CH 4 Behavioural Process

Part 1: Marketing Channel Systems
4
Behavioral
Processesin
MarketingChannels
CHAPTER
2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
The marketing channel as a social system

Behavioral processes
How conflict emerges
Learning
Objectives
Causes of channel conflict

Conflict and channel efficiency
Managing channel conflict
Power in the marketing channel
Basic research findings
Roles in marketing channels
Communication processes
2013
2013CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.
Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
Objectiv
e
Marketing Channel as Social System

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
2013
Objectiv
e
Behavioral Processes
Conflict
Roles
Power
Communication
2013
Objectiv
e
How Conflict Emerges
Cause
When a channel member

perceives
that another members actions
impede
the attainment of his or her goals
Behavioral
trademarks
Direct, personal, and

opponent-centered
behavior
2013
Objectiv
e
Causes of Channel Conflict
1. Role Incongruities
2. Resource Scarcities
3. Perceptual Differences
4. Differences of Expectations
5. Decision Domain Disagreements
6. Goal Incompatibilities
7. Communication Difficulties
2013
Objectiv
e
Conflict & Channel Efficiency

Does conflict
decrease
efficiency?
Can conflict
increase
efficiency?
How
does conflict
affect channel
efficiency?
Does conflict have

any affect?
2013
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
2013
Objectiv
e
Managing Channel Conflict

Detecting
conflict
Appraising the
effect of
conflict
Resolving
conflict
Managing
Conflict
2013
Detecting Channel Conflict

Regularly survey other members
perceptions of firms performance
Perform marketing channel audit
OR
OR
Form distributors advisory councils

or channel members committees
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Appraising the Effect of Conflict
Subjective process that

relies on
managers judgment
2013
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.
2013
Objectiv
e
Power in the Marketing Channel

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
2013
Objectiv
e
Basic Research Findings

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
2013
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).
2013

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

channels stability and viability.
2013
Objectiv
e
Roles in Marketing Channels

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.
2013
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 managers expectations for this

member conflict with those of the members
peers?
What role does this member expect the

manager to play?
2013
Objectiv
e
10
Communication Processes
Behavioral Problems in
Channel Communications
1.
Differences in goals
between
manufacturers &
Their retailers
2.
Differences in the
kinds of
language they use
to convey
information
2013
Communication Processes
Behavioral Problems in Channel
Communications
3.
Perceptual
differences
among
members
4.
Secretive
Behavior
5.
Inadequate
frequency of
communication
2013
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.
Weve 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
2013
Amoco, one of the nations 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 stations 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.
2013
In the summer of 2009, Walmart, the worlds 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 Walmarts 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.
2013

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Part 1: Marketing Channel Systems

The marketing channel as a social system

Causes of channel conflict

Marketing Channel as Social System

How Conflict Emerges

When a channel member

Direct, personal, and

Causes of Channel Conflict

Conflict & Channel Efficiency

Does conflict have

Effects of Channel Conflict

As the level of conflict increases,

Effects of Channel Conflict

Exists in channels characterized

Effects of Channel Conflict

Conflict might be impetus for

Managing Channel Conflict

Detecting Channel Conflict

Perform marketing channel audit

Form distributors advisory councils

Appraising the Effect of Conflict

Subjective process that

Conversely, if conflict is simply

Power in the Marketing Channel

Bases of Power for Channel

Using Power in the Marketing

Basic Research Findings

Basic Research Findings

Non-coercive power bases increase satisfaction in

Franchisees are likely to have higher morale.

Franchisees are more likely to cooperate with

Franchisees are less likely to terminate their

Franchisees are less likely to file individual

Franchisees are less likely to file class action

Franchisees are less likely to seek protective

Basic Research Findings

Power must be exercised to influence member

Effectiveness of power bases to influence

The exercise of power and how it is used

The use of coercive power probably promotes

The use of coercive power can reduce

Roles in Marketing Channels

Roles change over time.

Roles in Marketing Channels

What role is this member expected to play

Do the managers expectations for this

What role does this member expect the

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