Business Relationship Management and Marketing (eBook)

Michael Kleinaltenkamp is full professor of business and services marketing at Freie Universität Berlin. He is joint program director of the Executive Master of Business Marketing and the China-Europe Executive Master of Business Marketing programs. His research interests include business-to-business marketing and services marketing. Wulff Plinke is the founding dean of the European School of Management and Technology (ESMT) in Berlin. Before his spell at ESMT he held positions as full professor at Humboldt Universität zu Berlin and Freie Universität Berlin. His research interest lies in the area business-to-business marketing. Ingmar Geiger is an assistant professor of business and services marketing at Freie Universität Berlin. He is joint program director of the Executive Master of Business Marketing and the China-Europe Executive Master of Business Marketing programs. His research interests include business-to-business marketing and negotiation.

Preface 6
Contents 8
Part I: Basic Principles of Business Relationship Management 10
1: Phenomenon and Challenge to Management 11
1.1 Business Relationships as the Foundation of Business Relationship Management 11
1.1.1 The Business Relationship as a Competitive Marketing Task 11
1.1.1.1 Changes in the Field of Technology 13
1.1.1.2 Changing in the Field of Marketing 14
1.1.2 Definition of Business Relationship 14
1.1.2.1 Case 1a 19
1.1.2.2 Case 1b 19
1.1.2.3 Case 2a 21
1.1.2.4 Case 2b 23
1.2 Internationalization of Business Relationships 24
1.3 Responsibility in Business Relationships 28
Exercises 31
Nike Case Study 32
References 32
2: Theoretical Perspectives of Business Relationships: Explanation and Configuration 35
2.1 Theoretical Approaches to Explaining Business Relationships: Classification 35
2.2 Behavioral Approaches 37
2.3 Social Psychological Scheme of Explanation: The Approach of Thibaut and Kelley 38
2.4 Economic Indicators: Switching Costs and Relationship Value 41
2.4.1 Bonding Effects of Switching Costs 41
2.4.1.1 Investments Related to Business Relationships 41
2.4.1.2 Direct Switching Costs 46
2.4.2 Loyalty Effects of the Value of a Business Relationship 47
2.4.3 Commitment in Business Relationships: Interaction of Business Relationship Value and Switching Costs 48
2.5 Other Economic Attributes of Business Relationships 54
2.5.1 Structural Attributes of a Business Relationship 54
2.5.2 Process Attributes of a Business Relationship 55
Exercises 56
Case Study 56
Additional Exercises 58
References 58
Part II: Analysis, Goals and Strategies of Business Relationship Management 63
3: Repeat Purchasing in Business Relationships 64
3.1 Repeat Purchasing and the Market Transaction 65
3.1.1 Customer Benefit as a Determinant of Repeat Purchasing 66
3.1.1.1 Repeat Purchasing Caused by the Elements of Exchange 66
The Core Service as the Reason for Repeat Purchasing Behavior 67
Ancillary Services as the Reason for Repeat Purchasing 68
3.1.1.2 Repeat Buying Due to Bonding 71
Economic Effects as the Reason for Customer Bonding 71
Specificity as Switching Barrier 71
Satisfaction as Switching Barrier 73
Trust and Commitment as a Source of Customer Bonding 78
3.1.2 Supplier Benefit as a Determinant of Repeat Purchasing 81
3.1.2.1 Contract Theory 82
3.1.2.2 Business Relationships as Relational Contracts 83
3.2 The Business Relationship over Time 86
3.2.1 The Life Cycle of a Business Relationship According to Dwyer et al. 86
3.2.2 Dynamic Consideration of the Life Cycle of a Business Relationship 87
3.3 Summary 88
Appendix 89
Exercises 89
References 89
4: Customer Value and Customer Selection 92
4.1 Fundamentals of Customer Evaluation 92
4.2 Criteria for Determining Customer Value 94
4.2.1 Economic-quantitative Gages of Customer Value 94
4.2.1.1 Revenue Analysis 94
4.2.1.2 Calculation of Customer Contribution Margin 97
4.2.1.3 Customer Lifetime Value 100
4.2.2 Non-monetary Gages of Customer Value 104
4.2.3 Multi-dimensional Approaches to Determining Customer Value 106
4.2.3.1 Scoring Models 106
4.2.3.2 Customer Portfolios 109
4.2.4 Practical Application of Different Customer Evaluation Methods 111
4.3 Customer Value Controlling 112
Appendix 113
Exercises 113
References 114
5: Strategies of Business Relationship Management 116
5.1 Strategic Tasks of Business Relationship Management 116
5.1.1 Strategy in Business Relationship Management as a Task Between Competitive and Marketing Strategy 116
5.1.2 Competitive Advantage in the Context of Business Relationship Management 120
5.1.3 Strategic Analysis in the Context of Business Relationship Management 123
5.1.3.1 Phases of Business Relationship Management 124
5.1.3.2 Reciprocal Effects of Business Relationships with Their Environment 128
5.2 Entry into the Business Relationship: Out-Supplier Marketing 129
5.2.1 Strategic Windows 129
5.2.2 Entering into Business Relationships Not Planned (De Facto) by the Customer 132
5.2.3 Entering into Business Relationships Planned by Both Parties 134
5.3 Defending the Business Relationship: In-Supplier Marketing 136
5.3.1 Increasing Relationship Value 137
5.3.1.1 Improvement of the Core Offering 137
5.3.1.2 Improvement of the Procurement and Interaction Process 139
5.3.1.3 Enhancement Operations of Customer 140
5.3.2 Increasing Customer´s Switching Costs 141
5.4 Termination of a Business Relationship by the Supplier: Exit Management 142
5.4.1 Termination of a Business Relationship: Reasons and Consequences 142
5.4.1.1 Customer Value as a Reason for Termination 142
5.4.1.2 Customer Behavior as a Reason for Termination 143
5.4.1.3 Changed Fit Between Customer Needs and Supplier Service 144
5.4.1.4 Consequences of Supplier Terminating a Business Relationship 145
5.4.2 Communication Strategies to Terminate a Business Relationship 145
5.5 Business Relationships and the Corporate Network 147
5.5.1 The Business Relationship as Part of the Corporate Network: Handling Parallel Business Relationships 148
5.5.1.1 Prioritization of Customers When Resource Bottlenecks Occur 148
5.5.1.2 Protection of Relationship-Specific Values 150
5.5.1.3 Either/or Business Relationships 151
5.5.2 The Corporate Network as Part of the Business Relationship: Value Creation Through Collaboration 152
5.5.2.1 Partnerships for Innovations 152
5.5.2.2 Partnerships for Market Access 155
Exercises 155
References 156
6: Business Relationship Management and Marketing in a European-Chinese Context 160
6.1 Introduction 160
6.2 The Role of Culture in Business Relationships 161
6.2.1 What Is Culture? 161
6.2.2 Concepts of Culture and Cultural Distance 162
6.2.2.1 Hofstede´s Culture´s Consequences 162
6.2.2.2 GLOBE Study 163
6.2.2.3 Use of These Models 164
6.2.3 Cross-Cultural Communication 166
6.2.3.1 High Versus Low Context 166
6.2.3.2 Space 167
6.2.3.3 Time 167
6.2.4 Cultural Differences Between Europe and China 168
6.3 Cross-Cultural Differences in Business Relationship Management and Marketing 173
6.3.1 Key Factors in Western Business Relationships 174
6.3.1.1 Trust 174
6.3.1.2 Bonds (Western Networks) 175
6.3.1.3 Fairness 176
6.3.1.4 Power and Interdependence 177
6.3.2 Key Factors in Chinese Business Relationships 178
6.3.2.1 Confucian Values and the Notion of Guanxi 178
6.3.2.2 Elements of Guanxi-Relationships 181
mianzi (Face) 181
renqing (Norm of Reciprocity and Exchange of Favors) 182
ganqing (Emotional Affection) 182
xinren or xinyong (Personal Trust or Social Credit) 182
6.3.2.3 Harmony 183
6.3.2.4 The Stratagems of Sun Zi 184
6.3.3 Differences Between Guanxi and Western Relationship Marketing 185
6.4 Approaches to the Management of Sino-European Business Relationships 185
6.4.1 Gap Analysis in a Cross-Cultural Negotiation 186
6.4.2 Mutual Adaptation by Third-Culture Building 187
6.4.3 Comprehensive Guanxi Model by Wong and Leung 189
6.5 Managerial Implications for Doing Business in China 192
6.5.1 Contemporary Business Culture in China 192
6.5.2 Relational Marketing ``Package´´ in China 193
6.5.3 Business Strategies in China 193
6.6 Summary 193
Appendix 194
Exercises 194
References 195
Part III: Implementation of Business Relationship Management 200
7: Instruments of Business Relationship Management 201
7.1 Introduction 201
7.1.1 Customer Loyalty as the Objective of Instrument Application 202
7.1.2 Secondary Effects of Instrument Application to the Supplier Company 202
7.2 Instruments of Product Policies 203
7.2.1 From Product Supplier to Solution Supplier 204
7.2.2 Service/Product Customization and Customer Integration 206
7.2.3 Cross-selling 210
7.2.4 Product-related Services 211
7.2.4.1 After-Sales Service 212
7.2.4.2 Customer Training 214
7.2.4.3 Consulting on Improvement of Process and Quality 215
7.2.4.4 Lead User Concepts and Innovation Support 215
7.3 Instruments of Distribution Policies 220
7.3.1 Efficient Consumer Response 221
7.3.2 Just-in-Time Delivery 222
7.4 Instruments of Communication Policies 228
7.4.1 Complaint Management 228
7.4.2 Strengthening the Personal Relationships Between Supplier and Customer Personnel 231
7.4.3 Cooperations with User Groups 234
7.4.3.1 Cooperation with User-initiated User Groups 236
7.4.3.2 Cooperation with Supplier-Initiated User Groups 238
7.5 Instruments of Pricing Policies 238
7.5.1 How Pricing Policies Promote Customer Loyalty 239
7.5.2 Choice of Price Denominator 241
7.5.3 Price Modules and Terms and Conditions Systems 243
Exercises 244
References 245
8: Internal Implementation of Business Relationship Management 250
8.1 Organization of a Business Relationship Management 250
8.1.1 Fundamentals of a Customer-based Organizational Structure 250
8.1.2 Fundamental Alternatives of a Customer-based Organizational Structure 253
8.1.2.1 Foregoing Introduction of Institutionalized Relationship Management 253
8.1.2.2 Relationship Management as an ``Part-time Program´´ 254
8.1.2.3 Relationship Management as a Full-time Job 255
8.1.3 Assigning Key Account Management to a Position in the Organizational Structure 256
8.1.3.1 Fundamental Options for Assigning Key Account Management to a Position in the Organizational Structure 256
8.1.3.2 Key Account Management as a Staff Function 257
8.1.3.3 Key Account Management as a Line Function 259
Management Board Division ``Key Accounts´´ 260
Key Account Division 261
Division Key Account Management 261
Sales Area ``Key Accounts´´ 263
Key Account Management in the Sales Area 263
Key Account Management in the Matrix Organization 264
8.1.4 Composition of the Positions and Departments Responsible for Key Account Management 265
8.2 Key Account Manager Requirements 268
8.2.1 Social Competence 268
8.2.2 Personality Traits 269
8.2.3 Analytical-conceptual Capabilities 270
8.2.4 Expertise on Customer and Business 270
8.3 Key Account Management Teams 271
8.3.1 Reasons for Establishing Key Account Management Teams 272
8.3.2 Success Determinants of KAM Teams 274
8.3.2.1 Success Factors Specific to the Organization 274
Organizational Culture 275
Organizational Climate 276
Organizational Rules and Procedures 277
8.3.2.2 Success Factors Specific to a Team 279
Team Composition 279
Team Processes 280
8.3.3 Effects of Successful KAM Teams 282
8.3.3.1 Effects at the Team Level 282
8.3.3.2 Effects at the Corporate Level 283
8.4 Control and Supervision of Business Relationship Management 283
8.4.1 Controlling Business Relationship Management 285
8.4.1.1 Economic Control Parameters 286
8.4.1.2 Control Parameters Based on Behavior and Perception 288
8.4.2 Monitoring Business Relationship Management 289
Exercises 290
References 290
9: Customer Relationship Management 294
9.1 CRM: Terms and Fundamentals 294
9.1.1 Object of CRM 294
9.1.1.1 CRM: New IT Conditions for Old Ideas?! 294
9.1.1.2 Examples of Successful CRM Applications 296
9.1.2 Subtasks of CRM 297
9.1.2.1 Operative Customer Relationship Management 297
9.1.2.2 Analytical Customer Relationship Management 299
9.1.2.3 Strategic Customer Relationship Management (sCRM) 300
9.1.2.4 Communicative Customer Relationship Management 301
9.1.3 Goals of CRM 301
9.2 CRM at a Crossroads?! 304
9.2.1 CRM Euphoria and Disenchantment in Practice 304
9.2.2 (Unrealistic) Expectations Versus Underestimated Prerequisites for CRM 304
9.2.2.1 Underestimated Prerequisites for Integrated CRM Systems 304
9.2.2.2 Problems Associated with CRM Performance Analysis 307
9.3 CRM Development Scenarios 310
9.3.1 CRM Development Scenario 1: Focus on Realistic Subtasks 310
9.3.1.1 Examples of Selective CRM Applications 310
Customer-related Sales Information Systems 311
Data Mining Analyses of Customer-related Data 313
Management of Interests Combined with Customer Segmentation by Behavior Data 315
Proactive Recovery Management 315
Collaborative Filters as ``Automated Learning Relationships´´ 316
Coordination of Customer Touch Points and Interaction Channels 318
9.3.1.2 Potential Reasons for Successful Focusing 320
9.3.2 CRM Development Scenario 2: E-Business as Breakthrough for Integrative CRM?! 321
9.3.2.1 Comprehensive Management of ``Cross-linked Business Relationships´´ Using the German Pharmaceutical Market as an Examp... 321
Structure of the German Pharmaceutical Market 321
CRM Strategies of German Pharmaceutical Wholesalers 325
aCRM as Strategy Requirement 325
sCRM as a Requirement for oCRM and cCRM of Multi-channel Strategies 326
9.3.2.2 Digitalization, Cross-linkage and System Integration Promote More Comprehensive CRM 328
Conclusion 329
Appendix 330
Exercises 330
References 331
Index 335