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B2B Theory 2
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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.