Understanding Business Alliances & Partnerships: Symbiotic Marketing Framework, Study notes of Marketing

Download Understanding Business Alliances & Partnerships: Symbiotic Marketing Framework and more Study notes Marketing in PDF only on Docsity! Symbiotic marketing: ABSTRACT A number of channel alternatives have been identified which firms utilize in distributing their products and services. These alternatives include the traditional marketing channel, the vertical marketing system, vertical integration, strategic alliances, ne horizontal marketing system. One alternative that has not received much attention is symbiotic marketing. As originally defined, symbiotic marketing is “an alliance of resources or programs between two or more independent organ each” (Adler, 1966). It is argued, herein, that symbiotic marketing is a inclusive construct for explaining and understanding marketing channel phenomenon concept is discussed, reviewed, and expanded in the context of network analysis. Industry examples are provided to illustrate the various distribution options available to the firm. A typology of distribution alternatives is developed and discussed. Testable hypotheses are developed for further analysis. Keywords: symbiotic marketing, distribution, channels of distribution, joint venture, strategic alliance, strategy Journal of Management and Marketing Research Symbiotic Marketing, Page a network perspective J. Barry Dickinson Holy Family University twork organizations, and the izations designed to increase the market potential of more comprehensive and 1 . The INTRODUCTION In marketing channel strategy literature, a number of channel alternatives have identified which firms utilize in distributing their products and services. These alternatives include the traditional marketing channel, the vertical marketing system, vertical integration, strategic alliances, network organizations, and the horizont forms have been studied by market researchers relatively thoroughly and from a number of perspectives. However, one other strategic alternative has been identified and discussed by a limited number of authors but has yet aforementioned forms of distribution more holistic concept of symbiotic marketing marketing is “an alliance of resources or programs between two or more independent organizations designed to increase the market potential of each” (Adler, 1966) in the mid-1960s, the concept of symbiotic marketing has rarely been discussed by market researchers in either academic or popular literature. There are only a handful of published articles whose underlying theoretical basis is that of symbiotic marketing (Adler, 1966; Varadarajan & Rajaratnam, 1986) dispatched as a synonym for a horizontal marketing system (Kotler, 1991) more powerful and comprehensive than this lack of focus by marketing scholars indicates In what ways is symbiotic marketing a more com explaining and understanding marketing channel phenomenon? First, symbiotic marketing provides a strategic direction to channel considerations important core competencies and resour are actively and continually scanning both the external and the competitive environments for likely partners with such resources (developing its own capabilities) to externally capabilities). Nike is, perhaps, the best known example of this external orientation to resource acquisition. The firm has forged over 140 alliances with international partner expertise in production, marketing, and distribution comprise virtually all of the various forms of distribution identified in extent marketing and management literature. Modes of symbiosis inc marketing agreements, vertical marketing systems, horizontal marketing systems, and traditional buyer-seller marketing channels. and acquisitions as a tool, such as vertical integration, violate the spirit of the concept of symbiotic marketing. Once firms are integrated, they are no longer “independent organizations” which is a requirement under our adopted definition of symbiotic marketing of distribution strategy, other than vertical integration, are considered within the scope of symbiotic marketing. This provides a broad, more robust framework for examining phenomenon associated with inter-organizational relationships Since no well-defined body of research exists addressing the specific dynamics of symbiotic marketing, this paper will borrow from extent literature on strategic alliances and network organizations as grounding for its analysis are based on some form of collaborative organization (such as the vertical marketing system or co-marketing arrangement), this assumption appears to be supported diverse, and “fragmented” (Vyas, She on strategic alliances (Harrigan, 1987; Journal of Management and Marketing Research Symbiotic Marketing, Page al marketing system. to receive the same level of attention as that of the . This infrequently cited strategy is the broader, perhaps (Adler, 1966). As originally defined, symbiotic . First introduced -related concep . In other cases, symbiotic marketing has been . The concept is much prehensive and inclusive construct for . Rather than develop strategically ces internally, firms which practice symbiotic marketing . This shifts the firm from being primarily internally -oriented (partner with others with such s to gain functional . Second, the modes of symbiotic marketing lude strategic alliances, joint ventures, co However, forms of distribution strategy which employ mergers . Therefore, . . Since virtually all of the modes of symbiosis . There is a well lburn, & Rodgers, Pg. 47) body of research which focuses Lewis, 1990; Borys & Jamison, 1989; Contractor & 2 been These channel ts . -oriented - all forms -developed, relationships. Therefore, the analysis of in which they exist. Network analysis provides the researcher with the tools necessary for suc an analysis (Achrol, Reve, & Ster Hopkins 1992; Thorelli 1986). These comments point to the need to understand how firms or individuals can develop cooperative strategies to remain competitive of symbiotic marketing techniques and network analysis assists the researcher in understanding the underlying mechanism of symbiosis. Finally, the lack of marketing literature which focuses on of symbiotic relationships should be addressed since the phenomenon is quite prevalent in a number and variety of industries, both domestically and internationally framework should be developed to understand partnerships. Such a framework will be useful to both academicians and practitioners many examples of this trend towards symbiotic organizations in the business landscape, including (Park, 1996): • Corporate Networks Operations, an alliance between Hewlett Packard and Northern Telecom to manufacture mainframe computer systems • Agre Sense, a joint venture founded by Dow Corning Co. and Phillips Petroleum to develop and manufacture chemical pesticides • Biin, an alliance between IBM and Siemens established to develop specialized computer systems for mission-critical applications • Various consortia such as MCC, Sematech, Corporaton for Open System (COS), and Center for Advanced Television Studies (CATS) To achieve these goals, this paper will first, introduce and review the extant literature addressing channels of distribution framework. Second, the concept of symbiotic marketing will be introduced and dev advantages of using symbiotic marketing rather than, say, strategic alliances as a component for our framework will be addressed. The framework will be developed which builds on that introduced by prior researchers (Adler, 1966; Varadarajan, 19 developing a typology of possible “modes of symbiosis” avail and the identification and evaluation of symbiotic opportunities market segmentation discussed and e Fourth, the powerful concept of network analysis will be introduced this paper to fully develop the concept of network analysis managerial implications and applications of network analysis, not on its usefulness as a quantitative structural analysis tool relationships among networks of businesses or individuals within simply focusing on explaining and understanding the behavior of the two actors (or firms) which form a dyad by partnering, network analysis takes into account the influence of each and every actor on each side of the dyad. These organizational structure, its employees, suppliers, customers, and functional middlemen these actors have a significant impact on the form of the relationship between the firms based on the foundation provided by the review of extant literature, a model of symbiotic marketing’s usefulness as a strategic tool will be presented and justified hypotheses developed from the model will provide tested in future resea Journal of Management and Marketing Research Symbiotic Marketing, Page these business dyads must take into account the context n 1983; Anderson, Hakansson, & Johanson 1994; Iacobucci & . Strategic implementation provides the tools necessary to achieve this competitiveness the specific conceptualization . An integrative why and how firms enter into these types of . This will provide a basis from which to develop our 84). The framework will focus on able to contemporary businesses . Third, the general concept of xtant literature which is applicable to our study presented . It is not within the scope of . The focus will be on the qualitativ . Network analysis provides a richer perspective of examining organizations. other actors may include individual actors in each firm’s . It is hoped that the rch. 5 h . There are eloped. The . e, Rather than . Each of . Finally, MARKETING CHANNELS OVERVIEW It is important to review the various marketing channels available to a firm can make an informed decision to seek out and enter into a symbiotic relationship, it must first examine other alternatives. These alternatives to symbiosis are the other channels of distribution discussed below. However, the theoretical foundation for symbiotic marketing resides in network organization and strategic alliance literature streams which will also be presented Extant literature on marketing channels can be segmented into two streams, channel design and channel management (Rangan, Menezes, literature focuses on the structure of the channel of distribution and justifies the n marketing and functional intermediaries such as distributors, brokers, wholesalers, retailers, and insurance providers (Williamson, 1985) extensive, and historic, dating back to the semina intermediaries were first conceptualized (Shaw, 1912; Weld, 1916) provide an extensive literature review of this well management literature concentrate (Anderson & Narus, 1990), governance (Heide, 1994), and channel selection for new product introduction (Rangan, Menezes, A traditional marketing channel is one which independe some minor level of coordination, to deliver a product or service from the place of production to the consumer. Each member of the channel operates to maximize its own profit, even if it affects the overall profit of the channel negatively (Kotler, 1991) situation can be illustrated as “highly fragmented networks in which loosely aligned manufacturers, wholesalers, and retailers have bargained with each other at arm’s length, negotiated aggressively over terms of sale, and otherwise behaved autonomously (McCammon, 1970). This channel is characterized by arm’s length transactions, competition, and rivalry (Park 1996). Actors within the channel are not typically concerned with developing nor m relationships beyond those necessary to complete a transaction relationship that is forged simply to consummate the transaction is antagonistic (Astley, 1984) The structure of the traditional channel is hierarchical, i channel is motivated through a variety of market mechanisms both between the various levels of distribution and between the overall channel and the consumer (Etgar, 1976) mechanisms include price deals, types and assortments stocked on shelves and location of retail outlets. Although traditional marketing channels have traditionally provided an efficient and effective means of bringing a firm’s products/services to market, the uncooperative nature have given rise to some of the other hybrid structures described hereinafter A vertical marketing system (VMS), on the other hand, is a distribution channel in which producers, wholesalers, retailers, and other to deliver a specific product or service to the customer (Etgar, 1976) between traditional marketing channels and VMSs is that the VMS is controlled, to some extent, through some centralized mechanism strategies, as indicated below. VMSs are an important component to the global economy as indicated by the statistic that more than 60% of all consumer goods and services are marketed through some form of VMS (Michman & effectiveness in the marketplace by more sophisticated means than simply establishing ownership interests in various middlemen along the distribution channel (integration) Journal of Management and Marketing Research Symbiotic Marketing, Page & Maier, 1992). The channel design . The research in this area of traditional channels is rich, l works Shaw and Weld, where the functions of . There is little need to -known marketing area. The channel s on issues such as channel conflict and cooperation & Mairer, 1992). nt firms operate together, with . Perhaps more succinctly put, this . Moreover, the short n nature. Coordination in the traditional . Examples of such , levels of promotion, functional middlemen operate as an integrated entity . The chief difference . VMSs also differ significantly from vertical integration Sibley 1980). VMSs derive their power and 6 . Before a firm . eed for aintaining -term . ir inherent . . VMSs are, typically, comprised of firms within a single channel which derive synergistic returns when they combine their competencies and cooperate with each other three categories: corporate VMSs (Sherwin Williams), contractual VMSs (retailer cooperatives such as Associated Grocers’ and franchises), and administered VMSs (Proc review of the extant literature indicates that VMSs do possess intrinsic characteristics which can return operating efficiencies and economies of scale in distribution costs to the members of the VMS (Davidson, 1970; McCammon, 1965) franchises, provide the channel captain with some level of control over the other channel members through agency relationships (Bergen, Butta, channel member can command a prepo captain. Historically, the most influential or powerful member of the VMS (and the traditional channel) was the producer. An example of power commanded by the producer is Proctor and Gamble’s ‘control’ over its retailers display, promotion, and price policy issues even though the firm has no financial interest or direct control over these retailers allows it to govern its channel, solely through the size of its product assortment, breadth, and the market share the firm has established power in controlling the relationship with th However, this situation is changing proprietors and independent Coca Cola bottlers and distributors are closer to the customer than the producer. The information they gather, via scanner data and other collection devices and observing consumer shifts in preferences, is becoming increasingly strategically important to the producer. These retailers are becoming the key component along the value chain and commanding a significant level of power in their dealings with the producers Complete vertical integration, either forward or backward, is an extreme, special case of the more flexible phenomena of VMSs as the “combination, under single ownership, of two or more stages of production or distribution (or both) that are usually separate (Buzzell, 1983) Ford Motor Company’s development, the firm owned and act along the supply chain necessary to manufacture its automobiles vertical integration from the other forms of distribution is intra along the distribution channel are actually integrated financially and managerial advantages and disadvantages to integration. Advantages of complete vertical integration include: reduced transaction costs through integration economies achieved through eliminating steps and duplicated overhead, predictable flow of supplies and raw materials, improved coordination which reduces inventory carrying costs, improved marketing intelligence, and raised entry barriers. Disadvantages, on the other hand, include significant to establish and maintain the integrated organization, reduced flexibility to react quickly to changes in the market, the potential for perpetuating obsolete processes, and less defined market focus (Buzzell, 1983; Harrigan, 1984) Horizontal marketing systems (HMS) have received, perhaps, the least attention from marketing researchers, traditionally, although they are attracting research focus at an increasing rate. The HMS is most similar to the concept of symbiotic market article. Generic business formations which comprise HMSs include partnerships, strategic alliances, and joint ventures between firms operating in different markets two or more, independent firms combining th Journal of Management and Marketing Research Symbiotic Marketing, Page . VMSs are typically classified into tor and Gamble) . Moreover, several forms of VMSs, such as & Waler, 1992). Interestingly, any one nderance of the power or establish itself as the channel . P & G has significant influence on its retailers concerning . P & G has achieved this significant market power, which . This leaves upstream channel members with little channel e manufacturer (Bergen, Dutta, & Walker 1992) . Powerful retailers such as multi-franchise fast . . Traditional economic theory defines vertical integ . For example, during the formative years of ively managed virtually every stage . The key issue that distinguishes -channel ownership . capital requirements . ing, as defined within this . A HMS is defined as eir resources to take advantage of a market 7 . A . -food ration . The firms There are both impact of the more restrictive concepts of alliances, partnerships, and business networks on the marketing process (Anderson, Hakansson, 1990; Iacobucci & Hopkins, 1992) of literature addressing strategic alliances in management scie Even in the extant, extensive management literature on alliances, there researchers have established a comprehensive framework (such as symbiotic relationships) for understanding business relationships between non Even though interest by researchers and practitioners alike in explaining symbiotic relationships appears to be a relatively contemporary occurrence, such relationships have been prevalent in international markets for centuries traced back many centuries, possessed many of the characteristics of symbiotic relati discussed earlier (Hall & Hall, 1985). The original zaibatsu were large, inter complexes. These complexes consisted of many large corporations representing entire industries within the Japanese economy. The “nerve center” of the co banking institution. Although primarily vertically of members representing not only direct intermediaries (such as suppliers and retailers) but also functional intermediaries (such as insurance organizations) is an outgrowth of the original ancient zaibatsu War II to reduce Japan’s potential for establishing itself as strong military threat also a complex matrix of organizations, associated with one another via informal alliance agreements and other instruments, to achieve market efficiency and power (Ferguson, 1990) This definition appears to be conceptually similar to that pr The Japanese example of cooperation among both competitive and non provides an example of how competing businesses can cooperate to expand their market power and growth potential. Furthermore, the organizations were organized around a vertical channel, primarily that a firm expand its vision beyond its current business horizon opportunities, or synergistic partners environment, firms can achieve leverage in the market which was previously unachievable TRADITIONAL AND NETWORK PERSPECTIVES OF THE FIRM Network analysis has been applied to a varie To understand its application as a framework to explain successful symbiotic relationships, an overview of the topic is in order. thorough review of network analysis and all of its applications to organizational issues. This section provides a backdrop for the rationale presented later in this research organizations are evolving towards network models due to shortcomings in traditional organizational forms. A review of the extant literature indicates that there are at least four prevailing theoretical frameworks which attempt to explain inter perspectives. These frameworks are transactions costs theory, agenc contracting, and the resource-dependence model managing the inherent conflict between the principal and the agent in of a rel 1980; Jensen & Mecking, 1976). manufacturers and independent distributors of their product understanding symbiotic relationships is questionable due to its underlying focus on the conflict Journal of Management and Marketing Research Symbiotic Marketing, Page & Johanson, 1994; Achrol, 1991; Heide & John, . There is, however, a relatively well-defined and deep stream nce and organizational behavior is a lack of -competitive organizations. . The Japanese zaibatsu, whose origin can be -woven industrial mplex was typically a financial or a -focused, the complex was typically comprised . Similar to the zaibatsu, the keiretsu . The zaibatsu were dissolved following . oposed for a symbiotic relationship -competitive firms example can be expanded upon. The Japanese . Symbiotic marketing requires . By identifying market , via constantly scanning one’s competitive and macro ty of organizational and interpersonal issues However, it is beyond the scope of this paper to provide a -firm relationships, from varying y theory, relational . Agency theory is based on understanding and ationship (Fama, For instance, there is an agency relationship between . Agency theory’s applicability to 10 . evidence that onships World The keiretsu is . . - . . . That is, between the parties. The basis for symbiotic relationships is based more on cooperation and collaboration rather than confrontation the costs associated with monitoring this principal importance than the long-term market potential of the symbiotic relationship monitoring costs are important factors in developing symbiotic relationships, however, focusing on controlling costs may introduce a condensed time horizon perspective i the relationship. This may encourage the actors to ignore or reduce the value of the longer synergistic market potential that may exist through the symbiotic relationship The second framework frequently applied to explaining transaction cost theory. The underlying rationale behind transaction cost theory is that the interactions between firms and the manner in which the relationship is controlled can be explained solely by the form of the transactio indicates that transactions can differ on four chief dimensions specificity (degree to which assets are allocated to facilitating transactions with a particular partner), uncertainty associated with transaction definition and performance (in the product market as well as between the partners), and limited frequency of transactions (Sheth, 1992) Transaction cost theory primarily applies to understanding vertical integration gove One of its chief uses is to evaluate the “make or buy” decision but it can also be used to evaluate the benefit of utilizing independent distribution channels (brokers, agents, value over a direct channel of distribution (pe major criticisms of transaction cost theory is that it fails to take into account the social context in which transactions are “embedded” (Heide, 1994) significant advantage over transaction cost theory in understanding inter because it explicitly examines the social consequences and interrelationships of these alliances The third framework, resource (Heide, 1994). The resource-dependence framework is based on two concepts organizations are social actors and inter examining inter-organizational dependence and constra exists as a result of one of the underlying assumptions of resource are not completely self-sufficient (Heide, 1994) actors which have key resources necessary to succeed, thereby, becoming dependent upon these other firms. Second, apprehension experienced by both parties can be explained by a lack of trust (i.e. uncertainty) between the parties for key resources, the constant flow of these resources is uncertain information about each other, the issue of control of the relationship would be of minimal concern (Sheth, 1992). However, since the probability of gai actors seek to establish and control relationships, through formal and informal agreements, that reduce uncertainty and dependence (Heide, 1994) organizational dyads is focused on a leve relationships, as examined by network analysis, provide a much more robust and comprehensive understanding of dyadic relationships The fourth traditional framework for examining inter contracting theory. This theory was developed by Macneil, whose framework was grounded in non-contractual business relationships (Heide, 1994) a distinct difference between “discrete” and “relationa characterized as exchange between actors which is completely independent of past and future Journal of Management and Marketing Research Symbiotic Marketing, Page . Furthermore, agency theory also focuses on minimizing -agent relationship, which may be of less . Admittedly, nto the evaluation of . inter-firm relationships is n (Williamson, 1985). Transaction cost economics . These dimensions are: asset - rsonal selling and direct mail) (Ragan, 1992) . Therefore, network analysis appears to have a -firm relationships -dependence theory is grounded in social exchange theory . First, -organizational relationships can be explained by ints (Sheth, 1992). This dependence -dependence theory . Therefore, firms must seek out other firms or . Since firms are depending upon other, independent . If both parties had perfect ning perfect information is low, . Again, this framework for examining l of trust among the actors. Symbiotic marketing . -firm relationships i . The basis of the framework is that there is l” exchange. Discrete exchange is 11 -term, . rnance issues. added resellers) . One of the . --that firms actors s relational circumstances (Heide, 1994). This is the traditional economic concept of exchange transfer of ownership from one actor there is no guarantee that any future transactions will take place be considered discrete transactions consideration of both a historical component and a social context (Heide, 1994) takes place through some form of social norm that has been established transaction concept is grounded in the concept of a clan mechanism clan adopt the norms established by the clan secondary to the goals of the clan These traditional perspectives examine inter only attempt to explain the dyad formed by two firms while not fully taking into account the effect of other potential actors’ influence on the dyad begins with the assumption that actors, regardless of whether they are instit operate within a complex domain of social relationships network theory developed specifically to understand structures of relationships in networks and dyads (Knoke & Kuklinski, 1982) actors, or understand the individual dyad, without taking into account the “relational context” under which the relationship operates (Galaskiewicz, 1996). Network analysis considers both the structure and processes of groups these groups. Relationships among the members of the network are the unit of analysis rather than the actors themselves. Furthermore, network analysis differs from tradition the underlying assumptions concerning channel conflict and potential for cooperation traditional “market” alliance, channel conflict is expected it is one of the key issues addressed during p contrast, assumes cooperation as the basis of the alliance formation probable that the result of a network analysis of potential symbiotic partners will result in determining which firms should not be potential partners rather than those who may be potential candidates (Hakansson, 1996). Other key assumptions that underlie network analysis are (adapted from Galaskiewicz, 1996): • Actors and their behaviors are interdependent rather than aut a symbiotic relationship dyad does not operate within a vacuum interconnected relationships with its employees, suppliers, and other constituencies must be considered. Additionally, the traditionally applied applied to symbiotic relationships since these are of a more complex nature. • “The relationships that actors have with others are channels or conduits resources flow (pp. 20).” • Each actor’s position in the network determines its potential for developing opportunities and limits its possible actions. The statistical network model contains three distinct est Hopkins, 1992). The first of these are the propensity for actors to have relational ties and the intensity of such ties concept of “trust” can be examined in a network sense by determining the number of fellow actors a particular actor trusts (expansiveness) actors (intensity). The second set parameters estimate the tendency of actors to receive socio Finally, set of parameters are the “reciprocity” estimates ( Journal of Management and Marketing Research Symbiotic Marketing, Page to another. Both actors remain completely independent and . Common retail transactions can . Relational exchange, on the other hand, transpires . . The relational . Individual members of the . Therefore, the utility of the individual becomes . -firm relationships in virtual isolation . Network analysis, on the other hand, utions or individuals, . Network theory is based on social . It is not possible to interpret the relationship between the . It also explains how behaviors are affected by the structure of al approaches in and a purposeful attempt at minimizing re-alliance negotiations. Network analysis, in . Therefore, it is more onomous. That is, one partner in . The partner’s term, dyad, may be inappropriate as through which imable parameters (Iacobucci & expansiveness parameters (α) which indicates the . For instance, the and the extent to which this actor trusts the other of parameters measure what is termed “popularity” ( -metric choices from other actors ρ) which measure the degree to which 12 --simply the through The transaction . They . In the β). These . of symbiosis classified as new joint v represents one end of the symbiotic continuum represented by the use of an agent or broker during the marketing process effect on the organization when using a broker and the relationship is short However, the use of a broker does provide a key resource to the firm (in bringing together the buyer and the seller) and is, therefore, a form of symbiosis. Based on this origin framework proposed by Adler, let us propose that the New Joint Ventures modes of symbiosis originally identified be classified as and Facilities Sharing, Licensing, and Franchising as descriptive labels appear to be more illustrative classifications based on the underlying rationale behind forming such relationships and, primarily, developed to address narrow or specific market opportunities tactical modes are no less important than the strategic modes symbiotic modes are less often used, which may not be true in today’s marketplace frequently used, and becoming increasingly import agents are more commonly called value franchise systems are included as a mode of tactical symbiosis marketing system) sales account significantly to the marketing landscape There are a few issues with Adlers typology with which the currently proposed framework will address. First, one must ques acquisitions as a mode of symbiosis (Varadarajan, 1986) distinct original firms lose their independence Although the outcome of a merger would obviously alter the organization significantly, as required under Tactical Symbiotic Modes, both of the original participants would be stripped of their independence and eventually, their distinctive core competencies integration is included by Adler in his Facilities Sharing, Licensing, and Franchising group Vertical integration is not considered a component of the proposed Tactical Symbiotic Group for the same justifications just cited. instance, the symbiotic approach would suggest that the firm needing manufacturing expertise negotiate a manufacturing agreement with a plant which is operating at less than capacity end would be the same but the means are quite different the individual modes of symbiosis identified in the extant literature and how they have been classified by other researchers. In order to examine symbiotic relationships in a ne modes of symbiosis must be oriented in such a way that certain assumptions about how actors in a particular classification may behave with one another interact with one another based upon classifies modes of symbiosis based on the whether the actors participating in the alliance are typically competitors (competing for the same customers) or non classification reasoning is based on that utilized in developing a typology for strategic alliances (Sheth, 1992). However, bear in mind that not all alliances are strategic, in nature modes can be examined in two dimensions, purpose and parties, and further eva alliance on two levels of these dimensions, strategic vs. operations, and competitors vs. non competitors. Journal of Management and Marketing Research Symbiotic Marketing, Page entures result in a completely new organization . The other boundary of the continuum is . There is virtually no -lived and transient Strategic Symbiotic Modes Tactical Symbiotic Modes. . Tactical modes are more short-term in temporal character . However, these . Adler indicates that these tactical ant, in technology “vertical” markets -added resellers (VARs). Perhaps, more importantly, . Since franchise (vertical for 13% of all retail sales, tactical modes contribute (Boone and Kurtz, 1995; Pg. 491). tion Adler’s inclusion of survivors of mergers and . Once firms are acquired or merged, the . This violates the spirit of symbiotic marketing . Second, c Rather than acquire a firm for its manufacturing capabilities, for . Table 1 (See Appendix C twork framework, the typology of . Our typology proposes that actors their competitive orientation. That is, our typology -competitors. This type of luates each 15 . This . These . Agents are . These . omplete vertical . . The ) summarizes . Symbiotic - Sheth’s conceptual model indicates that based on these alliance characteristics, there are four alliance types. First, cartels competitors to address operational issues rather than strategic issues. The most familiar cartels are found in the petroleum industry, such as OPEC. Due to anti-trust regulations, cartels are not typically found in the US competitive alliances which are focused on operational or tactical issues are represented by cooperatives. Traditional agricultural cooperatives such as those that represen industries are probably the oldest example of this type of alliance alliances are becoming more common with contemporary progressive businesses these alliances include co-marketing alliances such as film co-marketing campaigns and Intel’s Pentium microprocessor co computer system and software manufacturers firms which remain competitors beyo Competitive alliances have become an useful tool for entering foreign markets and developing a global presence. One obvious example of competitive alliances is the joint automobile manufacturing agreement between Toyota and General Motors are formed by firms which do not compete with one another directly and are formed for strategic reasons. This is perhaps the most illustrative type of alliance, in a symbiotic s partners typically become heavily involved with one another’s operations including production, marketing, and financing. The joint venture is the most popular form of collaborative alliance Chevron Chemical and Ecogen, Inc. formed an a Ecogen is a small agricultural biotechnical firm Corp.) develops agricultural chemicals, specializing in bio product lines are complementary rather than substitutes Chevron’s well-established channels of distribution Ecogen gains access to Chevron’s extensive distribution network and Chevron gai complementary product to broaden its product line (Chan and Heide, 1993) Using the alliance-based matrix as a means for developing a typology of symbiosis has significant drawbacks. The most restrictive of these drawbacks is the static natur classification scheme. A firm may be involved in both competitive and collaborative symbiotic modes, simultaneously. This proposed matrix of symbiosis builds on Sheth’s theoretical concept of purpose of the alliance formation degree of symbiosis---to evaluate modes of alliances classifying alliances based on their competitive orientation, as mentioned earlier framework in mind, it is proposed tha of organization which is most effective in symbiotic marketing typology of network organizations will be more applicable to symbiotic marketing. Building on Sheth’s framework, next is a proposed typology of network organizations, developed by Achrol (Achrol, 1997). • Internal Market Networks-The guiding principle for this form of network is the dissolution of the internal firm hierarchy within the conventional firm ( replacing them with direct exchange networks among organizational units mediated by some level of market process. All organizational units are reduced to individual profit centers Although this may seem like some form of alliance among so-called intrapreneurs profitable, firms will spin-off such units and the network will evolve into vertical market Journal of Management and Marketing Research Symbiotic Marketing, Page are developed through formal or informal agreements among . These organizations are formed to address tactical . Second, t cheese and dairy . However, non the recent McDonalds and Walt Disney -marketing agreements with . Third, competitive alliances are between rival nd the alliance and enter the alliance for strategic reasons . Finally, collaborative alliances ense lliance which illustrates this form of alliance . Chevron Chemical (a subsidiary of Chevron -pesticide products. The two firm’s . The alliance permitted Ecogen to utilize . The alliance returns benefits to both firms: . . However, the present study offers a new dimension . This was done due to the difficulty in . t network organizations offer the best example of the type . Therefore, it is proposed that a as far as reasonably possible), laissez-faire management form, it is actually an . As profit centers become more efficient and 16 non- -competitive . Examples of . . Collaborating . . ns a e of the --- With this . networks. Asea Brown Boveri is such a way that it is actually comprised of relatively autonomous internal enterprise units, operating as independent profit centers (Snow, 1997) • Vertical market networks (marketing channel but a functional alliance, in the sense of a vertical marketing system primary “integrator” or “hub”, whether it or the reseller. It is defined as the “organizational set of direct supply or distribution relationships organized around a focal organization best positioned to monitor and cope with the critical contingencies faced by the network participants in a particular market.” An example of this type of business network include Sun Microsystem’s use of alliances with chip manufacturers, distribution firms, and service providers so that the firm can concentrate its resources on research and development of advanced computer systems frequently cited as an example of this type of network (Walker, 1997) integrator of the network. The firm focuses on research and development, design, and marketing, while depending upon its network partners for the rema functions such as manufacturing and distribution • Intermarket or concentric networks arrangements between firms which operate in a variety of unrelated market segments The primary example of this form of network organization is the Japanese keiretsu or the Korean chaebol, as described earlier network is driven by the interdependence and reciprocity that exists among the members of the network, as evidenced by cross resources such as common board of directors. • Opportunity Networks-This highly flexible form of a network is much closer to the market than to the typical organizational hierarchy specializing in various products, technologies, or services that assemble, disassemble, and reassemble, in temporary alignments, around particular projects or problems.” (Achrol, 1997, pp. 298). Achrol (1997) describes this form o within the network are organized around a central information and exchange firm which operates as a clearinghouse for information and regulates the individual actions of the firms within the network. the collection and dissemination of strategic marketing information, and coordinates market-oriented activities mechanisms oriented to and driven by consume These opportunity networks truly embody the concept of symbiotic marketing center of the opportunity network is a central marketing office intelligence by measuring changes in customer needs an by fielding customer inquiries. This information is maintained in an automated system which is supported by an expert system which distributes the information to the proper parties side of the network maintains close ties with a variety of specialized suppliers and vendors, continually updating information concerning inventory levels, pricing, product design capabilities, product specifications, etc the vendor/supplier capabilities can be negotiated quickly due to the constant upgrading the system knowledge. Although this form of network is continuing to evolve towards formation, there are several examples of firms which utilize the concept companies which specialize in the use of a variety of marketing channels to distribute consumer Journal of Management and Marketing Research Symbiotic Marketing, Page an example of this type of network. The firm is structured in . networks)-This is not a true strategic alliance . There is typically a is the manufacturer, the marketer, the research firm, . Nike is also . Nike functions as the ining essential business . -This form of network is characterized by . The relationship among the firms in this form of -stock ownership and utilization of common . It is defined as a “set of firms f network in detail. The alliances The firm serves as a clearinghouse for information, . The firm employs active environmental scanning and adaptive rs and markets. . This office monitors marketing d wants, economic shifts and trends, and . Matches between the marketing intelligence results and . First, are the direct marketing 17 . manages . The nerve . The other References Adler, Lee (1966). Symbiotic Marketing, Anderson, J., Hakansson, H., & Johanson, J. (1994). business network context, Journal of ----- and Narus, J. (1990). A model of distributor firm and manufacturer firm working partnerships, Journal of Marketing ----- (1991). Partnering as a focused market s 113. Archrol, R. (1991). 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Appendix A Journal of Management and Marketing Research Symbiotic Marketing, Page 25 Appendix B Journal of Management and Marketing Research Symbiotic Marketing, Page 26 Appendix C Facilities Sharing, Licensing, and Franchising Licensing Franchising Cooperatives or Consortium Administered Vertical Integration Traditional Marketing Channels Import/Export Agreements *Based on modes of symbiosis outlined in Adler (1966) and Varadarajan (1986) Appendix D Journal of Management and Marketing Research Symbiotic Marketing, Page Joint Ventures Equity Position Technology Exchange Joint Ventures Joint Product Development Joint Technology Development Co-Marketing Agreements Manufacturing Agreements Shared Distribution Joint Sales Organization Joint Service Department Original Modes of Symbiosis* Table 1 27