Why do SMEs switch suppliers?

Abstract

PurposeCombining a conceptual framework with empirical evidence, this study aims to offer insights into why small and medium-sized enterprises (SMEs) in the business-to-business beauty sector switch suppliers, due to pricing considerations.Design/methodology/approachData gathered from 475 telephone surveys of Spanish hairdressers provide the input for discrete choice models for testing the proposed hypotheses.FindingsThe SMEs that change suppliers tend to be sensitive to promotions, express less satisfaction with a current supplier’s offerings and serve fewer customers who buy professional products for their in-home use. If SMEs are satisfied with the supplier’s services though, they are less likely to change and more prone to negotiate with that supplier.Research limitations/implicationsThis study does not address why dissatisfied SMEs might remain with their current suppliers. Further research might replicate this study using additional pricing data from suppliers.Practical implicationsSuppliers in business-to-business (B2B) sectors can leverage these findings to allocate their marketing budgets optimally and establish service strategies that will enable them to retain buyers and reduce their switching risk.Originality/valueAs an extension of extant literature, this study specifies switching drivers for SMEs in the B2B beauty sector. The findings should apply throughout this worldwide service sector, as well as to similar markets such as health, beauty and personal care and well-being services.