Big Customers and Their Suppliers: A Case Examining Changes in Business Relationships and Their Financial Effects

Abstract

In this case, you will analyze large retailers' increasing clout and its implications for the pricing, inventory, and credit practices of their suppliers. You will use accounting data to explore how changes in these business practices and other phenomena at the firm and industry levels affected retailers' and suppliers' financial performances. In addition, you will examine stock return information to determine how Wall Street responded to the effects of these changes on firms' profitability. As a result, the case will increase your understanding of how to use accounting data to assess the effect of marketing and managerial decisions on financial performance. You will consider these issues for four large retailers (JCPenney, Target, Toys “R” Us, and Wal-Mart) and three manufacturer-suppliers (Garan, Mattel, and National Presto).

Journal Of Marketing Research

“…These concerns appear to have risen just as the move toward close relationships with a few customers has gained steam (Gosman and Kelly 2002). One conjecture that aligns with our findings is that the influence of CMOs may have declined because of the escalating presence of major customers in a firm's customer base.…”

“…Second, this measurement approach is consistent with prior research examining customer power (Anderson, Daly, and Johnson 1999). Third, this approach recognizes a growing trend within marketing, namely, the increasing prevalence of major customers; average sales percentages by firms to their largest customers rose from 10% in 1989 to 26% in 1997 (Gosman and Kelly 2002). Fourth, top managers recognize that major customers drive the activities undertaken by firms.…”

Value co-creation between firms and customers: The role of big data-based cooperative assets

“…The advent of the Internet significantly reduced information asymmetry between firms and customers, increased customers' bargaining power and, consequently, changed the channel power structure [47]. Moreover, the Internet strengthens interactions among customers, unifies unconsolidated individuals into powerful communities, and facilitates customer influence on firms [48]. Negative comments and public sentiments generated by online customers diffuse even faster and have significant impacts on sales, product/service design, production, and consumption [49].…”

Managing Key Business-to-Business Relationships

“…The importance of key accounts was emphasized by a recent survey of 207 companies. 28 firms reported that their key accounts were responsible for more than 50% of sales, and 4 firms said that 80% or more of their sales were to key accounts (Gosman and Kelly 2002). A subsequent survey by the same authors found still greater dependence on key accounts and also found that the service demands of key customers were increasing (Gosman and Kelly 2002).…”