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The role of marketing in supply chain management

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DOI: 10.1108/09600030010351462

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The role of marketing in The role of

marketing in
supply chain management SCM
Soonhong Min and John T. Mentzer
Department of Marketing, Logistics and Transportation, 765
The University of Tennessee, Knoxville, Tennessee, USA
Received May 1999
Keywords Marketing concept, Market orientation, Relationship marketing, Revised October 1999,
Supply chain management April 2000
Abstract The concept of supply chain management (SCM) started in the logistics literature,
and logistics has continued to have a significant impact on the concept. This study, however,
proposes that the concepts of the marketing concept, a market orientation, relationship
marketing, and SCM are not separate. Rather they are inextricably intertwined. The main
purpose of this study is to highlight the role of marketing in the implementation of SCM by
suggesting cause-and-effect relationships. Research propositions are presented and future
empirical studies are called for to test the cause-and-effect relationships suggested in an
integrative model.

Introduction
Supply chain management (SCM) has been conceptualized with two different
components ± an integrative business philosophy and implementation actions ±
to manage the total flow of a distribution channel from the supplier to the ultimate
user (see Ellram and Cooper, 1990; Cooper and Ellram, 1993; Cooper et al., 1997a).
SCM extends the concept of functional integration beyond a firm to all the firms in
the supply chain and, thus, each member of a supply chain helps each other
improve the competitiveness of the chain (Ellram and Cooper, 1990). Cooper and
Ellram (1993) suggested three major objectives of implementing SCM:
(1) reduce inventory investment in the chain;
(2) increase customer service through increased stock availability and
reduced order cycle time; and
(3) help build competitive advantage for the channel to create customer
value.
The concept of SCM originated in the logistics literature (Jones and Riley, 1985;
Bowersox et al., 1985; Christopher, 1994) and logistics has continued to have a
significant impact on the concept (Bechtel and Jayaram, 1997). The strong
influence of logistics in the process of conceptualizing SCM seems to be due to
the weight given to inventory reduction and stock availability as objectives of
SCM implementation. The purpose of this paper, however, is to highlight the
role of marketing in the implementation of SCM. The approach taken in this
paper is to review several concepts that have received considerable attention
(Barksdale and Darden, 1971; Borch, 1957; Churchill and Peter, 1995; GroÈnroos, International Journal of Physical
Distribution & Logistics
1995; Gundlach and Murphy, 1993; Jaworski and Kohli, 1993; Kohli and Management, Vol. 30 No. 9, 2000,
pp. 765-787. # MCB University
Jaworski, 1990; Kotler, 1972; McKitterick, 1957; McNamara, 1972) in the Press, 0960-0035
IJPDLM discipline of marketing ± the marketing concept, a market orientation, and
30,9 relationship marketing ± to explore the key linkages between marketing
management and SCM.
First, definitions of marketing and its core concepts are reviewed. Second, the
marketing concept, a market orientation, and their influences on the
management of a firm and a supply chain are described. Third, an explanation
766 of how relationship marketing affects SCM, as well as the management of a firm,
is provided. Fourth, an integrated framework of the relationships between the
marketing concept, a market orientation, relationship marketing, and SCM is
proposed. Fifth, the implications of this framework are presented. Research
propositions are provided throughout.

Definition of marketing
Kotler (1972) proposed the essence of marketing is the transaction (exchange of
values actually made between parties) and, thus, marketing is specifically
concerned with how transactions are created, stimulated, facilitated, and
valued. According to the American Marketing Association (1985), marketing is
``the process of planning and executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to create exchanges that satisfy
individual and organizational goals''. In other words, the objective of marketing
is creating exchanges, and the output of it is customer satisfaction.
Kotler (1997) and Churchill and Peter (1995) defined an exchange as a
process in which two or more parties voluntarily provide something of value to
each other. According to Kotler (1997), a transaction takes place when an
agreement is reached, whereas exchange is the process to produce an
agreement. Exchange takes place within a market, defined as a collection of
buyers and sellers that interact (Pindyck and Rubinfeld, 1992). In this context,
Churchill and Peter (1995) proposed various parties are involved in the
marketing effort: firms that produce goods or services, resellers of goods and
services (such as stores), and customers or clients.

The marketing concept and a market orientation

The marketing concept is essentially a business philosophy (cf. Barksdale and
Darden, 1971; McNamara, 1972), and the philosophical foundation of a market
orientation (Jaworski and Kohli, 1993). Kohli and Jaworski (1990) conceptualized
a market orientation as the implementation of the marketing concept.

The marketing concept

Based on previous conceptualizations of market orientation offered in Table I,
Kohli and Jaworski (1990) argued the marketing concept consists of three
pillars:
(1) customer focus;
(2) coordinated marketing; and
(3) profitability.
Felton (1959, p. 55) A corporate state of mind that insists on the integration and The role of
coordination of all the marketing functions which, in turn, are marketing in
melted with all other corporate functions, for the basic purpose of
producing maximum long-range corporate profits
SCM
King (1965) Concerned with profits and return on investment as well as with
consumer orientation
McCarthy and An organization aims all its efforts at satisfying its customers at a 767
Perreault (1984) profit under the marketing concept
Drucker (1954) Customer satisfaction lies at the center of the marketing concept Table I.
and, thus, profit is not the objective but the reward for creating a Conceptualizations of
satisfied customer the marketing concept

The marketing concept has strong influences on the management of a firm,

inter-firm relationships, and the supply chain. The marketing concept, as a
business philosophy, guides firms to look for customer satisfaction at a profit
in a coordinated manner. Webster (1992) proposed that marketing as a culture
means a basic set of values and beliefs about the importance of the customer
that guide the firm:
P1: The marketing concept provides the philosophical foundation of
individuals' activities or behaviors (called a market orientation) within
a firm.
Cravens (1995) argued the customer is at the center of the relationship-
marketing paradigm. In other words:
P2: The marketing concept, as a business philosophy, guides a firm's
behaviors (called relationship marketing) to develop, maintain, and
enhance inter-firm relationships to satisfy customers.
The marketing concept is also a necessary component for implementing SCM.
Authors (e.g. Cooper et al., 1997a; Lambert et al., 1996) suggested one of the
components of SCM implementation is partners with compatible corporate
philosophies, at least for key relationships. The marketing concept (i.e. the
philosophical foundation of a firm's activities) should be the compatible supply
chain partners' philosophy, so all partners in the supply chain strive to satisfy
customers at a profit through interfunctional coordination within and among
the supply chain partners. Thus:
P3: Under compatible marketing philosophies, supply chain partners
become more willing to be efficient (i.e. cost reduction) and effective
(i.e. customer service) toward a common goal (i.e., customer satisfaction
at a profit).

A market orientation
Based on definitions provided in Table II, Slater and Narver (1994) argued their
definition of a market orientation is commensurable with Kohli and Jaworski
IJPDLM Kohli and Jaworski The implementation of the marketing concept and that it is
30,9 (1990) composed of three sets of organization-wide activities: generation of
market intelligence pertaining to current and future customer needs;
dissemination of the intelligence across departments; and
responsiveness to market intelligence
Jaworski and Kohli Focuses on specific behaviors and, therefore, facilitates
768 (1993) operationalizing the market orientation construct
Narver and Slater An organizational culture in which all employees are committed to
(1990) the continuous creation of superior value for customers through
three behavioral components: customer orientation, competitor
orientation, and interfunctional coordination, and where culture is
defined as the pattern of shared values and beliefs that help
individuals understand organizational functioning and, thus,
provide them with norms for behavior in the organization
(Deshpande and Webster, 1989)
Table II.
Conceptualizations of a Deshpande et al. A set of attitudes or beliefs that should be pervasive throughout
market orientation (1993) the company

(1990) and Jaworski and Kohli (1993) because the measures of market
orientation consist of three behavioral components, each of which involves
market intelligence generation, dissemination, and managerial action.
Regardless of Slater and Narver's (1994) commensurability argument, it is
proposed that the different conceptualizations of a market orientation as a
culture and a set of behaviors are not identical, and the definition of a market
orientation as an organizational culture has a critical weakness because it
contains circular logic. Deshpande and Webster (1989) defined the marketing
concept as referring to a distinct organizational culture, a fundamental shared
set of beliefs and values that put the customer at the center of the firm's thinking
about strategy and operations. Accepting Deshpande and Webster's (1989)
definition of the marketing concept as an organizational culture, Deshpande et
al. (1993) and Slater and Narver (1995) interpreted a market orientation also as
an organizational culture. As such, if we take the conceptualization of a market
orientation as an organizational culture, we would conceptualize the marketing
concept as synonymous to market orientation. Thus, we propose to adopt Kohli
and Jaworski's (1990) conceptualization of market orientation as the
implementation of the marketing concept (culture).
A conceptual model of the impacts of a market orientation on a firm, inter-
firm relationships, and a supply chain is presented in Figure 1.
Management of a firm. A market orientation provides a unifying focus for
the efforts and projects of individuals and departments within a firm (Kohli and
Jaworski, 1990). Slater and Narver (1995) argued a market orientation is
valuable because it focuses the firm on:
. continuously collecting information about target-customers' needs and
competitors' capabilities; and
. using this information continuously to create superior customer value.
 The role of
marketing in
SCM

769

Figure 1.
The impacts of a market
orientation

A market orientation encourages interfunctional coordination that is a firm's

coordinated efforts, involving more than the marketing department, to create
superior value for buyers (cf. Narver and Slater, 1990; Day, 1994). This is so
because customer satisfaction, the ultimate goal of a market orientation and the
evaluation of the created customer value by a firm, is affected by many factors
IJPDLM that lie either inside or outside the scope of the marketing department (Kotler,
30,9 1997). For example, delivery reliability, invoice accuracy, invoice clarity, and
personnel are major factors that determine customer satisfaction.
A market orientation requires a firm to redefine the responsibilities of each
function within a firm, especially those of marketing. Narver and Slater (1990)
argued a seller's creation of value for buyers is analogous to a symphony
770 orchestra in which the contribution of each subgroup is tailored and integrated
by a conductor. Thus, in addition to traditional marketing activities, marketing
should perform a guiding and coordinating role to make sure the rest of the
company delivers on customers' expectations (Kotler, 1997). In other words:
P4: A market orientation becomes instrumental in coordinating the activities
of all departments, with the marketing function playing a pivotal role in
the success of the firm because everyone is involved in marketing
activities.
The responsibilities of functions, other than marketing, are also broadly
redefined so that everyone within the firm becomes a marketer either on a full-
time or part-time basis (Gummensson, 1996) ± because any individual in any
function in a firm can potentially contribute to value creation for customers
(Porter, 1985; Webster, 1988).
As inter-functionally coordinated actions prevail within a firm and the
responsibilities of each function are redefined, the boundaries between each
function become blurred. Since the marketing concept is concerned with
company-wide efforts (i.e. a market orientation), marketing is not interpreted as
a separate management function but rather the whole business as seen from the
customer's point of view (Drucker, 1954; Levitt, 1960; McKitterick, 1957). A
form of interfunctional coordination is the organization of cross-functional
teams across functional silos with experts from different functional areas
working together toward common goals (cf. Kahn and Mentzer, 1998). At the
extreme, the marketing function could disappear as a distinct management
function and specialty (Day, 1992). Thus, Kotler (1997) proposed a firm should
consider managing a set of fundamental business processes, rather than
independent functional departments for more efficient and effective response to
fulfill customer satisfaction. Given the discussion above:
P5: A market orientation forces a firm to restructure its organizational
system.
Jaworski and Kohli (1993) found a firm's financial performance (return on
investment (ROI) and return on assets (ROA)) and employee-related
performance (organizational commitment and esprit de corps) are positively
related to a firm's degree of market orientation. Narver and Slater (1990) and
Slater and Narver (1994) also found a positive relationship between a firm's
market orientation and its sales growth and new product success. Deshpande et
al. (1993) found a positive relationship between a firm's market orientation and The role of
its perceived performance in terms of profitability, firm size, market share, and marketing in
growth rate relative to competitors. As such: SCM
P6: A market orientation positively contributes to a firm's business
performance.
Management of inter-firm relationships. The influences of a market orientation 771
do not stop within the boundaries of the firm, but expand to inter-firm
relationships with consumers, customers, suppliers, and distributors. Thus, a
market orientation provides an environment in which relationship marketing is
nurtured.
Nurturing relationship marketing through a market orientation starts with
developing commitment, trust, and cooperative norms and reduced conflict
between firms. Siguaw et al. (1998) found a supplier's market orientation
affects its distributor's commitment to the relationship and the distributor's
market orientation has a direct effect on its trust and perception of cooperative
norms. Moorman et al. (1993) defined commitment as an enduring desire to
maintain a valued relationship. Because a market orientation requires a supplier
to devote considerable resources to satisfying distributors' needs, the distributor
commits to maintain the relationship with such a devoted supplier (Siguaw et
al., 1998).
Trust is a willingness to rely on an exchange partner in whom one has
confidence (Moorman et al., 1993). Siguaw et al. (1998) argued a supplier's
market orientation contributes to distributor trust through:
. voluntary information and advantage sharing with the distributor;
. favorable motives and intentions passed on to the distributor; and
. open communications and responsiveness to customer needs.
Cooperative norms reflect the belief that both parties in a relationship must
combine their efforts and cooperate to be successful (Cannon and Perreault,
1997). Macneil (1978) argued cooperative norms function as a conflict-resolving
mechanism.
If a supplier is market oriented and working to satisfy a distributor's needs,
the distributor is likely to perceive cooperative norms in the dyadic relationship
(both parties are working toward the mutual goal of need satisfaction) (Siguaw
et al., 1998).
Conflict is defined as the level of disagreement in the channel relationship
that impedes, blocks, or frustrates another firm's goal pursuit (Brown and Day,
1981; Thomas, 1976). Dwyer et al. (1987) and Kumar (1996) proposed firms
should select partners who possess similar values (e.g. a market orientation) to
reduce conflict potential. According to several authors (e.g. Berry, 1995; Sheth
and Parvatiyar, 1995; GroÈnroos, 1995), relationship variables such as
commitment, trust, cooperative norms, and reduced conflict are prerequisites of
relationship marketing. Hence:
IJPDLM P7: A market orientation influences the implementation of relationship
30,9 marketing by helping firms build commitment, trust, cooperative
norms, and reduced conflict, all of which are prerequisites of
relationship marketing.
A market orientation ± by its nature ± requires close inter-firm relationships
772 that are the sources of information outside the firm. Kohli and Jaworski (1990)
claimed the market, which is the unit of analysis of a market orientation,
includes end users and distributors as well as exogenous forces that affect their
needs and preferences. Therefore, a firm should have intimate relationships
with its customers to closely monitor their current and future needs and to
make sure that customers obtain what they want from the firm. In addition, the
firm should have close relationships with distributors, suppliers, and any other
participants in the market to identify influences of those market participants on
customers' needs and preferences.
Day (1991) claimed that organizational learning needs close and extensive
relationships with its customers, suppliers, and other key constituencies. Other
researchers (e.g. Kanter, 1989; Webster, 1992) also proposed learning from others,
includes benchmarking, forming joint ventures, networking, developing strategic
alliances, and working with lead customers to recognize strong needs before the
rest of the market and to find solutions to those needs. Organizational learning
consists of information acquisition, dissemination, and shared interpretation of
information across a firm (Sinkula, 1994). According to Slater and Narver (1995),
a market orientation and organizational learning are inseparable.
Organizational learning does not stop within the boundary of a firm, but
expands outside the firm. Lei et al. (1997) stated: ``All strategic alliances may be
thought of as co-alignments between two or more firms in which the partners
seek to learn and acquire from each other, products, skills, technologies, and
knowledge that are not available to other competitors.'' As such, organizational
learning is practiced within a firm and, then, expanded outside a firm. Thus,
organizational learning cannot be separated from close relationships with other
firms and, therefore:
P8: A market orientation directs a firm to move toward relationship
marketing to deal with the increasing complexity of building and
learning new sources of competitive advantage beyond the firm.
Supply chain management. A market orientation plays a pivotal role in
implementing SCM. First of all, a firm's market orientation produces and stores
valuable market information that is needed in the process of building,
maintaining, and enhancing supply chain relationships. For example, since a
firm has information about customers, suppliers, competitors, sociopolitical
environments, and technological trends, it could answer such questions as
which supply chain best serves its customers' needs, with which firms it should
work to implement SCM, what should be the objectives to be pursued in SCM,
and so on. In addition, Cooper et al. (1997a) suggested one of the components of
the implementation of SCM is information sharing through two-way The role of
communication between partners within a supply chain. A market orientation marketing in
should indirectly contribute to information sharing within a supply chain SCM
because market information obtained by individual partners could serve as the
basis of shared information among the supply chain partners.
Information sharing among the partners in a supply chain may simply be
part of practicing organizational learning within the boundary of a supply 773
chain rather than the boundaries of individual firms and dyadic inter-firm
relationships. Brown and Hendry (1997) claimed two major ongoing changes in
SCM practices are (organizational) learning through the supply chain and
working better with suppliers. When combined, these changes help partners
within a supply chain achieve better two-way relationships with suppliers.
With improved information exchange, partners are better able to utilize
supplier creativity and knowledge, improve processes (particularly for cost
savings and performance benefits in the supply chain), and encourage
individual learning within an established supply chain context.
Finally, a market orientation facilitates relationship marketing that, in turn,
could promote the implementation of SCM indirectly vis-aÁ-vis relationship
marketing. Cooper et al. (1997a) indicated building and maintaining close long-
term relationships among partners beyond the life of a contract that encourage
inter-firm coordination are needed for the implementation of SCM. Gundlach
and Murphy (1993), Morgan and Hunt (1994) and Gruen (1997) suggested
relationship marketing depends on inter-firm cooperation that focuses on the
systematic development of ongoing, collaborative business relationships.
Therefore, the implementation of relationship marketing promotes inter-firm
cooperation, in addition to close long-term relationships among the supply chain
members. Thus, the role of market orientation in SCM:
P9: A market orientation positively and indirectly influences firms to
implement SCM.
In summary, the marketing concept is conceptualized as a business philosophy,
guiding a firm toward customer satisfaction at a profit, and a market
orientation is the implementation of that philosophy, forcing the firm to
generate, disseminate, and respond to market information. The marketing
concept, as a business philosophy, not only provides the philosophical
foundation of a market orientation, but also plays an important role in the
management of a firm, inter-firm relationships, and the implementation of
SCM. A market orientation also impacts the management of a firm, inter-firm
relationships, and a supply chain. That is, a market orientation leads a firm to
focus on market information generation, dissemination, and responsiveness to
satisfy customers, coordinate its marketing efforts, redefine the responsibilities
of each function, restructure its organizational system, and achieve superior
business performance. At the same time, a market orientation provides an
environment which encourages a firm in its efforts to develop, maintain, and
enhance close relationships with other firms, obtain organizational learning
IJPDLM from other firms, and build commitment, trust, and cooperative norms in
30,9 relationships with other firms. A market orientation is performed both inside
and outside a firm to recognize and respond to customers' needs, and obtain
experiences, products, skills, technologies, and knowledge from outside the
firm that are not available to other competitors. Finally, a market orientation
promotes the implementation of SCM. For example, the input of market
774 information has indirect, positive impacts on the implementation of SCM. In
addition, information sharing and organizational learning, both of which are
components of SCM, are the broad applications of a market orientation beyond
the boundary of an individual firm. A close long-term inter-firm relationship,
which is reinforced by a market orientation, is also a component of the
implementation of SCM. As such, a market orientation has numerous positive
impacts on SCM implementation.

Relationship marketing
According to Gundlach and Murphy (1993), exchange ± which is at the center of
marketing ± takes various forms, depending on its location in the exchange
continuum. At one end of the continuum, transactional exchange involves
single, short-term exchange events encompassing a distinct beginning and
ending (Gundlach and Murphy, 1993). Goldberg (1976, p. 49) described this
form as a transaction in which ``no duties exist between the parties prior to
formation (of the exchange), and in which the duties of the parties are
determined completely up-front''. At the other end of the continuum, relational
exchange involves transactions linked together over an extended timeframe
(Gundlach and Murphy, 1993). Gundlach and Murphy (1993) explained that
relational exchanges trace back to previous interactions and reflect an ongoing
process. The close and long-term relationships established between certain
suppliers and their industrial customers (e.g. automobile manufacturers and
their suppliers), relationship banking, frequent-stay programs at hotels, and
priority acceptance for alumni family members at universities, are examples of
relational exchanges (Gundlach and Murphy, 1993). Marketing strategies differ
along the continuum of exchange from relationship-oriented strategies at one
end to transaction-oriented strategies at the other (GroÈnroos, 1995). Macneil's
(1980) relational exchange theory suggests building personal trust
relationships and developing social norms are key characteristics of interfirm
relationships. In addition, Gundlach and Murphy (1993) proposed that the
characteristics of relational strategy include an emphasis on purposeful
cooperation, extended planning, and the establishment of complex webs of
operational and social interdependence.
Since marketing deals with various forms of exchange ± including discrete
and relational ± and involves more than buyer-seller relationships (see
Table III), Morgan and Hunt's (1994) definition of relationship marketing as all
marketing activities directed toward establishing, developing, and maintaining
successful relational exchanges is adopted for this discussion. Relationship
marketing goes beyond repeat purchase behavior and inducement (Sheth and
Berry (1980) and Attracting, maintaining, and ± in multi-service organizations ± The role of
Berry and enhancing customer relationships marketing in
Parasuraman (1991)
SCM
Morgan and Hunt All marketing activities directed toward establishing, developing,
(1994, p. 23) and maintaining successful relational exchanges. The rationale for
this definition is that in many instances of relationship marketing
``customers'' do not exist, but only ``partners'' exchanging resources 775
Cravens (1995) Involves more than buyer-seller collaboration, and include suppliers,
distribution channel members, internal functions, and even
competitors
GroÈnroos (1990, Marketing is to establish, maintain, and enhance relationships with
p. 138) customers and other parties, at a profit, so that the objectives of the
parties involved are met. This is achieved by a mutual exchange
and fulfillment of promises. This perspective departs from the
traditional view of marketing that emphasizes only ``exchange'' and
moves toward the notion of ``exchange in relationship'' and, thus, Table III.
called the emergence of relationship marketing a paradigm shift in Conceptualizations of
the marketing discipline relationship marketing

Parvatiyar, 1995). In the same context, Webster (1992) proposed repeated

transactions are only a precursor to relationships, and customers expect simply
convenience and cost efficiency from repeated transactions. Firms in long-term
relationships do not always put relationship marketing into practice. For
example, in industrial markets, buyer-seller relationships have typically
involved relatively long-term contractual commitments, but even here the
relationships have often been arm's-length and adversarial, pitting the
customer against the vendor in a battle focused on low price (Webster, 1992).
Relationship marketing goes beyond transactional exchanges, repeated
purchases, and even adversarial, long-term relationships. Competitive forces in
the global marketplace of the 1980s compelled many firms to move
significantly along the continuum from arm's-length relationships with
suppliers to much stronger partnerships characterized by much greater
interdependence (Webster, 1992). As a result, relationship marketing today
pursues buyer-seller partnerships, strategic alliances, joint ventures, and
networks, all of which assume mutual, total-dependence relationships.
There are some prerequisites for relationship marketing. First, Berry (1995)
proposed relationship marketing is built on the foundation of trust, defined by
Moorman et al. (1993) as ``a willingness to rely on an exchange partner in whom
one has confidence''. Berry and Parasuraman (1991) also contend effective
services marketing depends on trust because customers typically must buy a
service before experiencing it.
Second, mutual benefit to participating parties is essential for strong
relationships (Berry, 1995). Both parties must perceive greater benefit from the
relationship than could be achieved without it.
IJPDLM Third, financial benefits and/or competitive advantage are earned by a firm
30,9 only if customers are willing and able to engage in relationship patronage
(Sheth and Parvatiyar, 1995). In other words, ongoing and cooperative
relationships reflect commitment made by the customer to continue patronizing
the particular firm (GroÈnroos, 1990; Shani and Chalasani, 1992). ``Commitment
to the relationship is defined as an enduring desire to maintain a valued
776 relationship'' (Moorman et al., 1992, p. 316).
Fourth, Bitner (1995) suggested the need of service guarantees and two-way
communication are vehicles by which promises can be effectively
communicated and customers can be informed as to what they can expect and
how it will be delivered. This is important because the foundation for
maintaining service relationships is the fulfillment of promises made to
customers (GroÈnroos, 1990). Two-way communication is also important
because a firm should monitor customer satisfaction through direct
communication channels with its customer bases, since ad hoc communication
such as surveys ± which are commonly used in transaction-based marketing ±
provide only a proxy indication of satisfaction (GroÈnroos, 1995).
Fifth, relationship marketing requires cooperation between marketing and
operations (GroÈnroos, 1995). For example, all functions interacting with a
customer have to reinforce the quality perception by the customer, since
relationship marketing involves ongoing relationships with customers.
Finally, internal marketing is needed to persuade other functions to be
prepared to assume the role of part-time marketers (GroÈnroos, 1995). This is
important because, in order for employees and service systems to deliver on the
promises made, they must have the skills, abilities, tools, and motivation to
deliver (Bitner, 1995).

Management of a firm
There are seven outputs of relationship marketing presented in Figure 2 that
impact the management of individual firms. First, interfunctional coordination
should be reinforced because the decision to either make or break a relationship
with other firms is contingent on the role of other processes (e.g. production and
delivery) as well as marketing (GroÈnroos, 1995). Webster (1992) also claimed a
common focus on customer value and relationship management might result in
much stronger coordination of the procurement, sales, and marketing functions
in a manner analogous to the merchandising function in retailing firms
(i.e. merchandising searches for merchandise and tests its quality based on
direct input from sales and marketing).
Second, relationship marketing drives a firm to redefine the responsibilities
of each function. The role of marketing in relationship marketing strategy is
expanded from capturing new customers to getting and keeping customers
(GroÈnroos, 1995). Thus, marketing should not be restricted to marketing mix
activities that are focused on the manipulation of customers, but should place
increased emphasis on relationship marketing skills. At the same time, the
fundamental responsibility of marketing is to be an expert on the customer and
 The role of
marketing in
SCM

777

Figure 2.
The impacts of
relationship marketing

keep the rest of the network organization informed about the customer
(Webster, 1992). Gummensson (1987) used the phrase ``part-time marketer'' to
stress the critical marketing role performed by customer-contact employees
other than the marketing department, and argued that part-time marketers are
at the heart of relationship marketing.
Third, relationship marketing requires a firm to restructure the
organizational system into a boundary-less organization. In other words, the
results of reinforced efforts at interfunctional coordination and the role shifts of
each function should be consistent with the two major trends of elimination of
boundaries between management functions within organizations and a
IJPDLM blurring of the boundaries between the firm and its market environment
30,9 (Webster, 1992). In brief, traditional ways of organizing the marketing function
and thinking about the purpose of marketing activity must be reexamined,
with the focus on long-term customer relationships, partnerships, and strategic
alliances (Webster, 1992).
Fourth, relationship marketing improves a firm's marketing effectiveness
778 because:
. as a firm is dedicated to customers with long-term commitment, it can
appropriately direct marketing resources toward those that provide the
greatest value for a selective set of customers; and
. relationship marketing promotes early involvement of customers so that
customers provide valuable information to the firm (Sheth and
Parvatiyar, 1995).
Fifth, relationship marketing brings resources from outside the firm to satisfy
customer needs. In the 1990s, customers became more demanding and
competition became more intense (Cravens, 1995). ``As firms globalize, they
realize that no matter how large they are, they lack the total resources and
requisites for success. Viewing the complete supply chain for producing value,
they recognize the necessity of partnering with other organizations'' (Kotler,
1997). As such, relationship marketing that requires a firm to team up with other
firms has become a must to satisfy customers in today's market environment.
Sixth, customers were motivated to build and maintain relationships with
suppliers to reduce risk (Bauer, 1960; Taylor, 1974). Perceived risk is associated
with the uncertainty and magnitude of outcomes (Sheth and Parvatiyar, 1995).
In this context, Bitner (1995) argued having a long-term relationship with a
service provider can reduce consumer stress as the relationship becomes
predictable, initial problems are solved, special needs are accommodated, and
the consumer learns what to expect. This is particularly so when customers
need continuous and periodic delivery of services that are important, variable
in quality, and/or complex (Berry, 1995; Bitner, 1995). In other words,
customers become loyal to the service provider for predictability and comfort
as well as service quality itself (Bitner, 1995).
The final impact of relationship marketing on a firm is financial benefits such
as increased revenue and lower marketing costs (Berry, 1995). For example,
Reichheld and Sasser (1990) found that lowering the customer defection rate
from 20 per cent to 10 per cent doubled the longevity of the average customer's
relationship from five years to ten, and increased the net present value of the
cumulative profit streams for a customer from $135 to $300. In addition, a firm
can cut costs by reducing some of the wasteful marketing practices associated
with competitive mass marketing, and by letting the consumer do such
marketer jobs as processing orders, designing products, and managing
information directed to the firm (Sheth and Parvatiyar, 1995).
These impacts can be summarized in the following proposition:
 P10: Relationship marketing leads to the following impacts on individual The role of
firms: marketing in
(a) increased interfunctional coordination; SCM
(b) redefined functional responsibilities;
(c) a boundary-less organization;
779
(d) improved marketing effectiveness;
(e) increased external resources to satisfy customer needs;
(f) increased supplier relationships to reduce risk; and
(g) increased revenue and lower marketing costs.

SCM
Effective SCM requires partners to build and maintain close long-term
relationships (Ellram and Cooper, 1990; Cooper et al., 1997a). Ellram and
Cooper (1990) contended a successful supply chain relies on forming strategic
partnerships, which expect long-term, inter-firm relationships with trading
partners. In this context, SCM puts more emphasis on a partnership approach,
or relationship orientation (Morris and Imrie, 1992). In the end, those inter-
organizational relationships tie firms to each other and may tie their success to
the supply chain as a whole (Cooper et al., 1997b). Ultimately, Webster (1988)
expected the emergence of a network of strategic partnerships among
designers, technology providers, manufacturers, distributors, and information
specialists, which would fit the need of functional integration within a supply
chain.
Relationship marketing ± through close inter-firm relationships such as
partnerships, strategic alliances, and joint ventures ± should increase inter-firm
cooperation, one of the components of the implementation of SCM, including
joint inventory and cost reduction, and joint planning (Cooper et al., 1997a). In
relationship marketing strategy, buyer-seller partnerships, strategic alliances,
joint ventures, and networks are formed, all of which assume mutual, inter-
dependent relationships governed by cooperative norms. The cooperation of
partners involved in these various close inter-organizational forms, in turn,
help partners achieve a high level of customer satisfaction in a rapidly
changing business environment (Cravens, 1995). Cooper et al. (1997a) posited
the implementation of SCM involves reducing channel inventory, increasing
channel cost efficiencies, maintaining long-term relationships, encouraging
inter-firm cooperation, and sharing risks and rewards among the partners:
P11: Relationship marketing helps achieve the objectives of SCM such as
efficiency (i.e. cost reduction) and effectiveness (i.e. customer service)
through increased cooperation in close long-term inter-firm
relationships among supply chain partners.
IJPDLM An integrative framework
30,9 Figure 3 shows the integrative conceptual framework of this paper. As detailed
earlier, the marketing concept is implemented in the form of a market
orientation that, in turn, promotes the emergence of relationship marketing and
the implementation of SCM. A market orientation helps the implementation of
SCM by providing valuable market information on customers, competitors,
780 potential supply chain partners, and market environments; suggesting a model
of information sharing and organizational learning; and augmenting the
practice of relationship marketing that contributes to the success of SCM.
Figure 3, and the antecedent justification that precedes it in this paper, lead
to the following four ombudsman propositions:
(1) Ombudsman Proposition I: the marketing concept has direct influences
on the management of an individual firm, inter-firm relationships, and a
supply chain by:
. providing the philosophical foundation of a market orientation
within a firm (P1);

Figure 3.
An integrative model of
the marketing concept, a
market orientation,
relationship marketing,
and supply chain
management
 . providing the philosophical foundation of relationship marketing The role of
between firms to develop, maintain, and enhance inter-firm marketing in
relationships (P2); and SCM
. providing a compatible business philosophy for implementing SCM
within a supply chain.
(2) Ombudsman Proposition II: a market orientation has direct influences on 781
the management of a firm, on relationship marketing and, ultimately, on
SCM by:
. providing managerial focus (i.e. customer satisfaction) to the partner
firms;
. increasing inter-functional coordination;
. redefining the responsibilities of each function;
. restructuring the partner firms' organizational system by redefining
the responsibilities of each function and promoting inter-functional
coordination (P5);
. contributing to superior business performance of the partner firms
(P6);
. increasing trust, commitment, and cooperative norms to the partner
firms involved in inter-firm relationships that are prerequisites for
relationship marketing (P7);
. requiring relationship marketing to build, maintain, and enhance
inter-firm relationships with the partner firms;
. encouraging organizational learning on the basis of well-
implemented relationship marketing;
. supplying valuable market information that could be used before
and during the implementation of SCM;
. expanding the application of organizational learning activities to
SCM so that partner firms share information and experience within
the supply chain; and
. advancing relationship marketing that, in turn, helps implement
SCM.
(3) Ombudsman Proposition III: relationship marketing impacts SCM as
well as the management of individual firms by:
. enhancing inter-functional coordination to satisfy customers with
company-wide efforts (P10a);
. redefining the responsibilities of each function of a firm (P10b);
. restructuring the organizational system;
IJPDLM . improving marketing effectiveness of the partner firms by proper
30,9 marketing resource allocation to the other partners and involvement
of the partners in the marketing process (P10d);
. bringing resources outside the firm to satisfy customers who become
more demanding in the competitive market (P10e);
782 . reducing risks in the market (P10f);
. providing financial benefits such as increased revenue and reduced
costs (P10g);
. helping build, maintain, and enhance long-term inter-firm
relationships such as partnerships, strategic alliances, joint ventures,
and networks that fit into the goal of SCM; and
. allowing inter-firm coordination that is required for the
implementation of SCM initiatives such as joint inventory and cost
reduction, and joint planning.
(4) Ombudsman Proposition IV: with the help of the marketing concept, a
market orientation, and relationship marketing, SCM achieves
differential advantage for supply chain and its partners by reducing
investments and improving customer service.

Conclusions
The marketing concept, market orientation, relationship marketing, and SCM
are not separate. Rather they are inextricably intertwined. At the starting point
of the model in Figure 3, the marketing concept promotes individual firms'
coordinated activities inside and outside the firms to accomplish customer
satisfaction at a profit.
A market orientation, which is the implementation of the marketing concept,
requires firms to generate, disseminate, and respond to market information.
Organizational learning, a major component of a market orientation, goes
beyond the boundaries of a firm since there exist a multitude of learning
resources and skills to fulfill customers' demand in an efficient and effective
way. Thus, a market orientation not only promotes the emergence of
relationship marketing but also provides the reasons for it to exist.
Relationship marketing aims at establishing, maintaining, and enhancing
either dyadic relationships or multiple relationships in a supply chain to create
better customer value. Thus, the role of marketing through the marketing
concept, a market orientation, and relationship marketing is essential for the
success of SCM.
The main purpose of this paper was to outline the role of marketing in SCM.
Specifically, this paper suggests the cause-and-effect relationships among
several important concepts in business research and practice: the marketing
concept, a market orientation, relationship marketing, and SCM.
Mentzer and Kahn (1995) suggested an iterative process of theory
development, moving forward from idea generation through literature review
and observation, to substantive justification, to theory formation, to theory The role of
testing using hypotheses and constructs and, finally, to the analysis of the marketing in
empirical test. According to the Mentzer and Kahn's framework, this paper takes SCM
only the first steps in this process and, thus, more work to empirically test the
detailed cause-and-effect relationships among the constructs and any potential
moderating and/or mediating constructs in the suggested model are in order.
An interesting avenue for future research that emanates from this 783
framework and the work of others is the exploration of the ``dark side'' of
relationships. Grayson and Amber (1999) and Pawson et al. (1998) raised the
legitimate issue that although relationship marketing (relationalism) is a new
paradigm in inter-firm relationships, it still lacks empirical studies to
investigate its nature and the relationships among different relational
constructs. Grayson and Amber (1999) found that trust has a decreasing
association with continuous advertising agency use and called this relationship
the dark side of relationship marketing. However, as Grayson and Amber
stated:
. . . though our study supports the general proposition that there is a dark side to long-term
relationships, the exact nature of these relational dynamics remains elusive (p. 139).

As Grayson and Amber pointed out, their study is limited to one specific
industry (long-term use of advertising agencies) that provides their clients high
levels of creativity that might deteriorate as an advertising agency stays with a
client for a long time. Reddy and Czepiel (1999) found in a business-to-business
setting that the likelihood of using bank's services in the future is high if the
client firm has a long-term relationship with the focal bank. In addition,
Grayson and Amber found positive links between:
. trust and involvement;
. trust and interaction;
. trust, rising expectations, and interactions;
. trust, lower opportunism/loss objectivity, and interaction; and
. trust, rising expectations, and interactions.
Rather than discounting the framework presented in Figure 1, such findings
support our argument that trust is a prerequisite of relationship marketing which
represents cooperation (e.g. joint marketing programs, cooperative management
of logistics, inventory/process, joint R&D, etc.), because cooperation requires
greater levels of involvement and interactions between partners.
Pawson et al. (1998) also found a dark side to relationship marketing,
suggesting ``perceptions of environmental uncertainty reduce the motivations
for relational governance (i.e. relationship marketing) instead of strengthening
them''. Pawson et al. also argued relationalism mitigates perceptions of
environmental uncertainty so that ``relationalism can, indeed, lull firms into a
false sense of security''. Finally, Pawson et al. argued very little is known about
the consequences of relationalism. Contrary to Pawson et al., however, Naidu et
IJPDLM al. (1999) found intensity of competition (a kind of uncertainty) has a positive
30,9 relationship with relationship marketing programs that, in turn, bring high
performance of firms. As such, it seems studies on relationship marketing at
the current stage are equivocal at best and, thus, there is a need for further
theory development of relationship marketing such as presented in this paper.
Specifically, future research needs to address the propositions put forward in
784 this paper to address these equivocal results. Case studies, surveys, and
qualitative supply chain analyses should be able to plumb the casual
relationships put forward in this paper. The result will be a more definitive
understanding of the role of marketing in SCM.

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