Test slide

Sales Management ­ A 102 Copenhagen Business School Mogens Bjerre

31. October 2003 Key Account Management B2B & B2C

A 102

Sales Management

Issues to be covered...  Introduction to Key Accounts –

When is an Account a Key Account?

 Introduction to Key Account Management –

Four types of Key Account Management

 KAM in B2C ­ the Battle for Shelf­ and

Mindspace  The Twin Marketing Strategies ­ introducing the three levels of Trade Marketing  Buyer’s behavior and goals –

Introducing four types

A 102

Sales Management

Why Key Account Management

 Fewer firms involved in the transactions  Price awareness is high  Decision making processes change  Negotiators asks more of their suppliers  The supply chain is concentrating;

focusing strategy, core business are pursued  Products and services are imitated

A 102

Sales Management

Objectives

 It is not always beneficial to operate a

holistic customer policy – – – –

Customer type?

Centralization of decision processes Professionalism What value can be added  For the customer?  For the company?

 Identify the key elements of objectives!

Sales Management

A 102

What Kind of Relationship?

Kurzrock

Dwyer et al.

Payne et al.

Kotler

Partners

Partners

Members

Members

Business Consultant

Advocates

Advocates

Preferred Provider

Clients

Clients

(Dissolution) Partner

Commitment

Expansion Repeat Relationship Customers Marketing ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­ Customers Traditional Vendor First time Marketing Customers Exploration Spectator Awareness Prospects Prospects Suspects

A 102

Sales Management

Key Account Criteria

   

Turnover, including potential Profit, including profit potential Volume Organization and structure – –

  

Role of the buying function, and buying process Managerial interest in cooperation

Market share and coverage Strategic and political importance Historical importance

A 102

Sales Management

Account Management

 Account management is used to describe the

identification of accounts and/or large accounts and providing them with special treatment (financially, structurally, managerially, or technically)  These accounts and/or large accounts may be: –

Local or regional, national, or international

A 102

Sales Management

Key Account Management is...

 Concerned with the appointment of senior

employees, who on behalf of their company, are responsible for foreseeing, identifying, and fulfilling the needs of the Key Account and establishing strong, relative, competitive advantages, efficiently and profitably

A 102

Sales Management

Key Account Management is...

 Key Account Management can be divided

into four types: – –

Contact Coordination  Passive  Pro­active

–

Integration

Bjerre, 1998

A 102

Contact

Sales Management

Key Account Management

 Key Account Manager function is identical

for all key account’s  “One face to the customer”  No customer specific adaptations are made  Primary purpose is to gain information about the account  Often located in the Sales Department  Focus on sales

A 102

Passive Coordination

Sales Management

Key Account Management





  

Key Account Manager function may vary from key account to key account, initiated by the customer Some customer adaptations are made, however, they are based on “re­use” as the key target is cost minimization Primary purpose is to “manage customer relations” Often located in the Sales and Marketing Department Focus on sales and customer profitability

A 102

Pro­active Coordination

Sales Management

Key Account Management





 

 

Key Account Manager function varies from key account to key account, initiated internally Some customer adaptation, typically based on utilizing customer insight Primary purpose is to support customer’s strategy Key Account Manager is supported by “back­up” function, maybe even by ad hoc teams Often located in the Sales and Marketing Department Focus is on customer profitability and the relationship

A 102

Integration

Sales Management

Key Account Management







 

Key Account Manager function varies from key account to key account Customer adaptation with the purpose of supporting customer’s strategy, “standard solutions” are not applied Key Account Manager is often supported by a permanent team­organization, including various functions Often located as an individual department Focus on customer profitability and the customer’s profitability

Sales Management

A 102

Level of Involvement with Customer Simple Complex

Key Account Relational Development Model

Synergistic­KAM Partnership­KAM Mid­KAM Early­KAM

Transactional Collaborative Nature of Customer Relationship Millman & Wilson, 1994 Pre­KAM

Sales Management Key Account Relational Development Model Basic Assumptions A 102

 Relational theory as theoretical base  Trust and commitment develop over time  Development over time, long term activity  Level of involvement (no. of interactions and

no. of levels) and nature of relationship are key factors (proportion of the counterpart’s business)

Sales Management

A 102

From Uniplex til Multiplex Exchange

Uniplex­

Uniplex

Uniplex­ Multi

Multiplex­ Uniplex

Multiplex­ Multiplex

Sales Management

A 102

KAM in B2C ­ is a Battle for Shelf­ and Mindspace

 Brand Marketing is used to ensure end­

user preferences towards the product  Trade Marketing is used to ensure the end­user availability of the product

Supplier

Retail Head Office

Retail Store

End­user

A 102

Sales Management

Trade Marketing is...

 The Marketing effort aimed at the retail

head office and the retail store with the purpose of: – – – –

Developing the relationship with the customer Enhance supplier’s position Ensure end­user availability to product(s) Enhance retailer’s marketing position

 Trade Marketing is strategic, tactical and

operational

A 102

Sales Management

Buyer’s Segmentation based on Risk Avoidance 

Internal risk –

Potential loss of profit



External risk –

Lack of delivery  Quality deficiencies

Potential  Those, that can and want to deliver



– – –

Importance of delivery Set­up costs Complexity of delivery and degree of mutual ”integration”

No. of suppliers 

– – –

Entry barriers for new suppliers Negotiation strength of the supplier(s) Degree of commodity in the delivery

A 102

Sales Management

External Risk Low High

The Risk Matrix

Bottleneck materials and services

Strategic materials and services

Ensure supply e­procurement

Partnering, co­ope­ ration and e­business

Non­critical materials and services

Synergy materials and services

Hands off!

Auctions

Encourage competition Marketplace

Low High Internal Risk

A 102

Sales Management

Four Types of Strategic Behaviour

 Defender  Prospector  Analyzer  Reactor

Miles & Snow, 1978

A 102

Sales Management

Defender  Relatively narrow market offer and/or market

domain ­ internal focus is dominant  Sticks to existing strategies as long as possible  Changes are not regarded as success, thus, changes are often a result of external pressure  Focus on cost­efficiency, thus, price is the most important element of the marketing­ strategy  Examples: ALDI, Road Transport  Sticks to proven successes

A 102

Sales Management

Prospector  Relatively wide market offer and/or market

domain ­ external focus is dominant  Constantly pursuing new opportunities and ready to test the value and benefit of these  Internal flexibility and dynamics are key factors in the constant development of the firm  Focus on differentiation in the marketing­ strategy  Examples: Sainsbury, SONY  Constantly exploring

A 102

Sales Management

Analyser  Plays it safe and sticks to proven methods.

Can be described as a combination of a Defender and a Prospector  Is often divided into two parts, a base­part that handles the major part of the revenue, and a test­part, used for “trial and error” activities  Focus is on cost­effective differentiation in the marketing­strategy  Examples: Netto, IBM  Efficient and strong minded

A 102

Sales Management

Reactor  Reacts to external developments without

further analysis of costs or opportunities  Does not stick to a consistent strategy, thus, there is no marketing­strategic focus  Often quite ready and open for change as there is management commitment and interest in development at any point in time  Examples: COOP, Metal industry  Adaptable and flexible