Key Account Management in Business-to-Business Markets - An Assessment of Its Economic Value

6 Determining the economic value of key account management in business relationships (S. 166-167)

In the previous chapters WilHamsons approach on transaction cost economics has been explained in depth and the various challenges have been described which arise within the internal organization due to the implementation of a key account management program. Drawing upon these insights, a comprehensive approach for analyzing and evaluating the correct marketing organization, i.e. in our case the correct key account management organization, needs to be developed. With respect to our previous explication on possible key account management organizations, the relevant alternatives for the decision-making model will be identified.

We will then derive - building upon the essential characteristics of transaction cost economics (asset specificity, uncertainty and frequency) - the relevant variables and their determinants for the decision process of the internal marketing organization. These variables will be integrated in a decision model, whose structure will be rolled out and described in depth. In the final section the model will be applied in a comparative analysis of organizational arrangements - on the basis of transaction costs.

6.1 Design alternatives of the key account management programs

For a long time, the primary focus in marketing research was on the different types of selling activities (McMurray 1961, Moncrief 1986, Marshall et al. 1999) as well as their evolutionary development (Powers et al. 1987, Powers et al. 1988, Wotruba 1991). With the increasing complexity of sales activities as well as interest on customer-orientation and market-orientation (e.g. Kohli/Jaworski (1990), Jaworski/Kohli (1993)) it becomes clear that the marketing &, sales department requires its own organizational structures which may differ from traditional approaches.

As a very specialized form of the marketing organization key account management is of prime interest: the set-up of a key account management program is related to considerable investments so that its organizational design needs to be efficient as well as effective. In the context of key account management it seems extremely difficult to choose the correct organizational form: for Pardo (1999, p. 286) the problem of key account management is primarily an organizational one.

Kempeners/van der Hart (1999, p. 310/312) even think of the organizational structures of account management systems as one of the most interesting and controversial parts of account management systems - because of the variety of organizational alternatives. Concerning the implementation decision on the key account management program, the existing literature offers a vast amount of the alternatives and alternative designs of the key account management organization (e.g. Shapiro/Moriarty (1984a), Colletti/Tubridy (1987), Diller/Gaitanides (1988), Gaitanides/Diller (1989), Rieker (1995), Kleinaltenkamp/Rieker (1997), Lambe/Spekman (1997), McDonald et al. (1997), Kempeners/van der Hart (1999)). As illustrated in Figure 22, we will distinguish between ten decision alternatives which include: no key account management program, key account management as a staff organization at the functional, divisional as well as corporate level, key account management as a line organization at the regional, functional, divisional as well as corporate level, and key account management as a matrix organization at the functional as well as divisional level.