Marketing Strategy and Competitive Positioning pdf ebook

The risks of dependence
A related point is that SAM exposes the seller to another type of risk, which is derived from 
the strategic account’s own end-use markets. The closer the relationship becomes to strategic 
account/strategic supplier status, the higher this risk becomes for the supplier.
Quite simply, if the key account’s performance declines, or if its business fails, its stra-
tegic suppliers will suffer business losses that are likely to be substantial, and over which 
they have little control.
For instance, consider the dilemma faced by tyre manufacturer Dunlop, and many other 
smaller suppliers, created by the 2005 collapse of MG Rover – it is believed some 15–20 per 
cent of Dunlop’s UK business was lost with Rover’s demise. Further, the value of Dunlop’s 
investment in a long-term collaborative relationship based on new product development 
for Rover was also lost. The impact was equally serious for some 1,500 small car parts 
manufacturers who supplied Rover, both in lost business and bad debts (Quinn, 2005a). 
Focus on a strategic account creates a shared business risk for suppliers, which may be 
uncontrollable, unrecompensed and unattractively high.
The paradox of customer attractiveness and competitive intensity
Advocates of SAM strategy argue that this model should only be applied to the customers 
who are most ‘attractive’ to a particular supplier (Capon, 2001). Setting aside the issue of 
how a company defines its criteria of attractiveness, the paradox is that the customers who 
are most attractive to one supplier will probably at the same time be the most attractive to 
competitors. While there will be situations of ‘fit’ that make a customer attractive to one 
Figure 14.13
Customer 
purchasing strategy
Impact of supplier on customer 
(reduce costs/improve competitiveness)
Customer risk
(lack of easy
substitutes)
Risk
reduction
Develop strategic
supplier
relationship
Pressure on
price and terms
Routinise
High
High
Low
Low
DEALING WITH DOMINANT CUSTOMERS

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CHAPTER 14 STRATEGIC CUSTOMER MANAGEMENT AND THE STRATEGIC SALES ORGANISATION
supplier and unattractive to others, this is likely to be the exception rather than the rule. 
Accordingly, the most ‘attractive’ customers for a SAM strategy are also likely to be those 
where competitive intensity is highest and consequently where the ability of the customer 
to substitute one supplier for another is highest. The likelihood seems that competitive 
intensity will deny strategic supplier status for any seller and place all in the routinised, 
commodity supplier category. The most ‘attractive’ customers become the least ‘attractive’ 
through processes of competitive convergence of suppliers on the same customers as stra-
tegic accounts (Saunders et al., 2000).