27

INFORMATION SHARING WITH B2B CUSTOMERS THE SELLERS DOUBLE-EDGED SWORD

William W. Hill, Mississippi State University
ABSTRACT The goal of this paper is to recognize the potential problems for sellers who share information with customers in the business-to-business (B2B) setting, a perspective counterintuitive to previously discussed in the marketing literature. In doing so, the author hopes to broaden the understanding of information exchange from the seller to the buyer, providing a perspective to the potential harmful long-term effects. The author proposes relationships are enhanced through information sharing in the early stages of the relationship, but eventually these relationships often peak and diminish as expert knowledge is transferred from the seller to the buyer. Also discussed is the sellers paradox in sharing information to build trust, while taking the risk of diffusing valuable knowledge to the buyer over the extended relationship. INTRODUCTION In the selling domain, it is clear that for the seller to survive, he/she must develop and maintain long-term relationships with the customers. Indeed, the marketing literature acknowledges the importance of the buyer-seller relationship toward sustaining competitive advantage (Hunt, 1983a; Ferber, 1970). Further, the stream of research relative to relationship marketing reinforces the importance of this strategy (Morgan and Hunt, 1994, Wilson, 1995). One factor noted for cultivating buyer relationships is information exchange (Cannon and Perraeult, Jr., 1999). Previous research suggests information exchange fosters customer satisfaction (Cannon and Perraeult, Jr., 1999), builds trust (Anderson and Weitz, 1992; Morgan and Hunt, 1994; Anderson and Narus, 1990; Doney and Cannon, 1997), and offers a perception of commitment (Dorsch and Carlson, 1996; Morgan and Hunt, 1994) for both parties. Information exchange has been suggested to have a positive impact on the internal functions within an organization (Buckman, 1998) and to be a constructive influence within alliances and joint ventures (D Aspremont and Jacquemin, 1988; Kamien, Muller, and Zang, 1992). Moreover, in the supply chain, companies often share knowledge to improve visibility in chain operations resulting in innovative solutions between channel partners (Im and Rai, 2008). Yet, surprisingly, previous research in this area has given minimal consideration to the negative influence of information exchange long-term. Specifically, do negative outcomes exist for Academy of Marketing Studies Journal, Volume 14, Number 1, 2010

28 the seller? Is there a limit to the amount of information that should be offered to the buyer? Are certain types of information too confidential to share? Are there specific contexts where the information offered is more detrimental to the business than others? Clearly, from this view, the answer to these questions is fundamentally yes. There seems to be a genuine sales dilemma in sharing information to build trust that runs the risk of transferring valuable knowledge to the buyer. This does not suggest that information sharing can always be avoided, nor does it imply that every scenario will necessarily lead to negative outcomes. This paper simply offers another perspective that is believed to be real. Thus, this view is counterintuitive to the belief that information sharing by the seller is always good approach for building relationships. In fact, the author suggests it can have serious impacts to the value of the seller and the products and services offered by the selling company. Since this issue has been given minimal notice in the marketing literature, this paper provides needed insight in this area. INFORMATION EXCHANGE IMPACTS TO RELATIONSHIPS AND PRODUCTS Not surprisingly, firms seek innovative products as a means of achieving competitive advantage. A part of this process is being unique and difficult to imitateclearly a key factor in sustaining companies against competitive challenges. Yet, while firms strive to differentiate, many find this goal problematic. A key problem here is competitive substitutes eventually become available in the marketplace. We know this is not uncommon even for the most successful companies. This issue of avoiding commodity status is particularly difficult within some raw material channels. Take, for instance, the mineral industry. Kaolin clays are mined, processed, cleaned, bleached, filtered, chemically treated, etc. prior to being shipped as clay slurries to the paper and paint industries. These industries use these mineral slurries and other raw materials to make coating recipes that, when applied to the surface of paper (or the living room wall), give optical properties that are appealing to the buyer. While many of these recipes are innovatively unique, in the world of manufacturing where formulating recipes is as much an art as a science, the likelihood that customers or competitors will discover other mineral combinations that could provide similar benefits, is a strong possibility. Another example here (in the industrial setting) is in the control of the pH. There are a variety of chemicals that work adequately in the control pH beyond the standard industrial acids and bases sold for this purpose. So as you can see, even at the simplest process level, it is constant battle for the seller to differentiate products to make a valueddifference to the buyer. Substitutes are often just around the corner. Because of this challenge, sellers are forced to compete largely through relationships. In doing so, sellers strive to enrich relationships by sharing information about the product, services, applications, etc. to secure trust, commitment, and to demonstrate seller expertise to the buyer. For the latter, the seller is not just selling the product, but the knowledge that can be offered. They are selling solutions involving their product. This is generally smart businessparticularly with Academy of Marketing Studies Journal, Volume 14, Number 1, 2010

29 products that are otherwise considered commodities. Recall IBMs effective slogan Solutions for a small planet (i.e., the PC is the commodity). Initially, the buyer will respect the seller for the knowledge that is shared and the relationship should prosper. Yet, over time, the seller is vulnerable to sharing valuable knowledge to the customer. In a sense, the seller, at some point, is giving away expertiseinformation that accelerates the commodity status for even new products in the market. Wilsons (2000) depiction of the case of the vanishing salesperson, alludes to this concern. Wilsons (2000) view suggests that the role of the salesperson is diminished with deep relationships, and we agree. However, we suggest deep relationships often occur as the result of information exchange. That is, information exchange reduces the importance of the seller because the buyer has become knowledgeable of the product and how it is used. Of course, this added knowledge about the product to the buyer, surely reduces the uniqueness of the product over time. Based on this discussion, we offer the following propositions. Proposition 1: For buyer-seller relationships that prosper, information exchange from the seller is likely a key factor stimulating the enrichment of that relationship in the short-term. As a result, the sellers perceived value to the buyer should initially increase. For buyer-seller relationships that prosper, information exchange from the seller is likely a key factor diminishing that relationship long-term. As a result, the sellers perceived value to the buyer should eventually decrease. Information exchange by the seller to the buyer to secure and nurture relationships is likely a key factor in reducing the timeframe that product remains unique to the market. INFORMATION EXCHANGE PATHS Information exchanges can occur through a variety of different exchanges, but as we have alluded to thus far, the most obvious path is from the seller to the buyer. As a guide to this discussion, see Figure 1. Here, we illustrate how information is transferred from the seller to the buyer and, then eventually in several directions. Of course, information can be transferred through verbal exchange in the selling process, but it also can occur when employees change jobs between sellers and sellers, buyer and sellers, sellers and buyers, etc. We know that many firms require employees to sign agreements preventing them from working for competitors, but these agreements have time limits and preventing an employee from permanently working for a competitor is difficult. Academy of Marketing Studies Journal, Volume 14, Number 1, 2010

Proposition 2:

Proposition 3:

30 Moreover, agreements are less common with employees who change jobs between selling and buying companies and vice versa. Undoubtedly, the information paths exist and must be acknowledged.
Figure 1. Information Exchange Paths in B2B Setting

Original Seller

Original Buyer

Seller (Competitor)

Buyer (Competitor)

Seller (Competitor)

Buyer (Competitor)

Seller (Competitor)

Buyer (Competitor)

At this point, the discussion moves more specifically to the topic of information exchange, how it is defined, and the aspects of information exchange that are detrimental to the seller. Information Exchange Cannon and Perreault, Jr. (1999, p. 441) define information exchange as expectations of open sharing of information that may be useful to both parties. Moreover, it is suggested here that the risks associated with information exchange can be grouped into three areas: amount of exchange, type of exchange, and the context of the exchange. A discussion of each is addressed in the following sections. Amount of Information Exchange Risk Relative to the Relationship We suggest that the amount of information transferred from the seller to the buyer should serve to enhance the relationship until it reaches a peak. At some point in that exchange, it is Academy of Marketing Studies Journal, Volume 14, Number 1, 2010

31 proposed the relationship dampens (see Figure 2). That is, eventually, as more information is exchanged, this giving away of knowledge serves to transfer expert status from the seller to the buyer. The greater the information transferred, the better the buyer is educated, and the buyers need for the seller is diminished. This does not infer the relationship is dissolved or it is at a lower level than at relationships initiation, just that it is lessened from its peak.
Figure 2. Information Sharing and Relationship Level

Enriching the Relationship

Diminishing of Relationship

Relationship Level (Seller Advantage)

Amount of Information Shared

Thus, it is proposed that Proposition 4: The amount of information exchanged from the seller to the buyer may contribute to enriching the relationship in the short-term, but the diminishing the relationship in the longterm.

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

32 Types of Information Exchange Risk It also evident that the type of information shared by the seller influences the quality of the knowledge exchange (i.e., some information is more valuable than others). The marketing literature most commonly identifies product and financial information exchange as primary areas subjected to the sharing environment (Dorsch et al., 2001; Srivastava et al., 1999). For product information, this may include product data characteristics (i.e., physical and chemical properties), product makeup, process/production knowledge, etc. Financial exchange could involve pricing, production costs, product revenue, etc. These types of information are certainly more valuable to the buyer than other information. Thus, sellers, against their better judgment, often share this information to help the short-term value of the relationship. Therefore, we propose: Proposition 5: The type of information exchanged from the seller to the buyer may contribute to enriching the relationship in the short-term, but the diminishing the relationship in the longterm.

Contexts of Information Exchange Risk Some business contexts are more conducive for transferring knowledge to customers. In fact, the marketing literature identifies several forums where information exchange occurs more easily and perhaps with greater understanding than others. In some studies, the authors even warn of associated risks in these settings or processes. Typical contexts of concern, summarized in Table 1, are discussed next.

Table 1. Typical Risk Contexts Noted in Marketing Literature Context Citations in Area Williams (2002) Summary of Findings Overuse of document exchange to address issues during supplier bid evaluation process. Avoid invitation of bids where apples-toapples comparisons can be made between products. Ethical Behavior 1) Purchasing shares confidential product information with others. 2) Purchasing requires bid process to drive down price when the supplier choice has already been made.

Procurement Bidding Process

Klein (2002)

Porter (1999)

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

33
Table 1. Typical Risk Contexts Noted in Marketing Literature Context Citations in Area Cannon and Perreault, Jr. (1999) Collaboration Product Development Srivastava, Shervani, and Fahey (1999) Lambe and Spekman (1997) Summary of Findings Both parties share important, even proprietary information. Activities might include involving the customer in product design. Sharing of information through customer relationship management process. Buyers benefit from suppliers ideas for new or improved products and better customization of the products or services they purchase. Suggests presentations offer a great deal of free information for the customer and can be used for building relationships. Sales efforts to generate customer resource investments include using fact-based presentations to customer

Meldrum (1998) Presentations Dorsch et al. (2001)

Procurement Bidding Process Buyers use the bid process primarily as a means of reducing product costs. For less powerful sellers, this is a real problem. If they do not participate in the bid, they will lose their existing business. Moreover, by ignoring the bid invitation, they show a lack of commitment to the buyer-seller relationship long-term. If they do participate and actually win the business, they do so at the expense of reduced pricing (i.e. from bidding low). Ultimately, the fear of losing the relationship (and sales revenue) encourages participation. Yet, when sellers do participate, the buyer learns a great deal. Specifically, the bid process offers a clear apples-to-apples comparison for buyer and hence educates the buyer as to similar competitive offerings (Klein, 2002). Buyers are often not aware of competitive brands before a bid process, and thus the bid process provides a clearer picture to the purchaser than perhaps ever before. Additionally, the bid process encourages the overuse of document exchange to questions generated from the bid evaluation process (Williams, 2002). Sellers might tend to be too free with information to please the buyer in this situation. Finally here, Porter (1999) articulates the bid process may foster unethical intentions as customers may eventually share information with competitors they want to win the bid. The sharing may be unintentional as well, but regardless, the information is released.

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

34 Collaboration in Product Development Process The process of collaboration encourages the sharing of knowledge, particularly as the groups work together on new innovative product designs (Cannon and Perreault, Jr., 1999; Lambe and Spekman, 1997). The concern here is similar to that in the bid process. Working together in the research and development setting allows buyers to compare (i.e., apples to apples) proprietary details about the product and its use. These same research scientists are working with competitive brands as well. Thus, while the intent of collaboration is worthy, the information shared in the context of product development may provide too great an understanding of the products makeup and capabilities long-term. Presentations In the B2B setting, the use of presentations is a very effective means for closing sales. The seller informs the buyer of the products benefits, often providing specifics about product offerings. The buyer appreciates the detail of this information. The seller has the opportunity to touch a number of key personnel involved in the buying decision. The seller also has the opportunity to alleviate any concerns about products with the entire buying group in attendance. Thus, the chance to make a presentation to a buyer is generally considered a great opportunity. Unfortunately, this method of information transfer may offer an extensive level of product information to the buyer prior to the sale (Meldrum, 1998; Dorsch et al., 2001). Product line details, application ideas, and cost information may be shared during presentations. In summary, only three of a number of possible contexts have been discussed here suggesting the context of the information exchange provides a risk to the seller. In each example, the relationship is a goal, but perhaps at a cost. Thus, we propose: Proposition 6: The context of the information exchanged from the seller to the buyer may contribute to enriching the relationship in the short-term, but diminishing the relationship in the long-term.

Risk Dynamics of Information Exchange Expanded In order to better understand the risk dynamics of information sharing by the seller, it requires taking a broad-based view of the buyer-seller relationship. It also requires an understanding of how important the relationship is to the seller in the B2B setting. Knowing this, this paper offers a who, what, where, when, why, and how depiction of buyer-seller environment that hopefully describes how shared information is diffused through the channels within an organization and beyond. This information is displayed in Table 2. Academy of Marketing Studies Journal, Volume 14, Number 1, 2010

35 The who in this scenario are the sellers contacts in B2B setting. Of particular importance here is how these contacts use the information shared by the seller. Typical contacts include operations, engineering, R&D, purchasing, and management. Each function has different motivations. It is important for the seller to understand these motivations such that they may use caution when working with these groups. The what dynamic in table 2 involves the types of information shared. This obviously includes product information, but also service/solution information relative to processes and practices. The where dynamic involves the locations that are suggested to be vulnerable for unintended information exchange by the seller. These include the customers facility, the sellers facility, conference settings, and entertainment settings. The when scenario involves the time at which the seller tends to share information. This involves the selling process, but also the recovery process. That is, when the buyer has difficulty with the sellers product, the seller will share more information to help the buyer eliminate the problem. The why dynamic is directed at the sellers motives. Clearly, this includes making the sale (economic), promoting his/her expertise (image), and maintaining business friendships (emotional). Finally, the how dynamic shown in table 2 describes how information is transferred. This involves both verbal and written communication. For the latter, salespeople will use brochures, product data sheets, letters, emails, etc., to help promote their product(s) to the customer. Obviously, this practice must be monitored such that it is not uncontrolled.

Table 2. Risks Dynamics of Information Sharing with Customers in B2B Selling Domain Description Operations Relevance Informs major user and application specialist of the product/service. Concern Operators actually use your product/service offerings. They have access to competitive products and know how apply them. This knowledge dilutes differentiation. Engineers work with product/service offerings and make decisions based on this information. Information provided will be compared to competitive brands. R&D has access to competitive product information and they perform scientific studies comparing products. Purchasers are bargain shoppers. They will seek to homogenize products and that could lead to price erosion. Chief information collectors and synthesizers. Paid to make decisions about product/servicing offerings.

Engineering Informs decision-maker with user and application knowledge.

Who?

R&D

Informs a highly scientific group with access to specific comparable attributes. Informs a price conscious function with information that will be price compared.

Purchasing

Management Informs chief decision-makers who have access to information from all functions.

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

36
Table 2. Risks Dynamics of Information Sharing with Customers in B2B Selling Domain Description Product Information What? Service Information Customer Location Relevance Product information such as costs, product makeup, procedures, and applications of use are included. Concern Products can be compared. If they can be compared, the can be copied. Thus, sustaining a differentiated competitive advantage is more difficult.

Service information includes costs, Services are copyable as well. Finding good processes, hiring practices, training, highly skilled people is hard to achieve. Protect etc. this information. Salespeople share information during sales calls at customer locations. Information is shared on their turf. The seller may have customer at its own facility to show product capability and knowledge. Conferences are forums for meeting many customers at the same time. Presentations, meetings, entertainment, etc. occur. Salespeople are vulnerable at customer locations to sharing information to impress. There can be a big audience, so one mistake travels to all channels. Salespeople invite customers to their facilities to show capabilities. The customer is exposed to details in the product/service offering. Conferences provide a hub for information transferInformation is shared in both business and social settings Thus, caution must be used during at these events.

Seller Location Where? Conference Settings

Entertainme Salespeople often use leisure Selling entertainment activities often result in nt Settings entertainment as an informal way to stronger relationships, even friendships. As a share information. result, the seller may be vulnerable to sharing unnecessary information. Selling Activities When? Recovery Activities Economic Salespeople disseminate information to gain sales opportunities. Customers want to make informed decisions. Salespeople are challenged to sustain business when products/services fail. The sharing of information is based on economics (i.e., generating sales). Sellers tend to flood customers with information to make the sale. This information is often more than necessary and may be compared with competitive offerings. The seller will be compelled to share a great deal of information to help the customer solve their problem. Again sharing information for short-term gains may result in long-term loss of differentiation.

Image Why? Emotional

The sharing of knowledge promotes The salesperson is trying to make a great the sellers and companys image. impression on the customer by sharing knowledge. Strong relationships and friendships Selling friendships and crisis situations lead to information exchange. For the latter, the with customers exist. Also, crisis customer is seeking answers to solve a problem. situations evoke emotion.

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

37
Table 2. Risks Dynamics of Information Sharing with Customers in B2B Selling Domain Description Verbal Exchange How? Written Exchange Relevance Concern

Information shared in presentations, The seller must use restrain when compelled to meetings, phone conversations, offer information as a part of the selling process. entertainment activities, etc. There are many tempting situations. Information shared via call reports, handouts, product data sheets, MSDS sheets, brochures, letters, email, etc. The selling party often floods the buyer with literature as a means of getting the buyers attention beyond the face-to-fact service call.

CONCLUSIONS AND FUTURE RESEARCH DIRECTIONS This paper hopefully offers a unique perspective on seller information exchange and the potential negative ramifications for sellers in the B2B setting. Clearly, the seller needs to build relationships and information exchange is often a necessary technique in this process. Thus, we must understand the dilemma of short-term gains versus long-term losses as discussed in this paper. It is important to recognize that the amount, type, and context of the information exchange are relevant in understanding how information is used by the buyer. Moreover, this paper recognizes the need to take a broad-based view of the information sharing environment such that sellers understand all the dynamics of the information shared. This paper has generated a number of thoughts for future research. First, an empirical study for the ideas proposed in this paper seems warranted. Interestingly, while we take a darker view of the practice of sharing information with buyers, there would also expect to be long-term influences for buyers sharing information with sellers. A framework for that process could prove insightful. Future research could include development of a taxonomy system for the types of information exchange that occur. While we suggest in this paper that information exchange may be present in different forms (i.e. product, financial), there may be a number of information exchange types that warrant identification in the marketing literature. REFERENCES
Anderson, J. C. and J. A. Narus (1990). "A Model of Distributor Firm and Manufacturer Firm Working Parnerships." Journal of Marketing 54(January): 42-58. Anderson, E. and B. Weitz (1992). "The Use of Pledges to Build and Sustain Commitment in Distribution Channels." Journal of Marketing Research 29(February): 18-34. Buchman, R. H. (1998). "Knowledge Sharing at Buckman Labs." Journal of Business Strategy (January/February): 1115.

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

38
Cannon, J. P. and J. Perreault, William D. (1999). "Buyer-Seller Relationships in Business Markets." Journal of Marketing Research 36(November): 439-460. D' Aspremont, C. and A. Jacquemin (1988). "Cooperative and Noncooperative R&D in Duopoly with Spillovers." American Economic Review 78: 1133-1137. Doney, F. R. and J. P. Cannon (1997). "An Examination of the Nature of Trust in Buyer-Seller Relationships." Journal of Marketing 61(April): 35-51. Dorsch, M.J. and L. Carlson (1996). A Transaction Approach to Understanding and Managing Customer Equity. Journal of Business Research 35(3): 253264. Ferber, R. (1970). "The Expanding Role of Marketing in the 1970s." Journal of Marketing 34(January): 29-30. Hunt, S. D. (1983a). "General Theories and the Fundamental Explanada of Marketing." Journal of Marketing 47(fall): 9-17. Im, G. and A. Rai. (2008), "Knowledge Sharing Ambidexterity in Long-term Interorganizational Relationships." Management Science 54(7), 1281-96. Kamien, M., E. Muller, et al. (1992). "Research Joint Ventures and R&D Cartels." American Economic Review 82: 1293-1306. Klein, G. B. (2002). "Avoiding the Apples-to-Apples Trap." Rough Notes (October): 184-185. Lambe, J. C. and R. E. Spekman (1997). "National Account Management: Large Account Selling and Buyer-Supplier Alliance?" Journal of Personal Selling and Sales Management 27(4): 61-74. Meldrum, D. H. (1998). "Making a Difference at Air Products and Chemicals." Business Economics (July): 21-24. Morgan, R. M. and S. D. Hunt (1994). "The Commitment-Trust Theory of Relationship Marketing." Journal of Marketing 58(July): 20-38. Porter, A. M. (1999). "Supply Alliances Pose New Ethical Threats." Purchasing (May): 20-22. Srivastava, R. K., T. A. Servani, et al. (1999). "Marketing, Business Processes, and Shareholder Value: An Organizational Embedded View of Marketing Activities and Discipline of Marketing." Journal of Marketing 63(Special Issue): 168-179. Williams, J. (2002). "The Five-Step Plan for Better Bids." Supply Management(June): 24-26. Wilson, D. T. (1995). An Integrated Model of Buyer-Seller Relationships. Journal of the Academy of Marketing Science 23(4): 335-345. Wilson, D. T. (2000). "Deep Relationships: The Case of the Vanishing Salesperson." Journal of Personal Selling and Sales Management 20(1): 53-61.

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

Copyright of Academy of Marketing Studies Journal is the property of Dreamcatchers Group, LLC and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.