McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

Chapter 9

Business Marketing Channels:

Partnerships

for Customer Service

KEY OBJECTIVES OFMARKETING CHANNELS

• DELIVER THE NEEDED GOOD/SERVICE

• PLACE THE GOOD/SERVICE WHERE IT IS WANTED

• HAVE THE GOOD/SERVICE

WHEN IT IS WANTED

9-3

MARKETING CHANNEL DIFFICULTIES

• CHANNELS AREEXPENSIVE TO ESTABLISH

• CHANNELS ARECOSTLY TO COORDINATE

• CHANNELS ARESLOW TO ADAPT TO ENVIRONMENTAL CHANGES

9-4

WHAT DISTRIBUTORS DO

CONTRIBUTIONTO MANUFACTURERS

MARKET COVERAGE

SALES CONTACTS

INVENTORY AVAILABILITY

ORDER PROCESSING

MARKET INTELLIGENCE

CUSTOMER SUPPORT

CONTRIBUTIONTO CUSTOMERS

PRODUCT AVAILABILITY

PRODUCT ASSORTMENT

FITTING ORDER QUANTITY

CREDIT

SERVICE

TECHNICAL SUPPORT

9-5

A MODEL FOR CHANNEL DESIGN

Identify andforecast

user serviceneeds

Identify andforecast

user serviceneeds

Evaluatecurrent channels

and otheroptions

Evaluatecurrent channels

and otheroptions

Createa vision ofthe idealchannel

Createa vision ofthe idealchannel

Implementthe best option

and managethe system

Implementthe best option

and managethe system

GapAnalysis

GapAnalysis

Exhibit 9-5

9-6

SOURCES OF CONFLICT INMARKETING CHANNELS

• GOAL CONFLICT:SALES GROWTH VS. PROFITS

• MEANS CONFLICT:HOW THINGS GET DONE AND WHO DOES WHAT & WHEN IS IT DONE

• CONFLICTING VIEWPOINTS:OUR VIEWPOINT VS. YOUR VIEWPOINT

9-7

HOW CHANNEL MEMBERS CANRESPOND TO CONFLICT

• EXIT—Can leave the relationship

• VOICE—Can find a means to articulate dissatisfaction

• LOYALTY—Can continue to persevere in face of

conflict

• AGGRESSION—Can openly or covertly take actions to

injure the conflict party

• NEGLECT—Can leave the conflict untreated and fade

away

9-8

OPTIONS FOR RESOLVING CONFLICT

1. PRIVATE REFEREES—Panel of channel members serve as a forum

2. THIRD PARTY SOLUTIONS—Mediated resolution

3. EMPATHIC MECHANISMS

• Use of a specialist

• Join Partner’s Industry Association

• Exchange personnel9-9

SOURCES OF CHANNEL POWER

1. REWARD POWER — Ability to provide days off for specific outcome/behavior

2. COERCIVE POWER — Ability to punish for failure to perform

3. INFORMATION POWER — Ability to obtain information others do not have

4. EXPERT POWER — Ability to gain an advantage by what you know

5. REFERENT POWER — Ability to influence by serving as the model of best practices

6. LEGITIMATE POWER — Explicit authority granted by tradition or contract

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RELATIONSHIP FORMS IN CHANNELS

• TRANSACTIONAL CHANNELS - Members trade at arms length

• ADMINISTERED CHANNELS - Interactions without formal chain of command or a set of rules

• CONTRACTUAL CHANNELS –Tightly coordinated by formal procedures and

pledges of on-going exchange

• CORPORATE CHANNELS –High degree of vertical integration in the sales and distribution functions

9-11