การจัดการช่องทางการจัด จำหน่าย Distribution Channel Management Channel Power Getting It, Using It, Keeping It Chapter 6

Chapter 6 Outlines Learning Objectives - Understand why power is critical to marketing channel - Understand the relation between power and dependency among channel members - Distinguish five sources of power and explain when each is effective and why - Know how to use power as a tool to manage conflict and increase cooperation - Distinguish six strategies for converting power into influence

Channel Power Points of Discussion - What is the nature of power? Is it good or bad? - Why is it so important in marketing channel?

Channel Power The Power Definition: - “Power is the ability of one channel member (A) to get another channel member (B) to do something it otherwise would not have done. In other words, power is a potential for influence.” - Power is a necessary tool, neither good nor bad

Channel Power The Power Definition: - Power is needed to make channels realize their potential to add value - Power can be used to do great damage - Power also use to drive member to operate in a coordinated way to achieve great benefits

Channel Power The Importance of Power - Players in channels depend on each other - Power is the way to manage interdependence - Interesting is how members acquire power and use it wisely

Channel Power There are two sides of misunderstanding when exercise power - False positive: A to overestimate its ability to exert influence on B to make change happen - False negative: B acting under A’s influence without knowing it

Channel Power Power as the mirror image of dependence - “Dependence is the utility (value, benefits, satisfaction) provided, multiply by scarcity of alternatives” - “B” depends more heavily on “A” if 1. The greater the utility “B” gets from A and 2. The few alternatives sources of that utility “B” can find

Channel Power Ways to measure dependence - To access both utility and scarcity separately and then combine them - To estimate what percentage our sales and profits under each manufactures’ brand - To ask how well you perform your role in the channel compared to your competitors

Sources of Channel Power Five different sources of power - Reward power (grant of reward, benefit, incentive) - Coercive power (negative sanction, punishment) - Expert power (special knowledge, expertise) - Legitimate power (feel obligated to carry out the duties) - Referent power (prestige or standard of reference)

Sources of Channel Power When putting the sources of power together - Power not merely a descriptive concept - Power becomes a choice for the firm - It is a strategic decision in medium to long term

Nature and Sources of Channel Power

Balance of Power Point of Discussion - Why channel power is not balanced at all times? - What would be the advantages of high balance of power? - What are the disadvantages dealing with imbalanced dependence situation?

Balance of Power The Total Picture of Net Dependence - Dependence is never entirely one way since “A” and “B” are interdependent - High mutual dependence is synonymous with high mutual power - High and balance of power is an effective way to achieve co-ordination, maximize overall channel profit, foster norms of fairness and solidarity - Symmetric dependence promotes bilateral functioning, increase each side willingness to adapt to each other

Balance of Power - When one channel members is much more dependent than the other - The balance of power favors the less dependent member - The more dependent member is open to exploitation - The more dependent party suffers economic and non-economic benefits The Situation of Imbalanced Dependence

Balance of Power Counter Measure from the Weaker Party Weaker party (B) can take three of types of countermeasure 1. Developing alternatives to “A” – diversify portfolio 2. Organizing a coalition to attack “A” – government agency 3. Exiting the business, removing itself from danger by no longer seeking the benefits “A” provides

Balance of Power Points of Discussion - Will the more dependent party accepts the imbalanced relationship and take no reaction? Why? - Then, are stronger parties always exploitative and weaker parties always suffer? - Should imbalanced relationships be avoided at any cost?

Exercising Power 1. Promise strategy: If you do what we wish, we will reward you. 2. Threat strategy: If you do not do what we wish, we will punish you. 3. Legalistic strategy: You should do what we wish because in some way you agreed to do it. Translating power into influence involve communication. Six common strategies are

Exercising Power 4. Request strategy: Please do what we wish. 5. Information exchange strategy: Without mentioning what we wish, but pursue the channel members the way to run business. 6. Recommendation strategy: Similar to information exchange strategy but the influencer states the conclusion. Translating power into influence involve communication. Six common strategies are

Exercising Power

Nature of Power - Power permeates all aspects of marketing channels - Interdependence makes power a critical feature - Channel members invest over time to build power - Power must be assessed accurately and used wisely - Not using power is to sacrifice opportunities and to expose vulnerabilities