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Behavioral Processes in
Chapter 4 Behavioral Processes in Marketing Channels
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Recap of What We Have Learned So Far
Marketing Channel and Participants New Marketing Channels Channel and Marketing Strategy Channel Design Selecting the Channel Members
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Major Topics for Ch. 4 1. Challenges of Managing Channels
2. Marketing Channels as a Social System - A Conceptual Framework 3. Major Building Blocks of the Framework** Economic Structure Economic Process Political Structure Political Process
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Loose alignment between channel members Central direction is lacking
Topic 1 Special Challenges in Exercising and Achieving Control in Marketing Channels Loose alignment between channel members Central direction is lacking Single ownership is often missing: intensity Formal authority is absent Reward and penalty system is not precise Central planning is rare. ©McGraw-Hill Companies, Inc. 2002
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Marketing Channel as Social System
Topic 2 4 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 = Interorganizational Social System Individuals or collectivities Interacting within marketing channel
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”Political Economy Framework”*
Topic 3 A Conceptual Framework for Understanding Behavioral Processes in Marketing Channels Four Elements of ”Political Economy Framework”* 1. Economic Structure (of a Channel) 2. Economic Process 3. Political Structure 4. Political Process
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1. Economic Structure Ex1) Vertical Marketing System
- What We Have Learned = Channel Structure Ex1) Vertical Marketing System Ex2) Market-Clan-Hierarchy Trichotomy Roles and Expectations
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Roles in Marketing Channels
4 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. Role Stress: Role Ambiguity and Role Conflict
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Roles in Marketing Channels
3 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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2. Economic Process 1) Formalization 2) Centralization
- Three Dimensions of Economic Decision Making 1) Formalization 2) Centralization 3) Participation Three Elements of Economic Exchange 1) Resource Exchange 2) Information Sharing 3) Collaboration
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3. Political Structure 1) Motivational Investment in the Partner
- Power-Dependence between Firms* 1) Motivational Investment in the Partner 2) Replaceability of the Partner - Strength of Interfirm Ties 1) Intensity: Past Resource Commitment 2) Intimacy: Information Disclosure 3) Reciprocity: Mutually Agreed Conditions
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Power in the Marketing Channel
4 Power in the Marketing Channel The ability 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 cf) Control
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Bases of Power for Channel Control*
4 Reward Power Coercive Power Legitimate Power Referent Power Expert Power
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Using Power in the Marketing Channel
4 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 Ex) Wal-Mart vs. Rubbermaid
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Countermeasures for balancing power asymmetry in a relationship**
Develop alternative sources Organize a coalition with other firms Walk out of the relationship! Raise the other party’s dependence on you ©McGraw-Hill Companies, Inc. 2002
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4. Political Process Control Mechanisms Channel Conflict
- Communication & Use of Power Control Mechanisms Channel Conflict
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Interfirm Communication
- Four Dimensions of Communication 1) Content* 2) Frequency 3) Modality 4) Directionality - Influence Strategies
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Behavioral Process in Marketing Channels IV: Use of Power: Influence Strategies
Influence Strategy Promise Threat Legalistic Request Information exchange Recommendation Power Bases Reward Coercion Legitimacy Referent, Reward Expertise, Reward ©McGraw-Hill Companies, Inc. 2002
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Types of Control Mechanisms
- Three Formal Control Mechanisms 1) Input Control 2) Process Control 3) Output Control - Two Informal Control Mechanisms 1) Communication 2) Clan Control = Norm-based Control
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How Conflict Emerges When a channel member perceives
4 When a channel member perceives that another member’s actions impede the attainment of his or her goals Cause Direct, personal, and opponent-centered behavior Behavioral trademarks
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Major Sources of Channel Conflict*
Competing Goals Different Perceptions of Reality Clashes over Domains: Intrachannel competition Multiple channels and Gray market Threats ©McGraw-Hill Companies, Inc. 2002
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Conflict & Channel Efficiency
4 Does conflict decrease efficiency? Can conflict increase efficiency? How does conflict affect channel efficiency? Does conflict have any affect?
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Conflict Resolution Strategies
Information-intensive mechanisms: DAC, Personnel exchange Building Relational norms: flexibility, solidarity 3. Third-party mechanisms: mediation and arbitration 4. Litigation ©McGraw-Hill Companies, Inc. 2002
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CONFLICT RESOLUTION STYLES*
Accommodation Collaboration or Problem solving Compromise Competition Aggression Avoidance Low Assertiveness High Cooperativeness Cooperativeness: concern for the other party’s outcomes Low Cooperativeness Assertiveness: Concern for one’s own outcomes High Assertiveness Based on Thomas (1976)
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