Behavioral processes in marketing channels Week 3 Instructor: Jungwan Lee

Learning objectives Understand that behavioral processes such as conflict, power, role, and communication are inherent behavioral dimensions in marketing channels Know the major causes of channel conflict Recognize the major issues involved in managing channel conflict Delineate the bases of power in marketing channels

Marketing channel characteristics An economic system A social system: behavioral process Conflict Power Role Communication process

Conflict vs. Competition ..is direct, personal, and opponent-centered behavior. ..blocking activities Coupon war Competition: ..is object-centered, indirect, and impersonal. ..interference Private brand vs. National brand

Causes of channel conflict Role incongruities Resource scarcities Perceptual differences: POP displays Expectational differences Decision domain disagreements Goal incompatibilties Communication difficulties

Channel conflict vs. channel efficiency Channel efficiency ..is the degree to which the total investment in the various inputs necessary to achieve a given distribution objective can be optimized in terms of outputs. Negative effect-reduced efficiency No effect- efficiency constant Positive effect-efficiency increased General curve

Managing channel conflict Detecting channel conflict Early warning system Marketing channel auditing Distributors’ advisory councils Appraising the effect of conflict Resolving conflict Channelwide committee Joint goal setting Distribution executive Arbitration

Bases of power for channel control Power..is the capacity of a particular channel member to control or influence the behavior of another channel members. Reward power Coercive power-Wal-Mart Legitimate power-Franchisors Referent power Expert power

Behavioral problems in channel communications Goal differences Language differences Other behavioral problems Perceptual differences Secretive behavior Inadequate frequency of communication