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