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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

Relational exchanges
Supplier
partnerships
Goods
suppliers

Services
suppliers

Business
units

Competitors

Focal
firm

Employees

Non-profit
organisations

Functional
departments

Internal
partnerships

Lateral
partnerships

Government

Intermediate
customers

Ultimate
customers

Buyer partnerships

Morgan and Hunt (1994)


25 February 2014

The range of relationship types


Transaction
Repeated transaction
Long-term relationships
Strategic (Buyer-Seller)
relationships

Webster, F. (1992).
The Changing Role of Marketing in the Corporation,
Journal of Marketing, Vol. 56, pp. 1-17
25 February 2014

Strategic alliances
(Joint ventures)
Network organisations

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
New B2B culture
 Zero sum game
 Positive sum game
 Information is power
 Information sharing is key
 Trust is for mugs
 Trust will emerge naturally
 Theyre out to screw us  Relationship is valuable in
longer-term
 Personal success is
about winning
 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


Complexity of account
Complex

Simple
Large

Major
account

National
(or key)
account

Size of
account

Small

25 February 2014

Traditional
selling

Source: Shapiro and Moriarty adapted by Pardo (1999)

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?
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KAM relationship stages


Supplier
strategic
intent

Source: McDonald (2000)


Integrated

Interdependent
Cooperative
Basic

Exploratory

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Disintegrating

Buyer strategic intent

Exploratory KAM relationship


Selling company

Buying company
Directors

Directors
Managers

Key
Account
Manager

Purchasing
Manager

Supervisors

Supervisors

Admin

Admin

Operators

Operators

Source: McDonald (2000)


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Managers

Basic KAM relationship

Source: McDonald (2000)

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Board

Buyer

Admin

KAM

Buying company

Ops

Ops

Admin

Board

Selling company

Co-operative KAM relationship


Selling company

Buying company

Directors

Directors

Managers

Managers
Key Account Manager
& Purchasing Manager

Supervisors

Admin

Admin

Operations
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Supervisors

Operations

Source: McDonald (2000)

Interdependent KAM relationship


Selling company

Buying company

Mngrs
Operations

Mngrs
Operations

KAM

Source: McDonald (2000)


25 February 2014

Buyer
Admin

Admin

Board

Board

Integrated KAM relationship


Selling company

Buying company
Operations
focus team

KAM

R&D focus
team

Finance
focus team

IT focus
team
Source: Adapted from
McDonald (2000)
25 February 2014

MR focus
team

Buyer

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
KAM
intermediation
Supplier
company

Internal relationship
marketing
Source: Brady (2004)
25 February 2014

Corporate
client

External relationship
marketing

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.

25 February 2014