Behavioral processes in marketing channels

Week 3

Instructor: Jungwan Lee

Learning objectives

• Understand that behavioral processes such as conflict, power, role, and communication are inherent behavioral dimensions in marketing channels

• Know the major causes of channel conflict

• Recognize the major issues involved in managing channel conflict

• Delineate the bases of power in marketing channels

Marketing channel characteristics

• An economic system

• A social system: behavioral process– Conflict– Power– Role– Communication proc

ess

Conflict vs. Competition

• Conflict:• ..is direct,

personal, and opponent-centered behavior.

• ..blocking activities

• Coupon war

• Competition:• ..is object-

centered, indirect, and impersonal.

• ..interference• Private brand vs.

National brand

Causes of channel conflict

• Role incongruities• Resource scarcities• Perceptual differences: POP displays• Expectational differences• Decision domain disagreements• Goal incompatibilties• Communication difficulties

Channel conflict vs. channel efficiency

• Channel efficiency ..is the degree to which the total investment in the various inputs necessary to achieve a given distribution objective can be optimized in terms of outputs.

• Negative effect-reduced efficiency

• No effect- efficiency constant

• Positive effect-efficiency increased

• General curve

Managing channel conflict

• Detecting channel conflict– Early warning system– Marketing channel auditing– Distributors’ advisory councils

• Appraising the effect of conflict• Resolving conflict

– Channelwide committee– Joint goal setting– Distribution executive– Arbitration

Bases of power for channel control

• Power..is the capacity of a particular channel member to control or influence the behavior of another channel members.

• Reward power• Coercive power-Wal-Mart• Legitimate power-Franchisors• Referent power• Expert power

Behavioral problems in channel communications

• Goal differences • Language differences • Other behavioral problems

– Perceptual differences– Secretive behavior– Inadequate frequency of

communication