The document discusses various topics related to channel relationships, including types of channel relationships, channel control, channel power, and conflict management. It defines discrete and rational exchange relationships. It also describes sources of power and different negotiation strategies like accommodating, avoiding, compromising, and competing. The document provides case studies on conflicts between Johnson & Johnson and stockists and between Cadbury and Future Group over pricing.

1. Channel Relationship

2. Contents Channel Relationship 1 Channel Control 2 Channel Power 3 Channel Conflict 4 5 Conflict Management 6 Negotiation Strategies 7 Case Study 1

3. Channel Relationship What is channel relationship? What is the importance of Channel Relationship?

4. 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.

5. Channel Relationship Transaction Specific Relationship or Discrete relationship Types of Channel Relationships Rational Exchange relationship 1 2

6. 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.

7. 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.

8. Channel Control Need for Channel control- Zone of indifference Optimize resource deployment Improved co-ordination of activities

9. Channel Control Future channel survival and success Optimize deployment of resources Controlling member must possess some authority

10. Channel Control Theory of Channel Control Pay- Off Function Tolerance Function Distributors profit earned Zone of Indifference Supplier Authority

11. 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

12. 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.

13. 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,

14. Channel Power Sources of Power 1. Reward Power 2. Coercive Power 3. Expert Power 5. Legitimate Power 4. Referent Power

15. 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

16. Channel Conflict Different Stages of Channel Conflict Attitudinal sources of Conflict Structural sources of Conflict Cognitive /Affective conflict Manifest conflict Conflict Outcomes Conflict resolution

17. 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

18. Channel Conflict Felt Conflict Related to frustrations, disappointments, negative feelings Agree to disagree Manifest Conflict Expressed behavior

19. 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

20. 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

21. 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.

22. Negotiation Strategies Types Of Negotiation Strategy Accommodating Avoiding Compromising Collaborative or Problem Solving Competing or Aggressive

23. Negotiation Strategies Accommodative Collaborative/Problem Solving Compromise Avoidance Competitive/Aggressive High Concern for own interest Low Low High Concern for the other’s interest

24. Negotiation Strategies Factors affecting the adoption of negotiating strategies Relative power of each party Term orientation Personal characteristics History of interaction between the parties

25. 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

26. 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

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