The document discusses various topics related to channel relationships, including the importance of strong and sustainable relationships between channel members. It defines different types of channel relationships, from discrete relationships with no commitment between parties to rational exchange relationships with a high level of commitment between parties who work towards common goals. The document also covers topics like channel control, power in channel relationships, sources of conflicts and how they can be managed through various mechanisms like mediation or joint associations. It provides examples of case studies on conflicts between companies like Johnson & Johnson and stockists as well as Cadbury and Future Group over pricing issues.

1. 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

2. 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

3. 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

4. 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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