The Dynamics of Buyers' Perceived Costs During the Relationship Development Process

Abstract

ABSTRACT Existing management practices indicate that buyers and sellers are engaging in closer relationships based on the total cost of the relationship, rather than traditional arms-length transactions solely based on price. This paper develops a conceptual framework suggesting that buyers' perceptions of a product's cost vary during relationship development. The objective of this paper is to provide suppliers with a model that helps them determine how buyers' perceptions of a product's cost vary while a buyer-seller relationship develops. By knowing what components of cost are of relative importance to buyers during each relationship phase, sellers can better manage their marketing efforts. This paper explains this phenomenon in a business-to-business context.