The Effect of Economic and Relational Direct Marketing Communication on Buying Behavior in B2B Markets

The Effect of Economic and Relational Direct Marketing Communication on Buying Behavior in B2B Markets BY Kihyun Kim April 13, 2016 Committee Chair: Dr. V. Kumar Major Academic Unit: Marketing Business to Business (B2B) firms spend significant resources managing close relationships with their customers, yet there is limited understanding of how the customers perceive the relationship based on the customer management efforts initiated by the firm. Specifically, studies on how firms communicate different values to B2B customers and how they perceive the values the firm offers by consistently evaluating the direct marketing communication which ultimately affect their buying behaviors have been largely overlooked. Typically, the direct marketing communication efforts are geared towards explicitly featuring economic values or relational values. To implement an effective communication strategy catering to customers’ preferences, firms should understand how these organizational marketing communications dynamically influence the perceived importance of different values offered by the firm. Therefore, using data from a Fortune 500 B2B service firm and employing a content analysis and a robust econometric model, we find that (i) the effect of economic and relational marketing communication on customer purchase behavior vary by customers and change overtime (ii) the latent stock variable of direct marketing communication affect the customer purchase behaviors and (iii) the evolution of customers’ perceived importance can be recovered using the transaction data. Overall, we provide a marketing resource reallocation strategy that enables marketers to customize marketing communication and improve a firm’s financial performance.