Mols, Niels Peter4; Sloth, Jacob Lerche1; Thrane, Claus5
1 School of Economics and Management, Faculty of Social Sciences, Aarhus University, Aarhus University2 Department of Economics and Business Economics - The Tuborg Research Centre for Globalisation and Firms, Department of Economics and Business Economics, Aarhus BSS, Aarhus University3 Department of Management, Aarhus BSS, Aarhus University4 Department of Economics and Business Economics - The Tuborg Research Centre for Globalisation and Firms, Department of Economics and Business Economics, Aarhus BSS, Aarhus University5 Department of Management, Aarhus BSS, Aarhus University
Abstract Purpose of the paper and literature addressed: The purpose of this paper is to identify buyer motives for supporting internal competitors and to suggest relevant marketing strategy elements for external suppliers confronting these internal competitors. Research method: With basis in a literature review we identify different buyer motives for choosing to combine external suppliers with internal production, i.e., an internal competitor. For each buyer motive, possible marketing strategies are identified and briefly discussed. Research findings: The paper describes different buyer motives for choosing dual sourcing by combining internal production and external suppliers. Central buyer motives are (1) to avoid idle production capacity, (2) to avoid quality debasement and cheating, (3) to avoid unreliable suppliers and hold-up problems, (4) to avoid inefficient problem solving, and (5) to access technologies and capabilities. These different buyer motives found in the literature indicate that the external suppliers do not face a homogeneous set of buyer motives when their customers produce the same components internally. Though, it may be difficult for the external suppliers to immediately identify relevant buyer motives, the existence of different buyer motives suggests that these buyers should be targeted with different marketing strategies. For each buyer motive, possible marketing strategies are suggested and briefly discussed. Thus, for each buyer motive it is briefly discussed (1) how the external supplier may try to replace the internal competitor, (2) how the external supplier may try to operate in parallel with the internal competitor, and (3) when the external supplier should refuse to deliver to the customer with internal production of the same components. Main contribution: The paper brings into focus the situation and buyer motives that external suppliers face when they confront an internal competitor. Furthermore, for each buyer motive a number of possible marketing strategies are identified.