marketing channels conflicts power

7/29/2019 marketing channels conflicts power

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Chapters 6 & 7:

Behavioral Processes in

Marketing Channels


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Major Topics

Challenges of Managing ChannelsMarketing Channels as a Social System

- A Conceptual Framework

Major Building Blocks of the Framework*

Economic Structure

Economic Process

Political Structure

Political Process


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3

Challenges in exercising power and

achieving control in marketing channels

Loose alignment between channelmembers

Central direction is lacking

Single ownership is often missing:

intensity

Formal authority is absent Reward and penalty system is not

precise

Central planning is rare.


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Marketing Channel as Social System

4

Social System

Generated by any process of

interaction on sociocultural level

Between two or more actors Actor is individual or collectivity

Individuals or collectivities

Interacting within marketing channel

=Interorganizational

Social

System


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Our Conceptual Framework:Political Economy Framework

Four Elements ofPolitical EconomyFramework*1. Economic Structure2. Economic Process

3. Political Structure

4. Political Process


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1. Economic Structure

- What We Learned = Channel Structure

- Ex1) Vertical Marketing System

- Ex2) Market-Clan-Hierarchy Trichotomy

- Roles and Expectations


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Roles in Marketing Channels

A set of prescriptions defining what the behavior

of a position member should be

Roles change over time.

Straying far from a role may cause conflict.

Roles help describe & compare the expectedbehavior of channel members and provides insight

into the constraints under which they operate.

Role Stress: Role Ambiguity and Role Conflict


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Roles in Marketing Channels

What role does the channel manager expect a particular

channel member to play in the channel? What role is this member expected to play by his or her

peers?

Do the managers expectations for this member conflict

with those of the members peers?

What role does this member expect the manager to

play?

Questions to help the channel manager


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2. Economic Process

- Three Dimensions of Decision Making1) Formalization

2) Centralization

3) Participation

- Three Elements of Economic

Exchange1) Resource Exchange

2) Information Sharing

3) Collaboration


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3. Political Structure

- Power-Dependence between Firms*1) Motivational Investment in the Partner

2) Replaceability of the Partner

- Strength of Ties1) Intensity: Past Resource Commitment2) Intimacy: Information Disclosure

3) Reciprocity: Mutually Agreed Conditions


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4Power in the Marketing Channel

The ability of a particular channel

member to control or influence the

behavior of another channel member

Keys to understanding Power: Power Bases

Use of Power Bases

cf) Control


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Bases of Power for Channel Control*

Reward Power

Coercive Power

Legitimate Power

Referent Power

Expert Power


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Using Power in the Marketing Channel

1. Identify available power basesBases are a function of size of:

producer or manufacturer

organization of channel

particular set of circumstances

2. Select and use appropriate

power bases to better or

worsen channel relationships


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As Level of

Investment in:Coercion

Reward

Legitimacy

Expertise

Reference

Competitive

Levels of:Coercion

RewardLegitimacy

Expertise

Reference

As Offering to B:Coercion Reward

Legitimacy Expertise

Reference

DEPENDENCE

OF B ON A

POWER OF

A OVER B

FIGURE 8.1: THE NATURE AND SOURCES OF

CHANNEL POWER


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Countermeasures for balancing

power asymmetry* Develop alternative sources

Organize a coalition with other firms Walk out of the relationship!

Raise the other partys dependence

on you

McGraw-Hill Companies, Inc. 2002


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4. Political Process

- Communication & Use of Power

- Control = Achieved Influence

- Conflict


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Interfirm Communication

- Four Dimensions of Communication

1) Content*

2) Frequency

3) Modality

4) Directionality- Influence Strategies**

Behavioral Process in Marketing Channels IV:


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Behavioral Process in Marketing Channels IV:

Using Power to Exert Influence

Influence Strategy

Promise

Threat

Legalistic

Request

Information

exchange

Recommendation

Power Bases

Reward

Coercion Legitimacy

Referent, Reward

Expertise, Reward

Expertise, Reward



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Communication Processes

Behavioral Problems in

Channel Communications

1.

Differences in goals

between

manufacturers &

their retailers

2.

Differences in

the kinds oflanguage they use

to convey

information


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Communication Processes (contd)

Behavioral Problems in

Channel Communications

3.

Perceptual

differences

among

members

4.

Secretive

behavior

5.

Inadequate

frequency

of

communication


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FIGURE 7-2: NATURAL SOURCES OF CONFLICT:

INHERENT DIFFRENCES IN VIEWPOINTS OF SUPPLIERS

AND RESELLERS

Supplier Viewpoint Reseller Viewpoint Expression of Clash

FinancialFinancial GoalsGoals Max imize own prof it by Max imize o wn profit by Supplier: You d ontput enoug h effort

- Highe r pr ices to reselle r - Highe r own-leve l ma rgins behind mybr and . Your pr ices ar e too

- Higher sales by reseller (lower prices from our supplier high.

and higher prices to our Reseller: You d ontsupport me enough.

customer) With your wholesale prices, we cant make

- Highe r r eselle r expense s - Lower expense s ( less support) money.

- Higher reseller inventory - Faster inventory turnover

(lower reseller stocks)

- Lower allowances to - Higher allowances

reseller from manufacturers

Focus on: Focus on:

DesiredDesired TargetTarget - Multiple seg ments - Segment corresponding Supplier: We need more coverage and

AccountsAccounts to resellers po sitioning more effort. Ourreseller doesnt do enough

(e.g. discounter) for us.

- Multiple markets - Our markets only Reseller: You d ontrespect our marketing

- Many accounts - Selected accounts strategy. We need to make money too.

(raise volume and share) (those that are prof itable

to serve)

Desired ProductDesired Product - Concentrate on our - Achieve economies of Supplier: You carry too many lines. You

And AccountsAnd Accounts produ ct category and scope over produ ct categor ies dont giveus enoug h attention. Youre

PolicyPolicy our brand disloyal.

- Carry ou r full lin e - Serv e cu stomers b y offering Reseller: Our customers come first. If we

(a variation for every brand assortment satisfy our customers, you will benefit.

conceivable need, p lu s our - Do not carry inferior or By the way, shouldnt you consider pruning

efforts to exp and o ur line slo w-mov in g items yo ur prod uct line?

ou tsid e ou r tr ad itional (ev ery supplier has so me of

strenghts) these)

*Based on Magrath and Hardy (1989 )


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Managing Channel Conflict

Detectingconflict

Appraising the

effect of

conflict

Resolvingconflict

Managing

Conflict


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Conflict Resolution Strategies

1. Information-intensive mechanisms:DAC, Personnel exchange

2. Third-party mechanisms: mediation

and arbitration

3. Building Relational norms: flexibility,

solidarity



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CONFLICT RESOLUTION STYLES

AccommodationCollaboration

or

Problem solving

Compromise

Competition

or

Aggression

Avoidance

Low Assertiveness

High Cooperativeness

Cooperativeness:

concern for the

other partys

outcomes

Low Cooperativeness

Assertiveness:Concern for ones

own outcomes

High Assertiveness

Based on Thomas (1976)


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Key Qualitative Outcomes

Trust

Satisfaction

Commitment



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CONFLICT

Level of tension, frustration,

disagreement in relationship

experienced by focal firm

ECONOMIC SATISFACTION

of focal firm: positive affective

response to financialrewards

derived from relationship or

economic gratification

NON-ECONOMIC

SATISFACTION

of focal firm: positive affective

response to psycho-social aspects of

relationship, or gratification from

non-financial sector

TRUST

Focal Firms belief in

counterparts honesty and

benevolence

_

_

_

_

COMMITMENT

Focal Firms desire to continue

relationship and to sacrifice

to build and maintain it

+

G S (1999)

FIGURE 9.1: HOW HIGH LEVELS OF CONFLICT ERODE

CHANNEL RELATIONSHIPS

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marketing channels conflicts power