Buyer groups, preferential treatment through key account management, and cartel stability

Antelo, Manel and Bru, Lluís (2015): Buyer groups, preferential treatment through key account management, and cartel stability.

Abstract

This paper examines why some customers may want to create a buyer group (BG), and why key account management (KAM) may be a tool for the seller to deal with BG members separately from customers that remain outside the BG. We find that both actions are related and explain each other. The implementation of a KAM program makes it advantageous for some customers to belong to a BG, eliminating the inherent instability that would otherwise plague the BG. Simultaneously the formation of a BG leads the seller to resort to a KAM approach so as to segment the market and charge higher prices to customers remaining outside the group. The seller’s commitment problem is then highlighted.

• Item Type: MPRA Paper
• Language: English
• Keywords: Buyer groups, key account management, market segmentation, cartel stability, commitment problem
• Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L21 - Business Objectives of the Firm

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