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Handbook of Business-to-Business Marketing

Handbook of Business-to-Business Marketing

Elgar original reference

Edited by Gary L. Lilien and Rajdeep Grewal

This insightful Handbook provides a comprehensive state-of-the-art review of business-to-business marketing. It supplies an overview and pioneers new ideas relating to the activity of building mutually value-generating relationships between organizations – from businesses to government agencies to not-for-profit organizations – and the many individuals within them.

Chapter 25: Key Account Management

Christian Homburg and Torsten Bornemann

Subjects: business and management, marketing


Christian Homburg and Torsten Bornemann Companies have always paid particular attention to their most important customers. The importance of a customer can arise from strategic factors, such as the customer’s potential to enhance the supplier’s image, and from financial factors, such as the customer’s profitability. With increasing power on the customer side, resulting from account concentration and centralization of procurement activities, a systematization of these ‘particular attention’ activities has become necessary (Capon 2001). This need for systematization is reflected in the foundation of the Strategic Account Management Association established in 1964, which, according to its mission statement, is ‘devoted to developing, promoting and advancing the concept of customer supplier collaboration through communities of practice’. At the beginning of the 1970s, research on the management of the most important accounts, called ‘key accounts’ or ‘national accounts’, commenced (Workman et al. 2003). The objective of key account management (KAM) is to reap the economic benefits of long-term relationships with important customers. The advantages for the customer are obvious: preferential treatment, better service and often lower prices. However, these particular attention activities, which can range from special conditions regarding marketing mix elements to the vertical integration of the supply chain, have additional costs. As a result, relationships with the most important customers sometimes become unprofitable for the supplier (Reinartz and Kumar 2002). Napolitano (1997) even argues that the majority of all KAM programs do not yield any additional value for the supplier. Diligent management of the most important customers thus is required to...

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