Preferred Customer Status: Attractiveness in Buyer-Supplier Relationships

Abstract

The importance of acquiring preferred customer status with suppliers has risen over the past years, as the majority of innovations in high technological sectors today come from suppliers. Coupled with this is a shift of bargaining power toward suppliers, as several segments experience mergers and acquisitions that make the suppliers fewer and larger. It is therefore important for buyers to be attractive to their suppliers in order to secure a sustained competitive advantage through a preferential access to innovation and resources from the few highly competitive suppliers. Recent research has mostly focused on how buyers work with acquiring preferred customer status, what they regard as preferential treatment and what they find attractive in suppliers. There is however a lack of research into what suppliers find attractive in their buyers, and how their respective views on the subject differ. This study aims to remedy the lack of focus on suppliers and facilitate a holistic understanding of attractiveness in the preferred customer status context by analyzing their differing views and find what suppliers find attractive. The research is based on 8 interviews with 11 sales representatives and purchasers at linked buying and supplying firms within the same high technological industry segment. The result of our study shows that what buyers think suppliers find attractive in them differs from what suppliers actually find attractive, and that buyers need to focus more on building trust and commitment as well as developing relational aspects. Further, our study provides a new model that shows the interaction of the factors that creates attractiveness, as well as the development of preferred customer status as a dynamic concept.