The buyer and seller relationship is fundamental in economics. The providers of goods and the consumers define the terms of economic exchange. Maintaining a good relationship with your customers is extremely important if you're a business. By attempting to understand the terms of the relationship between buyer and seller you will be gaining a greater insight into the basic workings of the economy. There are disadvantages and advantages in any kind of relationship, this one included.
One of the basic conditions of free markets is that buyers are able to take their business wherever they please. Sellers have no particular hold over their consumers apart from the value that they are able to provide in their product. This is a disadvantage for many businesses, as they can see their business dry up with new competition. For buyers, free exchange helps to ensure a greater quality for their money and incentive for businesses to improve.
In contrast to the basic conditions of a free market it is often possible for some businesses to gain a monopoly over a certain product. Government regulation often steps in to prevent monopolies from growing too powerful, but they tend to persist regardless. In this situation buyers are greatly disadvantaged, as they are no longer free to take their business to another competitor. This gives the seller less of an incentive to reduce costs.
To cope with the conditions of a free market many businesses attempt to establish customer loyalty. This is often done by creating an emotional attachment between the buyer and seller. Businesses create brands that are associated with their products and that many times buyers form fondness for. As well, consumer loyalty can be gained by offering a consistent quality, and also by offering more intangible benefits, such as very good customer service.
Many businesses rely on the relationship between their sales staff and their customers. In businesses such as these it is the personal relationship that maintains customer loyalty. If a buyer is more comfortable dealing with the same person, whom they know well and trust, they will be less likely to be lured away by any competition. Often businesses are able to charge more if they have a particularly knowledgeable sales-force to aid buyers in decisions.
- Northwestern University; Testing Incentives in a Buyer-Seller Relationship; Nicholas Ross and Richard Saouma; May 2010
- "Journal of Business Research"; Relationship Quality as a Predictor of B2B Customer Loyalty; Papassapa Rauyruen, et al.; January 2007
- "International Journal of Production Economics"; The Effect of Relationship Characteristics on Relationship Quality and Performance; Brian Fynes, et al.; January 2008
- 23rd Annual IMP Conference; Ongoing Buyer-Seller Interaction in Business Services Including the Perspective of Service Providers; Wendy van der Valk, et al.; 2007
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