An Interaction Approach to the Management of a Portfolio of Customer Opportunities

Portfolio theory has its roots in financial investment and in the desire to balance the often conflicting objectives of high yield and low risk. It has also found applications in product management, corporate strategy and more recently in attempting to develop a range of customer opportunities. It is possible that, in all the applications except the last‐named, the control of the portfolio rests principally with the “portfolio manager”. In the case of customers, recent work in demonstrating the interactive nature of supplier/customer relationships, particularly in industrial markets, may mean that the portfolio concept has to be modified if it is to find application there. The challenge to marketing management is the planned deployment of resources between different customer opportunities and the adoption of a portfolio approach implies that a company is seeking a balance of customers in an attempt to achieve its objectives, both in the short and longer term. It is the question of how this should be achieved to which this article is addressed, firstly, by tracing the development and application of portfolio theory, secondly by applying it to the industrial market using a three‐dimensional approach to identifying customer groups and, finally, by presenting the data obtained from an empirical study of a supplier and a range of customers in the telecommunications industry, demonstrating that the supplier should adopt an interaction approach to the selection of target customer opportunities.