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Channel Relationship

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Channel Relationship Channel Relationship Presentation Transcript

  • Channel Relationship
  • Contents Channel Relationship 1 Channel Control 2 Channel Power 3 Channel Conflict 4 5 Conflict Management 6 Negotiation Strategies 7 Case Study 1
  • Channel Relationship What is channel relationship? What is the importance of Channel Relationship?
  • Channel Relationship
    • The relationships are defined in terms of interrelated concepts such as power, dependence, control, etc..
    • Strong and sustainable relationship is important.
    • Channel leader sets channel wide objective.
    • Defining a channel leader is important.
  • Channel Relationship Transaction Specific Relationship or Discrete relationship Types of Channel Relationships Rational Exchange relationship 1 2
  • Channel Relationship
    • Discrete relationship- parties do not have any commitment to each other.
    • Absolute freedom on the price or other terms.
    • There is no concept of channel leader.
  • Channel Relationship
    • Rational exchange Relationship-parties are attached to each other to achieve a common goal.
    • Willing to sacrifice their individual goals.
    • Level of commitment is very high.
  • Channel Control
    • Need for Channel control-
    Zone of indifference Optimize resource deployment Improved co-ordination of activities
  • Channel Control
    • Future channel survival and success
    • Optimize deployment of resources
    • Controlling member must possess some authority
  • Channel Control
    • Theory of Channel Control
    Pay- Off Function Tolerance Function Distributors profit earned Zone of Indifference Supplier Authority
  • Channel Power
    • Emersons definition of power:
    • The power of A over B is equal to and based upon the dependence of B upon A.
    • The dependence of actor B upon Actor a is -:
    • Directly proportional to B’s motivational investment in goals mediated by A, and
    • Inversely proportional to the availability of those goals to B outside of the A-B relation
  • Channel Power
    • El-Ansary and Sterns definition of power:
    • The power of a channel member is his ability to control his decision variables in the marketing strategy of another member in a given channel at a different level of distribution. For this control to qualify as power, it should be different from the influenced member’s original level of control over his marketing strategy.
  • Channel Power
    • 3 basic axioms in channel management:
    1 Channel members do not incline naturally towards coordinated behavior, 3 Channel power is necessary to alter actions by channel members to induce a more coordinated outcome. 2 The lack of natural inclination in this direction can and does cause sub-optimal channel outcomes,
  • Channel Power Sources of Power 1. Reward Power 2. Coercive Power 3. Expert Power 5. Legitimate Power 4. Referent Power
  • Source: Adapted from Narus & Anderson 1998 Promotional Support Training Market Research Company Policies Distributors firm incentives Responsiveness Systems Technical Assistance Incentive Programme Distributor Sales force Incentives - Financial returns - Quality Products - Comprehensive price - Reliable delivery -National Reputation Channel Core Elements Capability Development Programmes Components of channel offering Manufacturer Sales force Incentives
  • Channel Conflict
    • Different Stages of Channel Conflict
    Attitudinal sources of Conflict Structural sources of Conflict Cognitive /Affective conflict Manifest conflict Conflict Outcomes Conflict resolution
  • Channel Conflict
    • Attitudinal Causes of Conflict
    • Disagreement about Channel Roles
    • Future expectations
    • Present perceptions
    • Lack of communication
    • Structural causes of Conflict
    • Divergence in goals
    • Drives for autonomy
    • Fights over scarce resources
  • Channel Conflict
    • Felt Conflict
    • Related to frustrations, disappointments, negative feelings
    • Agree to disagree
    • Manifest Conflict
    • Expressed behavior
  • Conflict Management
    • Institutional Mechanism
    • Joint membership of association
    • Executive exchanges
    • Cooptation
    • Distributor councils
    • Interpersonal and third party Mechanism
    • Mediation
    • Arbitration
    Two mechanisms for Channel Conflict Management
  • Conflict Management Latent Conflict Felt Conflict Manifest Conflict
    • Institutional mechanism
    • Joint membership of associations
    • Exchange of executives
    • Cooperation
    • Dealer councils
    • Third Party mechanisms
    • Meditation
    • Arbitration
    Negotiation Conflict Management methods at different stages of conflict
  • Negotiation Strategies
    • Negotiation is a process where parties to the dispute set down mutual rules of engagement and work within these rules to achieve competitive advantage over the other party.
  • Negotiation Strategies Types Of Negotiation Strategy Accommodating Avoiding Compromising Collaborative or Problem Solving Competing or Aggressive
  • Negotiation Strategies Accommodative Collaborative/Problem Solving Compromise Avoidance Competitive/Aggressive High Concern for own interest Low Low High Concern for the other’s interest
  • Negotiation Strategies
    • Factors affecting the adoption of negotiating strategies
    • Relative power of each party
    • Term orientation
    • Personal characteristics
    • History of interaction between the parties
  • Case Studies
    • Johnson & Johnson trade boycott.
    • J & J is the baby care and personal care giant.
    • Reduced stockist margin by 3% in 1999.
    • Protests from stockists in South India.
    • TNCPSA – Tamil Nadu Consumer Products Stockist Association
    • Cadbury & Future Group price margin conflict.
    • Conflict over price discrimination.
    • Future Group’s Take:
    • We find their ‘conditional terms’ unacceptable, offering fill rates (stocks on shelf) of only 65%
    • Cadbury’s Take:
    • Sales from emerging markets like India are vital to global sales and therefore it is unlikely that Cadbury will discriminate on this front
  • Thank us for educating you!