Marketing Strategy and Competitive Positioning pdf ebook

Customer sophistication and complexity
The growing sophistication and aggressiveness of purchasers in business-to-business mar-
kets has also escalated the strategic importance of effectively managing buyer–seller rela-
tionships (Jones et al., 2005). For a company such as IBM, for example, how can traditional 
marketing cope with consultative selling, when the product is being designed as it is being 
sold? The challenge to the seller is to implement effective marketing strategy in a dramati-
cally changed world of sophisticated buyers (Shapiro et al., 1998). This change is underlined 
by the shift in the traditional role played by purchasing functions in customer organisations.
Increasingly, purchasing has become a strategic function linked to the customer’s stra-
tegic plans, with a major level of responsibility for profitability, cost control and enhanced 
shareholder value (Janda and Seshandri, 2001). Professional purchasing managers use com-
plex sourcing metrics to select the ‘right’ suppliers, and to dictate terms on how they will 
be supplied, so more than ever supplier profitability is determined at the point of sale, 
where the sales organisation interacts with the customer (De Boer et al., 2001; Talluri and 
Narasimhan, 2004). Correspondingly, the sales task has become far more complex and the 
stakes much higher.
Sellers in business-to-business markets increasingly face more complex decisions about 
their marketing and sales investments in customer relationships. Historically, seller profits 
were generally in line with account size, because prices tended to be cost-based, sales costs 
were relatively low and the size of accounts did not vary dramatically. However, consolida-
tion by merger and acquisition and attrition through recession has changed this situation 
in many markets. In industrial markets, sales situations are increasingly characterised by 
fewer, larger and more complex purchasing organisations, and in consumer markets there 

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PRIORITIES FOR IDENTIFYING STRATEGIC SALES CAPABILITIES
has been a massive shift in power to retailers (Shapiro et al., 1998). Unsurprisingly, very 
large customers are powerful and demand customised sales and account management, and 
are challenging in terms of profitability for the supplier. Other customers also demand 
special treatment, but it is likely to be different. Small and medium-sized accounts require 
yet more different approaches, mainly because of the cost of serving them. The strategic 
challenge is to match sales efforts and approaches to different parts of a complex portfolio 
of customers, to balance revenue and profitability with business risk. These choices impact 
substantially on corporate performance.
Market trends of this kind have elevated the importance of the effective deployment of 
sales capabilities to a strategic issue. In particular, we will explore the themes of the cus-
tomer portfolio and the impact of dominant customers as the chapter develops.