1. Channel Relationship

2. Contents Channel Relationship 1 Channel Control 2 Channel Power 3

Channel Conflict 4 5 Conflict Management 6 Negotiation Strategies 7 Case

Study 1

3. Channel Relationship What is channel relationship? What is the

importance of Channel Relationship?

4. Channel Relationship The relationships are defined in terms of

interrelated concepts such as power, dependence, control, etc.. Strong and

sustainable relationship is important. Channel leader sets channel wide

objective. Defining a channel leader is important.

5. Channel Relationship Transaction Specific Relationship or Discrete

relationship Types of Channel Relationships Rational Exchange

relationship 1 2

6. Channel Relationship Discrete relationship- parties do not have any

commitment to each other. Absolute freedom on the price or other terms.

There is no concept of channel leader.

7. Channel Relationship Rational exchange Relationship-parties are

attached to each other to achieve a common goal. Willing to sacrifice their

individual goals. Level of commitment is very high.

8. Channel Control Need for Channel control- Zone of indifference

Optimize resource deployment Improved co-ordination of activities

9. Channel Control Future channel survival and success Optimize

deployment of resources Controlling member must possess some authority

10. Channel Control Theory of Channel Control Pay- Off Function

Tolerance Function Distributors profit earned Zone of Indifference Supplier

Authority

11. Channel Power Emersons definition of power: The power of A over B is

equal to and based upon the dependence of B upon A. The dependence of

actor B upon Actor a is -: Directly proportional to B’s motivational

investment in goals mediated by A, and Inversely proportional to the

availability of those goals to B outside of the A-B relation

12. Channel Power El-Ansary and Sterns definition of power: The power of

a channel member is his ability to control his decision variables in the

marketing strategy of another member in a given channel at a different

level of distribution. For this control to qualify as power, it should be

different from the influenced member’s original level of control over his

marketing strategy.

13. Channel Power 3 basic axioms in channel management: 1 Channel

members do not incline naturally towards coordinated behavior, 3 Channel

power is necessary to alter actions by channel members to induce a more

coordinated outcome. 2 The lack of natural inclination in this direction can

and does cause sub-optimal channel outcomes,

14. Channel Power Sources of Power 1. Reward Power 2. Coercive Power

3. Expert Power 5. Legitimate Power 4. Referent Power

15. Source: Adapted from Narus & Anderson 1998 Promotional Support

Training Market Research Company Policies Distributors firm incentives

Responsiveness Systems Technical Assistance Incentive Programme

Distributor Sales force Incentives - Financial returns - Quality Products -

Comprehensive price - Reliable delivery -National Reputation Channel

Core Elements Capability Development Programmes Components of

channel offering Manufacturer Sales force Incentives

16. Channel Conflict Different Stages of Channel Conflict Attitudinal

sources of Conflict Structural sources of Conflict Cognitive /Affective

conflict Manifest conflict Conflict Outcomes Conflict resolution

17. Channel Conflict Attitudinal Causes of Conflict Disagreement about

Channel Roles Future expectations Present perceptions Lack of

communication Structural causes of Conflict Divergence in goals Drives for

autonomy Fights over scarce resources

18. Channel Conflict Felt Conflict Related to frustrations, disappointments,

negative feelings Agree to disagree Manifest Conflict Expressed behavior

19. Conflict Management Institutional Mechanism Joint membership of

association Executive exchanges Cooptation Distributor councils

Interpersonal and third party Mechanism Mediation Arbitration Two

mechanisms for Channel Conflict Management

20. Conflict Management Latent Conflict Felt Conflict Manifest Conflict

Institutional mechanism Joint membership of associations Exchange of

executives Cooperation Dealer councils Third Party mechanisms

Meditation Arbitration Negotiation Conflict Management methods at

different stages of conflict

21. Negotiation Strategies Negotiation is a process where parties to the

dispute set down mutual rules of engagement and work within these rules

to achieve competitive advantage over the other party.

22. Negotiation Strategies Types Of Negotiation Strategy Accommodating

Avoiding Compromising Collaborative or Problem Solving Competing or

Aggressive

23. Negotiation Strategies Accommodative Collaborative/Problem Solving

Compromise Avoidance Competitive/Aggressive High Concern for own

interest Low Low High Concern for the other’s interest

24. Negotiation Strategies Factors affecting the adoption of negotiating

strategies Relative power of each party Term orientation Personal

characteristics History of interaction between the parties

25. Case Studies Johnson & Johnson trade boycott. J & J is the baby care

and personal care giant. Reduced stockist margin by 3% in 1999. Protests

from stockists in South India. TNCPSA – Tamil Nadu Consumer Products

Stockist Association

26. Cadbury & Future Group price margin conflict. Conflict over price

discrimination. Future Group’s Take: We find their ‘conditional terms’

unacceptable, offering fill rates (stocks on shelf) of only 65% Cadbury’s

Take: Sales from emerging markets like India are vital to global sales and

therefore it is unlikely that Cadbury will discriminate on this front

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