Describe Managing Relationships with Business Customers (Coursework Sample)

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Servitization
In the current times, a most business that is large and operates international especially those that work in the business –to- business markets have to adopt new trends that are occurring so as to grow more regarding sales and profits they make. One of the recent trends that most of the organizations are undertaking is called servitization to market their products. Bhatia (2012: pg. 48-49) defines servitization as a “transformation journey where the firms mostly the manufacturing one are coming up with the capabilities they require to offer services which will supplement their traditional or initial products that they provide.” It is a model that marks the change of the existing portfolio of the products from only goods to great combinations of services and outputs.
The word or the use of servitization has been in existence for more than hundred years, but it has gained popularity and importance for about two decades. The reason for this is because of the basis of globalization where companies in the high-wage countries view it as a mean to protect themselves against competition from the low-wage nations.
The concept of Servitization
In both science and business or company practices, servitization is viewed as a concept which only changes product comprehension in the business model especially that of the manufacturing companies. The concept has been used by companies such Rolls-Royce where it has yielded positive gains, and they have been able to change the existing business model to changing conditions through servitization. When the product suppliers and providers complement their collection with services or turn them into simple service, they do offer them with a motive to gain a competitive advantage. There is a possibility of a win-win situation which can be provided to the customers and manufacturers through the changes towards servitization. After the servitization process works hand, it is usually up to the company to decide to undertake a product portfolio with the so-called product services systems.
The whole process of servitization involves different types of services which have varying degrees of maturity, and they include the following: the base services which are usually used also to the pure product such as spare parts. The other one is the standard services which are intended to ensure the functionality and the performance of the primary product. Lastly, we have the advanced services which came into existence due to the demand of the customers to acquire individual results with a given level of performance but not a particular result or desired performance.
What are the implications for relational selling, and KAM, of the adoption of servitization from the supplier? 

The approval of servitization on the business-to-business have impacts on their sales which the end of it all will have effects on the key account management. According to Servitization: Implications for Sales and Marketing. (2014: pg 30) The main impacts are two which are: increased cost of selling and longer sales cycle. They are usually caused by the increase in the complexity of selling the serviced offering which often requires customization and coming up with solutions during the sales process.
On the cost of selling, what will happen is that the sales people representing the suppliers will be required to adopt relationship management roles where they will be involved in the longer-term and end-to-end with the customers who include offering after sales services and in general they will act as a primary point of contact? It calls higher demand for services to engage in this. The closer relationship with the customers does not mean that the firm will make more profits but it can lead to a bankruptcy situation is not well checked. It could come up due to the increased costs of acquiring and maintaining customer, which sum up to be the cost of selling and relationship management. What we can say is that the compound serviced selling requires more input from the supplier because of the much need for extensive buyer-supplier interaction and communication during the buying process.
The trend in the sale of the serviced products is that the customers usually want to the services, not just the products meaning that they expect the suppliers will offer services that will deal with their specific issues. It demands more work from providers as it will require the involvement of a large team which will work cross functionally and vendor with other departments within the organization. The higher labor demand and the involvement of more people or workers and addition of units in the sale mean that the supplier’s investment in the sale process has to increase in the serviced context which will result in higher sales costs.
In general, Servicing means that sales cost more to make because there will be number of meeting with the customer and there will be also higher supplier investment in the selling process. There will be also large, more expensive and more complex offering and lastly the involvement of more provider people and department in the sales process.
Another impact of servitization to the vendor is that there will be longer sales cycles. It is because the selling of the serviced products leads to more focus on customer solutions and adding the value for use. It is because it is of the essence to define the problem and understand what the customer want which at the end will require the supplier to develop or co-create customized solutions during the sales process. What will follow is the possibility of having longer and more expensive sales cycle in the serviced selling than the average selling where the product or services selling is pre-specified.
In general, servicing means that the sales will take longer to make because solutions may be developed during the sales process and conversations may require involving more people and departments at the customer. Another reason that may lead sales to take longer is that the supplier may develop and test offering as the sales process goes along and contracts may be non-standard and may lead to the usage of novel pricing methods. The two discussed above are the main implications of selling to a supplier when he opts to adopt servitization.
What are the benefits of the adoption of servitization for both suppliers and buyers? 

However, despite the negative implications of servitization to the suppliers there are some benefits that he will get and they are as follows; there will be growth in the organization as the services will yield or generate additional revenue. The increase in profits will result in growth which will enhance development in the body. Another benefit is that the margins in the product business will disappear due to the price competition with the low-cost competitors which will improve the firms to make more profits due to the competitive advantage it has. With the servitization, there will be an increase in the customer’s loyalty because there will be interchangeability of services than products. Customers will be able to get what they want and thus will increase their trust to the firm which will lead to much loyalty as they can get what they want or demand. Another benefit is that they will be the creation of strong customer relationships as there will be more human contact between the salespeople and the customers. It will help in developing contacts which at the end will deepen the relationship with the customers.
According to Beige (2014: pg. 295-313), the customer will also be able to benefit from the servitization from the suppliers. One advantage is that there will be a cost structure which will be through services and fixed costs which will be transformed into variable expenses. The reason for the transformation is that the cost will always vary with the level of output which will be supplied by the supplier. Another advantage which will be brought by product servitization is that the risks involved especially the financial risks are or will always be-be partially or wholly be in the hands of the supplier. Some of the risks could be the failure of a given device coming to the market, and it will be catered by the supplier, not the client. Another benefit to the customer is that the operating costs are always provided by the vendor who works a lot to make sure the consumers get what they want. What the consumer do is to buy the final product which is usually modified according to their specification. Thus they are the end user or the buyers.
The supplier and the customer usually have a common objective rather than a conflicting goes which is for the supplier is to see the client is satisfied and the customer yearn to get satisfied. However the it is seen that the supplier do the selling and at the same time it is his interest to make sure that the product that he takes to the market is faultless. It shows that there is a lot on the supplier side and the consumer all that is on his or her side is just consumption.
A common benefit for both the supplier and consumer is that...