Marketing Channels: Behavioral Processes in Marketing Channels Behavioral Processes in Marketing Channels

Marketing Channels
Part 1: Marketing Channel Systems
A Management View
8e
Rosenbloom
4 Part 1: Marketing Channel Systems

CHAPTER
Behavioral
4
CHAPTER
Processes
Behavioral in
Processes
MarketingChannels
in Marketing Channels
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
① The marketing channel as a social system
② Behavioral processes
Learning Objectives
③ How conflict emerges
④ Causes of channel conflict
⑤ Conflict and channel efficiency
⑥ Managing channel conflict
⑦ Power in the marketing channel
⑧ Basic research findings
⑨ Roles in marketing channels
⑩ Communication processes 2
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Objective
Marketing Channel as Social System
1
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
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Objective
Behavioral Processes
2
Conflict
Roles
Power
Communication
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Objective
How Conflict Emerges
3
When a channel member perceives

Cause that another member’s actions impede
the attainment of his or her goals
Direct, personal, and

Behavioral trademarks
opponent-centered behavior
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Objective
Causes of Channel Conflict
4
1. Role Incongruities
2. Resource Scarcities
3. Perceptual Differences
4. Differences of Expectations
5. Decision Domain Disagreements
6. Goal Incompatibilities
7. Communication Difficulties
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Objective
Conflict & Channel Efficiency
5
Does conflict Can conflict
decrease increase
efficiency? efficiency?
How
does conflict
affect channel
efficiency?
Does conflict have

any affect?
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Effects of Channel Conflict
Negative Effect: Reduced Efficiency
As the level of conflict increases,
Channel efficiency declines
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No Effect: Efficiency Remains Constant
Exists in channels characterized by

high level of dependency among
members
Channel efficiency is not affected
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Positive Effect: Efficiency Increased
Conflict might be impetus for either

or both members to reappraise their
policies
Channel efficiency increases
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Objective
Managing Channel Conflict
6
Detecting
conflict
Appraising the
effect of
conflict
Resolving
conflict
Managing
Conflict
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Detecting Channel Conflict
Regularly survey other members’

perceptions of firm’s performance
Perform marketing channel audit

OR
Form distributors’ advisory councils

OR or channel members’ committees
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Appraising the Effect of Conflict
Subjective process that relies on

manager’s judgment
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Resolving Conflict
Creative action on the part of some

party to the conflict is needed if the
conflict is to be successfully resolved.
Conversely, if conflict is simply “left

alone,” it is not likely to be
successfully resolved
and may get worse.
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Objective
Power in the Marketing Channel
7
The capacity 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
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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 bases

Bases 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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Objective
Basic Research Findings
8
Classic Findings
1. Expert and referent power in

conventional channels may be more
effective than direct monetary incentives
or threats in inducing channel members
to accept controls.
2. Power employed by manufacturers

based on economic rewards or coercion
provided a higher degree of control over
channel members than power based on
legitimacy, expertise, or reference
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Non-coercive power bases increase satisfaction in
“weaker” channel members, such as franchises
1. Franchisees are likely to have higher morale.
2. Franchisees are more likely to cooperate with the
franchisor.
3. Franchisees are less likely to terminate their
contracts.
4. Franchisees are less likely to file individual suits
against the franchisor.
5. Franchisees are less likely to file class action suits.
6. Franchisees are less likely to seek protective
legislation such as the “Franchise Full Disclosure
Act” (1970).
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General Inferences from findings
1. Power must be exercised to influence member

behavior.
2. Effectiveness of power bases to influence members
is situation-specific.
3. The exercise of power and how it is used affects the
degree of cooperation, conflict, and satisfaction
among channel members.
4. The use of coercive power probably promotes
conflict and dissatisfaction to a greater degree than
the other power bases.
5. The use of coercive power can reduce channel’s
stability and viability.
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Objective
Roles in Marketing Channels
9
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 expected
behavior of channel members and provides
insight into the constraints under which they
operate.
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Roles in Marketing Channels
Questions to help the channel manager
• 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 manager’s expectations for this member
conflict with those of the member’s peers?
• What role does this member expect the manager
to play?
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Objective
Communication Processes
10
Behavioral Problems in
Channel Communications
2.
1.
Differences in the
Differences in goals
kinds of
between
language they use
manufacturers &
to convey
Their retailers
information
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Communication Processes
Behavioral Problems in Channel

Communications
3. 4. 5.
Perceptual Secretive Inadequate
differences Behavior frequency of
among communication
members
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Discussion Question #2
Bill Schwartz, the owner of Newvalue Supply, a
medium-sized wholesaler of plumbing supplies, was
furious. He had just gotten off the phone with the sales
manager of Jefferson Industries, the manufacturer of a
very profitable line of high-quality faucets that Newvalue
had been selling for several years. “That SOB is now going
to start selling the big home center accounts directly,”
fumed Bill Schwartz to his son Paul. “We’ve worked real
hard to establish this line and then, when it finally gets
going with some real volume, Jefferson wants to cut us
out,” he continued.
Discuss the possible underlying causes of the conflict

that seems to be emerging in this situation.
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Amoco, one of the nation’s largest oil companies, has
been forcing a number of its independent service stations
to convert from full-service stations offering repair service
to convenience stores or “gas only” stations. Thus the
highly profitable repair part of the business will no longer
be available to those station owners forced to convert.
The franchised independent dealers have little choice but
to give in to Amoco because the oil company typically
owns the station’s land and buildings and offers leases of
only three years or less. This arrangement appears to vest
all of the power with the producer and virtually none with
the dealers.
Discuss this situation in light of the bases of power and

the possible
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In the summer of 2009, Walmart, the world’s largest retailer, left
no doubt about its enormous power in the marketing channel.
Walmart announced to all manufacturers whose products it sells that
they must adhere to Walmart’s new “green” environmental initiative.
The manufacturers must estimate and disclose the environmental costs
of producing their products and then allow Walmart to use that
information to develop a “green” rating system that will be disclosed to
consumers on product labels. The cost of the “green” program will be
borne entirely by the 100,000 Walmart suppliers. Although the
program will take a number of years to fully implement, some parts of
it may be in place by as early as mid-2011. Suppliers will not be able to
opt out of this program. So all of them, from the largest to the smallest,
will have to participate. If they do not, Walmart has made it clear that
those suppliers will likely be dropped by the giant retailer.
What power base(s) appear to be in play in this situation? What do

you think Walmart is trying to accomplish here by exercising its great
power in the marketing channel?
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Marketing Channels: Behavioral Processes in Marketing Channels Behavioral Processes in Marketing Channels

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Marketing Channels

Part 1: Marketing Channel Systems

4 Part 1: Marketing Channel Systems

③ How conflict emerges

④ Causes of channel conflict

⑤ Conflict and channel efficiency

⑥ Managing channel conflict

⑦ Power in the marketing channel

⑧ Basic research findings

⑨ Roles in marketing channels

When a channel member perceives

Direct, personal, and

Does conflict have

Negative Effect: Reduced Efficiency

As the level of conflict increases,

Channel efficiency declines

No Effect: Efficiency Remains Constant

Exists in channels characterized by

Channel efficiency is not affected

Positive Effect: Efficiency Increased

Conflict might be impetus for either

Channel efficiency increases

Regularly survey other members’

Perform marketing channel audit

Form distributors’ advisory councils

Subjective process that relies on

Creative action on the part of some

Conversely, if conflict is simply “left

The capacity of a particular channel

Keys to understanding Power:

1. Identify available power bases

2. Select and use appropriate

1. Expert and referent power in

2. Power employed by manufacturers

1. Power must be exercised to influence member

• Roles change over time.

Questions to help the channel manager

• What role does the channel manager expect a

Behavioral Problems in Channel

Discuss the possible underlying causes of the conflict

Discuss this situation in light of the bases of power and

What power base(s) appear to be in play in this situation? What do

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