry may exhibit some kind of specific “culture”. Yet, this supports the intention of this MP to deliver a framework and a management tool applicable to similar activities across other industries.

FormofexportDescription

Distributor usually perform a great variety of marketing functions and take ownership and most often possession of goods Sales representative(s) (internal, external/agents) are only engaged in sales and sometimes promotional activities Subsidiary are prevalently used for bigger markets or with great potential that commands almost total control of the marketing activities

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Figure 2-6: Forms of export used in the German SGI (author)

Notably, the SME players with the German SGI use primarily three forms of exporting (Figure 2-6). This MP exclusively focuses on the direct export through distributors.

Figure 2-7 depicts the mix of international operations for one of the players in the German SGI to exemplify the range of entry and operation modes.

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Figure 2-7: Example of mix of operation (entry) modes for one sample case (author) (SMU = Special Make-up)

The German SGI manufacturers/sells goods worth 10 billion Euro annually of which 28,6% are sold in foreign markets (BSI, 2007).

2.6 Summary

Foreign markets provide a fertile but also challenging ground for companies in the increasingly liberalised global marketplace while export management should basically be considered as a process of relationship management at both strategic and tactical levels (Leonidou, 2003).

Relationships are established by any exchange (process) through the giving and receiving of value. Even in a single or short-lived transactional relationship, each side of the participants gives something in return for a benefit. (Relational) exchanges can thus be lined up on a continuum of low and high intensity.

However, export operations through brand-reseller-relationships (BRR) entail certain characteristics that give rise to issues exporters need to be concerned about when trying to achieve superior performance in overseas markets. The fact that establishes the basic outset for this MP.

More specifically, two specific elements lead to the launch of the research venture and subsequently to the formulation of the research question.

1. Marketing strategies have been found, by practical experience and academic evidence, essential in the determination of the level of export performance.
2. Using a reseller in the foreign market, its role becomes critical because the brand’s marketing strategy is made operational by him. In line with that, the reseller’s needs, capabilities, and also the information and advice he can provide through his market knowledge (e.g. buying trends, competitor profile) must be included in the formulation of the strategy to become successful.

In summary, this study focuses on a specific dyadic relationship in an export setting while both parties are businesses that trade with consumer goods. This is manifested by the term and construct “brand-reseller relationship” (BRR).

Due to the increasingly pressuring environment it is suggested that brands form high- intensity relationships with other market players, amongst which the most important ones are resellers. Questions arise how intense relationships should/can be and how should/can they be managed which paths the way for the next chapter.

3 Customer Relationship Management

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The previous chapter suggested that a company’s choice whether or not it is has relationships is merely rhetoric. It is more important to determine as to what customers it wants to relate with.

This chapter therefore presents the effort both to categorize the various types of relationships that can occur in export marketing channels and the suggestions made with respect to the choice of the appropriate type for a brand.

Later the key constructs for the formation and development of VMRs are discussed.

Finally, as strong relationships are only good to the extent that they deliver value for the brand they need to be investigated on their contribution to the overall performance.

3.1 Types of intra-channel relationships

The discussion thus far was also not to suggest that the surge to partnerships is universally valid and should be pursued by any firm any time. In fact many companies for good reasons continue to rely on a more transactional orientation (Kelly and Kerwin, 1993; Blois, 1998). While partnerships have the potential to create new value (Anderson and Narus, 1990; Morgan and Hunt, 1994), they are also costly to develop, nurture, and maintain. In addition, there are risky, given the specialized investments they require (Bensaou, 1999).

Particularly, SMEs cannot invest as deeply and widely in systems, people, and programs as big companies, so they must be very selective in the types of customers/relationships they choose to serve (Day, 2000).

In addition, the study of Bensaou (1999) shows that no one type of relationship, not even the strategic partnership, is inherently superior to the others. Each type of collaboration showed low- and high-performing relationships, suggesting that each type can be well or poorly managed. Though, competitive forces in the global market place forces many firms to move significantly along the continuum from transaction-oriented relationships to stronger forms characterized by much greater interdependence (Webster, 1992).

However, various scholars have used several variables to explain the occurrence of various types of relationships (Jackson, 1985; Wilson, 1995; Day, 2000; Bensaou, 1999). Kim and Frazier (1996) offer a useful context-based typology of channel systems. Further, they use the construct of commitment (see next section) as a basis for the level of suitable response (very high to very low). Knowledge of these contingencies, along with the specific features of the product, is very helpful when deciding which resellers are the best prospects for future business and which marketing approach to select (chapter 5).

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Figure 3-1: A typology of channel systems (Kim and Frazier, 1996)

The model builds on three dimensions that, taken together, differentiate channel contexts into mutually exclusive and exhaustive categories (Figure 3-1). However, they are presented as alternatives, not as positions along a continuum as their structures and management is fundamentally different. Equally, as the contextual factors can change over time so must the level of commitment.

A complementary perspective, introduced by Hakansson & Snehota (1995), suggests that when a company determines how close a relationship should be with another organisation, it must recognize that there are trade-offs to be made (Figure 3-2). The degree to which each of these factors exists and their degree of disadvantage will vary according to the very nature of a specific relationship. In turn, the disadvantages may also manifest some advantages.

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Figure 3-2: Dark and light sides of relationships (based on Blois, 1998)

An implication of the deliberations above is that every company faces, similar to achieving balance within a range of stocks or products, a portfolio of relationships (Egan, 2001).

Accordingly, a company should invest in as well as maintain and manage a well-balanced portfolio of relationships to generate a steady cash-flow today and to achieve long-term profitable growth (Johnson and Selnes, 2004; Gummesson, 2000; Christopher et al., 2002). Johnson and Selnes (2004) refer to this a “customer portfolio management” and suggest a model of “customer portfolio lifetime value” (CPLV) to facilitate decision-making on resource allocation to relationships.

3.2 Formation and development

Since many scholars have suggested to build more cooperative and long-lasting relationships with their customers (e.g. Day, 2000; Rust et al., 2000; Storbacka et al., 1994) it shall now be analysed why these may be of benefit for brands and how they can be developed.

The study of relationships and networks is not, of course, a new area of research. A diverse set of paradigms (Figure 3-3) in disciplines adjacent to management (for a review see Donaldson & O’Toole, 2003; Eiriz and Wilson 2006) have been used. Although instructive to a certain extent, these streams of research have generated “an amorphous and disjoint conceptualization of buyer-seller relationships” (Leonidou et al., 2006).

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Figure 3-3: Most often used research paradigms to understand relationship formation

More insights can be dawn from the works of the Industrial Marketing and Purchasing (IMP) Group. With their “interaction approach” (Hakannson, 1982) buyer-seller cooperation was conceptualized as complex interactions between the participants at both the firm and individual levels. Further, they stressed that discrete transactions are simply episodes in continuing relationships between the interacting firms so that the outcome of a current exchange must be seen with respect to future exchanges. A practical implication is that management must not be concerned with creating and influencing transactions, but instead with establishing and nurturing relationships.

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Figure 3-4: The interaction approach framework (based on Johnson and Selnes, 2004; also Turnbull and Valla, 1985)

The interaction approach suggests three sets of variables to be taken into consideration when assessing the importance and influence of interactions: the environment in which the interaction takes place, the elements and processes of the interaction itself, and the “atmosphere” surrounding. Whereas the value created in interactions is a direct function of both the customer’s and supplier’s strategies and capabilities. They depend on their ability and motivation to participate (Johnson and Selnes, 2004). Figure 3-4 depicts the central concept of exchange relationships (interactions).

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