Disciplines of Marketing Management
The report is mainly focussed on the two significant aspects of marketing management called customer portfolio and strategic account management. The critical viewpoints of different researchers and scholars have been evaluated in order to generate theoretical background. Customer portfolio is mainly related to the numerous groups that generates up the customer base of an organisation. In this context, customer portfolio analysis aids companies in recognizing how a specific group of customer is behaving. Strategic Account management is another imperative aspect of marketing management, which can be regarded a business strategy that is concentrated on some of the significant customers or customer segments. In addition, for the purpose of applying the concepts practically they have been applied on the company Coca-Cola and necessary recommendations have been made to the Managing Director of the Company.
In the recent era, globalization has led organisations around the world to move beyond their home territories. However, these international operations require organisations to market their products and services extensively in the international market. Nowadays, companies are required to significantly apply the different marketing concepts and techniques and should make them an integral part of their marketing strategy formulation. This is because effective marketing is essential for organisations in the era of globalisation in order to influence customers at the international level (Gordon 2013).
Organisations are required to manage their marketing resources and activities in a comprehensive in order to defeat competition and overcome the intense marketing competition. Marketing manager needs to comprehend the firm that customers are also significant as assets and investments of organisations and requires a portfolio analysis. This is because of the fact that the portfolio analysis of customers will aid organisations in luring customers and caught their immediately in comparison to the competitors (Ryals 2009).
The discipline of marketing management is pertinent for organisations to survive in the turbulent market conditions and constantly changing customer’s demands. The discussion in the report will critically explore the two significant aspects of marketing management, which are customer portfolio and strategic account management from the viewpoint of different authors. Additional, the practical applications for the concept will be presented by applying them to the selected company (Coca Cola) and making significant recommendations to it.
In the current hyper dynamic marketplace, customers have extensive choices and greater control on companies than ever imaginable. In the viewpoint of Eng (2004), the clear chaos has also offered extraordinary opportunities to inelegant marketers for analytically converting once-faceless prospect into loyal, long-term and superior value customers, called as the best customers. However, they key to this is customer data that will allow companies to convert concealed prospects into bottom line realities by incorporating marketing data from all the significant customer bases (Hooley, Piercy and Nicoulaud 2012).
This will be helpful for companies in determining and interpreting the behaviour of customers as it happens, and simultaneously, utilise the insights to shift customers alongside their natural lifecycle. Companies can use the data to covert prospect customers to single buy customers, to multi buy customers, to loyal customers, and eventually to long term best customers. Thus, the importance of customer portfolio is apparent in converting prospects in to customers and increasing the loyal customer base (Buttle 2012).
Customer portfolio is mainly related to the numerous groups that generates up the customer base of an organisation. In this context, customer portfolio analysis aids companies in recognizing how a specific group of customer is behaving. Zolkiewski (2002) has explicated that customer portfolio analysis allows companies to observe and distinguish customers as never before. It is notable that customer portfolio analysis is not only significant for building pertinent customer data, but also to recognize, build and implement sophisticated marketing programs that will augment customer value.
Customer portfolio analysis allows companies to consider customers as real, living and breathing, similar to assets that need to be managed, understood and promoted for the purpose of increasing the lifetime value, in any investment portfolio. According to Hale and Mason (2009), customer portfolios permit organisations to not only consider customers as individuals, but to group them into portfolios of people or corporations that share analogous behaviour, attitude and values.
It is noteworthy that customers as a group are much likely to counter back in a similar manner to the different marketing efforts. However, it is prominent that these customer portfolios are dynamic on the basis of the individual performance of customers. Moreover, Ryals (2009) has elucidated that some members of the customer portfolio might reveals contrast behaviour that budges them to customer lifecycle comparatively faster or else, make purchases at such a quantity that they get placed in the most prominent portfolio.
Selnes (2011) has critically evaluated that each customer portfolio of selling companies, like investment portfolio, can be treated as per business rules relying on the most logical expectations for performance in that customer portfolio. It is significant that while analysing their customer portfolio companies should not only keep tract of the best prospective customers, but they should also determine general customers so that they can be nourished in a manner that is most possibly to develop the utmost overall value.
Tarasi, et al. (2011) have stated that customer portfolio is significant method as by structuring it marketing managers can enhance shareholder value because it will bring down the susceptibility and instability of cash flows. Authors have critically stated that financial portfolio theory offers an organizing structure for diagnosing the inconsistency in a customer portfolio, evaluating the resemblance of market segments. Furthermore, the financial portfolio theory is also helpful for marketing managers in generating an optimized portfolio by discovering market segment weights. In addition, it will be useful in dividing the reward on inconsistency those individual customer segments of the portfolio provide. It has been criticised by authors that an efficient customer portfolio has constantly lower variability as compared to the existing customer mix and profit maximization portfolio of companies.
In line with this, Selnes (2011) has also illuminated that the core of financial portfolio theory is related to falling risk by diversifying investments. In this manner, simple diversification within different customers will reduce the entire customer portfolio risk. Thus, it is apparent that the financial theory is also applicable to this marketing field. Hooley, Piercy and Nicoulaud (2012) have highlighted that the role of sales and account management in assessing the customer environment for the basis of strategic decisions is a significant sales issue for organisations.
Companies often find it difficult that where they invest resources during the development of customer relationships or where not because of the constant increase in the cost of handling customers. Customer portfolio acts as a tool for coming out from this issue. Companies can initially categorise customers simply in portfolios on the basis of number of accounts. However, it can be expanded later by examining the profitability as well as the stability of the business in the various account categories. Ultimately, it is worthy to state that customer portfolio planning is a mechanism for recognizing the most appropriate association in order to offer a particular account and choices for assigning the sparse sales force, account management and other important resources (Hooley, Piercy and Nicoulaud 2012).
Strategic Account Management
Strategic Account management is another imperative aspect of marketing management, which is related to the customer portfolio. Strategic Account management can be regarded a business strategy, which is concentrated on some of the significant customers or customer segments, who are considered as assets of the organisation and have pertinent long term value. Strategic account management (SAM) is important for companies because it helps in then in finding ways and save the scarce resources and money of the organisation (Wilson, Speare and Reese 2002).
Noor and Ahmmed (2013) have evaluated that Strategic Account management is helpful in maintaining the strategic relationship with customers and in planning the deployment of corporation wide resources in manner that companies will be able to offer inclusive products, services and solutions to the strategic account. Strategic account management should be of keen interest for companies nowadays because it aids then in surviving in the recent economic conditions, attaining competitive advantage and develop base for future growth. It is important to state here customer portfolio helps in segmenting customers on the basis of their values and strategic account management is helpful in preserving relationships with those customers, who are of more strategic value for the financial health of the company. Furthermore, it is considerable that the approach to strategic account management necessitates extensive financial investment accompanied with long term concentration and multinational abilities. In addition, the approach to SAM also needs significant reformation of the sales organisation.
Zupancic (2008) has critically assessed that for the effective strategic account management companies should start with a great purpose, provides a superior centre and work with focussed sales efferent. Companies should always take into account that their relationship with their valuable customers is the key to their competitive advantage in the cut-throat competition. With the help of customer portfolio analysis companies should treat its more valuable customers differently from their medium or less valuable customers.
According to the analysis of the report Strategic Key Account Management (2013) it is considerable executing strategic account management is necessary for companies while doing marketing management because it generates a win-win relationship with customers that create superior value. Moreover, implementation of strategic account management also brings down the day to day intricacies of business and in turn elevates the profitability of companies because it wipes out costs out of the entire system. In addition, author has also stated they key to successful strategic account management is the accurate strategy, right accounts and people as well as loyalty.
It has been illuminated by Wengler, Ehret and Saab (2006) that the approach to strategic account management is different from key account management. Particularly, strategic account management is useful in ensuring the long term advancement and preservation of strategic customers. Therefore, strategic account management is a tool for managing, developing and nurturing relationships with different customers of the company. It is notable that if companies integrate SAM in their core marketing strategy then it will be exceedingly helpful in customer partnering. Yet, it is considerable that selection and categorisation of customers in different portfolios is critical for effective strategic account management. Additionally, strategic account management is significant because it allows a deep insight in customers and is flexible enough due to which it can be shared easily cross boundaries by international business organisations.
The ability of risks management of SAM provides several vital opportunities for companies. For instance, retaining customers facilitates firms in influencing lifetime value of customers, provides enhanced market comprehension, and increased values because of improved allocation of resources. However, it is considerable that the choice of strategic accounts for effective SAM is critical and customers must be aligned appropriately with the strategic vision of the company. With respect to this, companies must identify the attractiveness of customers in terms of likelihood for the organisation. It is noteworthy that the process of deselecting customers is equally important (Workman, Homburg and Jensen 2003).
Researchers have analysed that developing relationship with trust and integrity is required for strategic account management. Strategic account management is a highly significant concept that takes account management to a new level and erect long term strategic relationships with customers with high strategic value. Moreover, it is also helpful for companies in generating novel opportunities and chances for better business prospects. However, the most vital facet is that it assists in managing resources in the most effective manner and aliggining them with the corporate strategy.
Thus, with the use of customer portfolio strategic account management is a substantial concept that transfers the buyer seller relationship into collaboration or a partnership based association with the best customers of organisation. The prime rationale for companies to rely on strategic account management is that the needs of large customer have lead suppliers to revert with focussed organisational resources to concentrate on strategic accounts and to integrate value adding functions in the offerings. SAM is a widespread concept, which is essential for companies to respond the constantly enhancing pressure from customers and markets (Hooley, Piercy and Nicoulaud (2012).
The company that has selected in order to practically the aforementioned concepts is Coca Cola. Coca Cola is world renewed US based Beverage Company that has gained recognition not only in the home country, but also in international market, almost in every market where it is active. The offerings of the company and its wide product portfolio, such as thumps up, maaza and kinley water are much known amongst the customers. However, the Managing Director must consider that the company also faces intense competition from other beverages companies and its most pertinent competitor is Pepsi Co., which is another renowned beverage company in the international market.
As stated that customer portfolio comprises of the humours groups that build up the customer base of a company. Similarly, the customer portfolio of Coca Cola consists of restaurants, amusement parks, grocery stores and sports arenas. This portfolio has been generated on the basis of behaviour of different segments of customers as well as their value. Thus, in order to develop enduring relationships with customers it is required that Coca Cola should focus on these customer accounts. The customer portfolio of Coca Cola Company aids it in identifying that how a specific group of customers behave. With the help of this customer portfolio, the company can differentiate amongst its customers as well as determine their level. It is substantial to note that the value of groups like sports arena and restaurants is higher than the value of grocery stores and amusement parks as they generate more revenues and profitability for the company. Thus, it makes it apparent that which customers groups or accounts are more significant assets of the company in which it should invest its efforts and scarce resources to wipe out competition from the market or overcome its competitors (Eng 2004).
In this regard, for effective strategic account management the company should divert it resources and efforts towards the higher value accounts. It is considerable that the aim of Coca Cola’s SAM will be profitability and competitive advantage. Furthermore, the groups have been selected in alignment with the mission of the company, which is to attain long term growth and deliver superior value to their customers. Strategic account management of these accounts will make it easier for the company develop a partnership based relationship with customers that will be beneficial for both parties and Coca Cola will be able to achieve its financial and non financial objectives (Noor and Ahmmed 2013).
Hence, in light of the customer portfolio of the company and analysing their value, the key recommendations for the strategic account management of the company are:
- It is proposes that the needs of today’s customers are highly dynamic, and therefore, for effective management, Coca Cola should time to time identify the needs of customers. The company should determine that the best way to lure customers by determining their needs and generating strategies for those needs.
- The company should implement an even handoff from sales to account management in a refined manner. It should ensure that every new customer should belong to someone in the company so that it can be tracked in a methodological manner and make the company proactively engaged in the marketing management (Hooley, G., Piercy and Nicoulaud 2012).
- A soli strategic plan is the key to effective strategic account management. Hence, it is recommended that the planners of the company should pen down all the great ideas, which can further be polished by the account management team. However, this will be possible only after figuring out customer needs and offerings to address those needs (Gordon 2013).
- Since the purpose of SAM of Coca Cola is to gain competitive advantage, the company should execute its strategic plan that actually shows up the customer that they are valuable for the company. It is essential demonstrating that the company value the business and success is desirable as a whole and not only for the product only.
- Although, the above-mentioned recommendations will definably aid Coca Cola in effective SAM, but then also setting up an intonation for meeting and reporting is critical. Therefore, it should be decided that how frequently the company will communicate with its customer portfolio as this is essential to develop a partnership base relationship with customers (Buttle 2012).
- Coca Cola should keep up the relationship with its customers, even though it is has maintained a significant relationship with customers till now, but it should remain crackling in the future, as well.
To conclude, it is considered that customer portfolio and strategic account management are two of the significant aspects of marketing management. Every company should integrate these two elements in its strategy in the current era, as they help in combating the pressures from markets and customers, such as escalating competition, enhanced customer concentration and strong strategies of supplier base declination by large buyers. The discussion in the paper elucidated the critical analysis of the viewpoints of different authors and researchers to generate a theoretical framework. In addition, the practical application of the two concepts have be done on the Coca Cola company, and subsequently, recommendations have been made to them Managing Director of the company.
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