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?
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
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.
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.
Need for Channel control-
Zone of indifference Optimize resource deployment Improved co-ordination of activities
Future channel survival and success
Optimize deployment of resources
Controlling member must possess some authority
Theory of Channel Control
Pay- Off Function Tolerance Function Distributors profit earned Zone of Indifference Supplier Authority
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
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.
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
Different Stages of Channel Conflict
Attitudinal sources of Conflict Structural sources of Conflict Cognitive /Affective conflict Manifest conflict Conflict Outcomes Conflict resolution
Attitudinal Causes of Conflict
Disagreement about Channel Roles
Lack of communication
Structural causes of Conflict
Divergence in goals
Drives for autonomy
Fights over scarce resources
Related to frustrations, disappointments, negative feelings