25 February 2014

MSc Marketing/MSc Management:

Marketing Contexts

Lecture: February 27th 2014

Business-to-business (B2B)

Marketing: Part 2

Lecturer: Dr Gary Harden

25 February 2014

B2B Part 1 recap

Imagine you are working for a major blue chip company. Your job is to organise the purchase (or leasing) of a fleet of company cars for senior managers and sales staff.

Describe the stages in the process that you would go through in making the purchase?

What particular issues will be important to you in making the purchase?

What qualities or characteristics would you be looking for in your preferred supplier?

Take a few minutes to consider your answers to the questions above and then compare your views with your immediate neighbour(s).

25 February 2014

Overview of lecture

Changing nature of B2B relationships

Understanding what both parties want from a B2B relationship

Ways of building B2B relationships

Aspects of Key Account Management (KAM)

25 February 2014

The changing nature of B2B relationships

25 February 2014

Relationships in B2B

all organisations have some relationships. However,

the depth of these relationships will vary from those

where both the customer and supplier recognise,

accept and act on their mutuality of interest through to

situations where, although the customer and supplier do

have a relationship (because they do business with one

another), it is one whose characteristics are those of

discrete exchange.

Blois (1998:256)

25 February 2014

Focalfirm

Goodssuppliers

Servicessuppliers

Competitors

Non-profitorganisations

Government

Ultimatecustomers

Intermediatecustomers

Functionaldepartments

Businessunits

Employees

Lateral partnerships

Supplier partnerships

Buyer partnerships

Internal partnerships

Relational exchanges

Morgan and Hunt (1994)

25 February 2014

The range of relationship types

Webster, F. (1992).

The Changing Role of Marketing in the Corporation,

Journal of Marketing, Vol. 56, pp. 1-17

Transaction

Repeated transaction

Long-term relationships

Strategic (Buyer-Seller)

relationships

Strategic alliances

(Joint ventures)

Network organisations

25 February 2014

Changing nature of B2B relationships

a clear evolution away from arms length

transactions and traditional hierarchical,

bureaucratic forms of organisation towards more

flexible types of partnerships, alliance and

networks

Webster (1992:10)

25 February 2014

Changing B2B culture

Old B2B culture

Zero sum game

Information is power

Trust is for mugs

Theyre out to screw us

Personal success is

about winning

New B2B culture

Positive sum game

Information sharing is key

Trust will emerge naturally

Relationship is valuable in

longer-term

Personal success is about

mutual success

Adapted from Brennan (1997:767)

25 February 2014

Strategic implications

The customer may not want close relationship

All relationships involve an element of risk

Need to evaluate resources required to maintain

relationship

Need to determine organisational structure to

put in place in order to manage relationship

Blois (1998)

25 February 2014

Understanding what both parties want from a B2B

relationship

25 February 2014

Small group exercise

Put yourself in a typical B2B situation and consider life from the perspective of both the supplier and the customer.

From the customer perspective, what would you want from a long-term relationship with a supplier?

From the supplier perspective, what would you want from a long-term relationship with a customer?

Take a few minutes to consider your answers to the questions above and then compare your views with your immediate neighbour(s).

25 February 2014

What do customers want?

Customers seem to appreciate:-

Personal contacts

Good communications channels

Ease of doing business

Availability of technical advice

Quality products/services

Continuity (or even exclusivity!) of supply

25 February 2014

What do suppliers want?

Suppliers seem to appreciate:-

Long-term peace of mind/security

Sales volume and enhanced profit

Access to new end-user markets

Status from association with important

customers

Good communications channels

25 February 2014

Building B2B relationships

Deliver good customer service/keep promises

Act honestly and with integrity

Maintain good lines of communication

Hold joint planning meetings

Agree long-term contracts

Share market information/technology

YouTube - B2B marketing in a digital world

Give designated individuals responsibility for managing a relationship (e.g. a Key Account Manager)

25 February 2014

Key Account Management (KAM)

25 February 2014

Defining KAM

Key account management is:-

the process of allocating and organising

resources to achieve optimal business with a

balanced portfolio of identified accounts whose

business contributes or could contribute

significantly or critically to the achievement of

corporate objectives, present or future.

(Burnett, 1992, cited in McDonald, 2000:19)

25 February 2014

Putting KAM in context

Simple Complex

Large

Small

Size of account

Complexity of account

Source: Shapiro and Moriarty adapted by Pardo (1999)

Major account

National (or key) account

Traditional selling

?

25 February 2014

What is a key account?

Key accounts are:-

customers in a business-to-business market

identified by selling companies as of strategic

importance

(McDonald, 2000:18)

However, this begs the question of how to

determine strategic importance?

25 February 2014

KAM relationship stagesSupplier

strategic

intent

Buyer strategic intent

Exploratory

Basic

Co-

operative

Interdependent

Integrated

Disintegrating

Source: McDonald (2000)

25 February 2014

Exploratory KAM relationship

Selling company Buying company

Directors Directors

Managers Managers

Supervisors Supervisors

Admin Admin

Operators Operators

Key

Account

Manager

Purchasing

Manager

Source: McDonald (2000)

25 February 2014

Basic KAM relationship

KAM BuyerO

ps

Op

s

Ad

min

Ad

min

Bo

ard

Bo

ard

Source: McDonald (2000)

Selling company Buying company

25 February 2014

Co-operative KAM relationship

Directors Directors

Managers Managers

Supervisors Supervisors

Admin Admin

Operations Operations

Key Account Manager & Purchasing Manager

Selling company Buying company

Source: McDonald (2000)

25 February 2014

Interdependent KAM relationship

Mngrs Mngrs

Operations Operations

Admin Admin

Board Board

KAM Buyer

Selling company Buying company

Source: McDonald (2000)

25 February 2014

Integrated KAM relationship

Operations

focus team

R&D focus

team

Finance

focus team

MR focus

team

IT focus

team

KAM Buyer

Selling company Buying company

Source: Adapted from

McDonald (2000)

25 February 2014

Role of the Key Account Manager

Responsible for growth of one or more key accounts consistent with business objectives

Co-ordination and tailoring of offering to key accounts

Facilitating multi-level, multi-functional exchange processes

Promoting KAM concept in own organisation

YouTube - Stuart Thomas - Key Account Manager

25 February 2014

Intermediating role of the Key Account Manager

Supplier

companyCorporate

client

KAM

intermediation

Internal relationship

marketing

External relationship

marketing

Source: Brady (2004)

25 February 2014

Key Account Manager skills

Ability to span boundaries

Integrity

Product/service knowledge

Communication

Understanding customers business and business environment

Selling/negotiating skills(McDonald et al., 1997:748/9)

25 February 2014

Summary of main points

All organisations have relationships whether they know it

or not

Relationships range from discrete transactions through to

complicated and intimate networks of contacts

All relationships pose a significant risk to a supplier

Not all customers will want a relationship

Technology has impacted B2B relationships dramatically

Key Account Management (KAM) is a recognised

approach to managing important customer relationships.

However, it may come at a significant cost to the supplier

25 February 2014

References1

Blois, K. (1998), Dont All Firms Have Relationships? Journal of Business & Industrial Marketing, Vol. 13, No. 3, pp. 256-270.

Brady, N. (2004), In Search of Market Orientation: an Experiment in Key Account Management, Marketing Intelligence & Planning, Vol. 22, No. 2, pp. 144-159.

Brennan, R. (1997), Buyer/Supplier Partnering in British Industry: The Automotive and Telecommunications Sectors, Journal of Marketing Management, Vol. 13, pp. 759-775.

Buttle, F. (1996), Relationship Marketing: Theory and Practice, Paul Chapman Publishing Ltd., London..

McDonald, M., Millman, T. F., and Rogers, B. (1997), Key Account Management: Theory, Practice and Challenges, Journal of Marketing Management, Vol. 13, pp. 737-757.

McDonald, M. (2000), Key Account Management - A Domain Review, The Marketing Review, Vol. 1, pp. 15-34.

25 February 2014

References2

Millman, T. F., and Wilson, K. (1995), From Key Account Selling to Key Account Management, Journal of Marketing Practice: Applied Marketing Science, Vol. 1, pp. 9-21.

Millman, T. F., and Wilson, K. (1999), Processual Issues in Key Account Management: Underpinning the Customer-Facing Organisation, Journal of Business & Industrial Marketing, Vol. 14, No. 4, pp. 328-337.

Morgan, R. M. and Hunt, S. D. (1994), The Commitment-Trust Theory of Relationship Marketing, Journal of Marketing, Vol. 58, No. 3, pp. 20-38.

Pardo, C. (1999), Key Account Management in the Business-to-Business Field: a French Overview, Journal of Business & Industrial Marketing, Vol. 14, No. 4, pp. 276-290.

Webster, F. (1992), The Changing Role of Marketing in the Corporation, Journal of Marketing, Vol. 56, No. 4, pp. 1-17.