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									                             Managing Corporate Customers
                            Course Module in Business Marketing
Course Modules help faculty select and sequence HBS Publishing titles for use in segments of a course.
Each module represents subject matter experts’ thinking about the best materials to assign and how to
organize them to facilitate learning. In making selections, we’ve received guidance from faculty at Harvard
Business School and other major academic institutions.

Each module recommends four to six items. Whenever possible at least one alternative item for each
main recommendation is included. Cases form the core of many modules, but we also include readings
from Harvard Business Review, HBS background notes, and other course materials.

I. Overview of suggested contents (HBS cases unless otherwise noted)

Title                              Author            Product     Publication    Pages    Teaching
                                                     Number      date                    Note
1. Overview
Note on Customer Management        Narayandas        502073      2002           56p      --
Alternative: Business Marketing:   Anderson &        98601       1998           11p      --
Understand What Customers          Narus
Value (HBR)
 2. Researching and Targeting
     Corporate Customers
ThoughtWorks (A)                   Tybout            KEL113      2004           12p      --
(Kellogg School)                                     B case:
                                                     KEL114
Alternative 1: Centra Software     Deighton          502009      2001           17p      503047
                                                                 Rev.2002
Alternative 2: Eastern Bank Ltd.   Deutscher         904A30      2005           19p      --
(A) (Ivey School)
   3. Managing Customers,
  Distributors, and Partners
CMR Enterprises                    Narayandas        501012      2001           21p      502070

Alternative: WESCO                 Narayandas        598021      1997           28p      598093
Distribution, Inc.                                               Rev.1998
  4. Evaluating and Ensuring
          Profitability
Managing Customers for Profit      Narayandas        8249        1997           3-4      8230FG
(HBS interactive simulation)                                                    hrs.




                                Harvard Business School Publishing
                      800-545-7685 (Outside the U.S. and Canada 617-783-7600)
                                    custserv@hbsp.harvard.edu
                                 www.hbsp.harvard.edu/educators
                      Managing Corporate Customers: An HBSP Course Module

Alternative: Customer               Ofek               503019       2002           9p       --
Profitability and Lifetime Value
(HBS background note)
      5. Capstone reading
Building Loyalty in Business        Narayandas         R0509H       2005           9p       --
Markets (HBR)

II. Rationale for selection and sequencing the items in this module
The readings selected for the first segment both introduce key issues in the management of corporate
customers and thus help to set the stage for subsequent case reading. The main selection is a
remarkably dense and wide-ranging HBS background note on managing business customers. Over its 56
pages it covers “Customer Selection,” “Managing a Portfolio of Customer Relationships,” “Monitoring
Customer Health,” and Linking Customer Management Effort to Reward.” Teachers who want to assign a
briefer introductory reading should consider the HBR article “Understanding What Customers Value.”

The theme of understanding customers better is made more concrete in segment 2, which features three
alternative cases. In the main selection, ThoughtWorks, the leaders of a small IT firm begin with concerns
about questionable positioning and the inability to build a brand, then come to recognize that they know
little about the customers they already have. Students can evaluate the results of an aggressive
marketing research project that yields some surprising results. The alternative cases, on Centra Software
and Eastern Bank, focus on targeting customer segments to maximize value.

The cases in Segment 3 continue the theme of delineating and targeting customer segments, but they
concentrate mainly on managing relationships. The CMR Enterprises case portrays a small cabinets
business that must carefully manage not just customers but a valuable distribution partner. The
alternative case on electrical equipment distributor WESCO explores the role of service in long-term
customer relationships.

If you know who your customers are, deliver the products and services they want, and manage your
relationships well, you still need to ensure that your business is profitable. Giving students practice in the
pursuit of steady profits is the goal of the HBS Interactive Simulation, in CD-ROM format, that we
recommend in segment 4. This multimedia program places students at the helm of a mock paper-
packaging company, TubePack, which the students must steer to profitability quarter after quarter – while
being assaulted by the ongoing challenges of running a complex business in an increasingly competitive
environment. Professors who prefer to assign a reading in this general topic area might consider the
alternative item, an HBS background note on customer profitability.

Building loyalty among customers is perhaps the ultimate goal of any successful firm. That theme, clearly
sounded in segment 4, is continued in a recommended capstone reading in segment 5, “Building Loyalty
in Business Markets.” Author Das Narayandas emphasizes the distinctive needs of business customers,
which often cannot be addressed by solutions rooted in the consumer-marketing worldview.

III. Detailed description of recommended content




                                 Harvard Business School Publishing
                       800-545-7685 (Outside the U.S. and Canada 617-783-7600)
                                     custserv@hbsp.harvard.edu
                                  www.hbsp.harvard.edu/educators
                      Managing Corporate Customers: An HBSP Course Module


1. Overview
Note on Customer Management Das Narayandas (HBS background note)
Lays out a framework for the management of customers using examples of forms in a variety of
industries. Subjects: Business marketing; Customer relations.

Alternative: Business Marketing: Understand What Customers Value James C. Anderson & James A.
Narus (Harvard Business Review)
In this article, authors James Anderson, professor at the Kellogg Graduate School, Northwestern
University, and James Narus, associate professor at the Babcock Graduate School, Wake Forest
University, illustrate several ways in which suppliers can figure out exactly what their offerings are worth
by creating and using what they call customer value models. Field value assessments--the most
commonly used method for building customer value models--call for suppliers to gather data about their
customers firsthand whenever possible. Through these assessments, a supplier can build a value model
for an individual customer or for a market segment, drawing on data gathered from several customers in
that segment. Suppliers can use customer value models to create competitive advantage in several ways.
First, they can capitalize on the inevitable variation in customers' requirements by providing flexible
market offerings. Second, they can use value models to demonstrate how a new product or service they
are offering will provide greater value. Third, they can use their knowledge of how their market offerings
specifically deliver value to craft persuasive value propositions. And fourth, they can use value models to
provide evidence to customers of their accomplishments. Doing business based on value delivered gives
companies the means to get an equitable return for their efforts. Once suppliers truly understand value,
they will be able to realize the benefits of measuring and monitoring it for their customers. Subjects: EVA;
Industrial markets; Market analysis; Market research; Marketing strategy; Pricing strategy; Product
positioning.

2. Researching and Targeting Corporate Customers
ThoughtWorks (A) Alice M. Tybout (Kellogg School case)
ThoughtWorks, a medium-size IT systems integrator, was growing quickly but identified "lack of clear
positioning around which to build a brand" as the biggest impediment to continued growth. The company
had identified features that it believed differentiated it from its competitors and was considering alternative
segments to target. Asks readers to choose a target and develop a positioning statement for that target
as well as identify the assumptions underlying the recommended positioning strategy and suggest how
market research could help establish the validity of those assumptions. Subjects: Brands; Business
marketing; Growth; Market research; Marketing; Strategic positioning. Setting: United States, IT, $75
million, 2003.

Alternative 1: Centra Software John Deighton
Centra is a pioneer in software eLearning. It is debating how to modify its go-to-market strategy, adding
telesales to improve sales force productivity. At the same time, its market is evolving, and management
thinks it may be about to "cross the chasm" in Geoffrey Moore's terminology. Should it "fish where the fish
are biting" or should it concentrate on the enterprise customer and exclude small and mid-size
corporations? If a shakeout is coming, how can Centra ensure that it either survives or is acquired by one
of the survivors?




                                 Harvard Business School Publishing
                       800-545-7685 (Outside the U.S. and Canada 617-783-7600)
                                     custserv@hbsp.harvard.edu
                                  www.hbsp.harvard.edu/educators
                     Managing Corporate Customers: An HBSP Course Module

Learning Objective: Examines the design of go-to-market strategy, how to manage conflict between field
sales and telephone sales, how to manage rapid growth markets, and the competition between best-of-
breed collaborators and single-source vendors. Subjects: Business marketing; Distribution; International
marketing; Market definition; Marketing implementation; Sales management; Software. Setting: United
States, software, $23 million, 2001.

Alternative 2: Eastern Bank Ltd (A) Terry H. Deutscher (Ivey School case)
Eastern Bank Ltd. has taken over the Bangladesh operations of the Bank of Credit and Commerce
International after its collapse. The new CEO of Eastern Bank must decide which corporate banking
clients to target, how to develop and position the Eastern Bank brand, which products to emphasize and
in what price structure, and whether to centralize or decentralize the bank's operations.
Learning Objective: To discuss relationship management within a complex service analysis of market
segments and present and future profitability so that marketing strategy decisions are customer driven.
Subjects: Banking; Brand management; Consumer marketing; Decision making; Market segmentation;
Marketing strategy; Operations management. Setting: Bangladesh, banking, 2000.

3. Managing Customers, Distributors, and Partners
CMR Enterprises Das Narayandas
Sam Marcus recently purchased a small cabinet-making company, and is looking for dramatic growth.
The company competes in commercial and residential construction markets; shortly after the acquisition,
the company gains a large new residential customer. The case traces the changes made at the company
and how the relationship with this customer begins to deteriorate. At the end of the case, Marcus must
decide whether to fix or end the relationship.
Learning Objective: An integrative case of customer management that; allows for discussion on selecting
customer segments and customers, relationship management strategies, and measuring performance.
Quantitative details on cost-to-serve are included. Emphasizes that marketing strategies are only as
effective as frontline implementation. Subjects: Contractors; Customer relations; Entrepreneurial
management; Industrial markets. Setting: United States, construction, $10 million, 1999.

Alternative: WESCO Distribution Das Narayandas
In 1996, WESCO, a national distributor of electrical equipment and supplies, charted out a growth of 6 to
8 percent in sales, and 12 to 16 percent in profitability over the next five years. The centerpiece of this
growth strategy is the National Accounts (NA) program that WESCO has developed to serve its major
industrial customers in response to recent changes that they made to their business processes. However,
as of June 1997, the NA program has not delivered the expected results. WESCO now needs to isolate
the root cause of the NA program shortfall and implement changes that will put this program back on
track. It needs to decide whether to continue to be proactive in initiating, building, and maintaining
national accounts, or to be passive and offer the NA program only after customers have shown a
legitimate interest. Subjects: Customer relations; Distribution channels; Marketing strategy; Suppliers.
Setting: United States, electric power, $3 billion, 1997.

4. Evaluating and Ensuring Profitability
Managing Customers for Profit Das Narayandas HBS Interactive Simulation (CD-ROM)




                                 Harvard Business School Publishing
                       800-545-7685 (Outside the U.S. and Canada 617-783-7600)
                                     custserv@hbsp.harvard.edu
                                  www.hbsp.harvard.edu/educators
                     Managing Corporate Customers: An HBSP Course Module

A CD-ROM-based interactive simulation (for Windows or Macintosh) that allows users to run TubePack, a
supplier of industrial packaging products. Individual users decide how much the company should spend
on sales force support, delivery service, customization, and other budget items. In addition, they
determine pricing policy. Through five different market scenarios, users contend with fluctuating demand
and increasing competition. In the process, they learn how to orchestrate the strategic levers that are key
to increasing both profits and market share. Coaching segments, triggered by the individual user's
decision-making, enrich and facilitate the learning experience. Subjects: Decision making; Industrial
markets; Market research; Marketing strategy; Operations management; Service management;
Simulation; Software; Strategy formulation; Strategy implementation.

Alternative: Customer Profitability and Lifetime Value Elie Ofek (HBS background note)
Introduces the central concepts involved in determining customer lifetime value, with detailed analysis
and examples from the realm of direct marketing. Implications for marketing strategy and customer
relationship management are briefly discussed.
Learning Objective: Provides students with a basic understanding of the analytic tools necessary for
calculating customer acquisition costs and customer lifetime value. Subjects: Customer relations;
Customer retention; Direct marketing; Market analysis; Marketing planning; Marketing strategy.

5. Capstone reading
Building Loyalty in Business Markets Das Narayandas (Harvard Business Review)
Companies often apply consumer marketing solutions in business markets without realizing that such
strategies only hamper the acquisition and retention of profitable customers. Unlike consumers, business
customers inevitably need customized products, quantities, or prices. A company in a business market
must, therefore, manage customers individually, showing how its products or services can help solve
each buyer's problems. And it must learn to reap the enormous benefits of loyalty by developing individual
relationships with customers. To achieve these ends, the firm's marketers must become aware of the
different types of benefits the company offers and convey their value to the appropriate executives in the
customer company. It's especially important to inform customers about what the author calls nontangible,
nonfinancial benefits--above-and-beyond efforts, such as delivering supplies on holidays to keep
customers' production lines going. The author has developed a simple set of devices--the benefit stack
and the decision-maker stack--to help marketers communicate their firm's myriad benefits. The vendor
lists the benefits it offers, then lists the customer's decision makers, specifying their concerns,
motivations, and power bases. By linking the two stacks, the vendor can systematically communicate how
it will meet each decision maker's needs. The author has also developed a tool called a loyalty ladder,
which helps a company determine how much time and money to spend on relationships with various
customers. As customers become increasingly loyal, they display behaviors in a predictable sequence,
from growing the relationship and providing word-of-mouth endorsements to investing in the vendor
company. The author has found that customers follow the same sequence of loyalty behaviors in all
business markets. Subjects: Business markets; Competition; Consumer behavior; Consumer marketing;
Customer relations; Customer relationship management; Customer retention; Customization; Loyalty;
Marketing strategy.




                                 Harvard Business School Publishing
                       800-545-7685 (Outside the U.S. and Canada 617-783-7600)
                                     custserv@hbsp.harvard.edu
                                  www.hbsp.harvard.edu/educators

								
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