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Chapter 4Chapter 4
Behavioral Processes in the Marketing Channel
Marketing Channel as Social Marketing Channel as Social
SystemSystem
44Objective 1:
• Social System– Generated by any process of interaction on the
sociocultural level– Occurs between 2 or more actors– “Actor” can be an individual or a collective
• Marketing Channels are Social Systems in addition to Economic Systems
Behavioral ProcessesBehavioral Processes44Objective 2:
• While cooperation is the goal…
• Channels are constrained by 4 factors– Conflict– Power– Roles– Communication
How Conflict EmergesHow Conflict Emerges44Objective 3:
• Conflict occurs when one actor perceives another actor’s actions as impeding the attainment of one’s goals.
• Conflict ≠ Competition– Conflict is direct, personal, and opponent-
oriented– Competition is indirect, impersonal, and object-
oriented
Causes of Channel ConflictCauses of Channel Conflict44Objective 4:
• 7 General Causes for Conflict:– Role incongruities– Resource scarcities– Perceptual differences– Expectational differences– Domain disagreements– Goal incompatibilities– Communication difficulties
Can conflict increase efficiency?
Does conflictdecrease
efficiency?
Does conflict have any affect?
How does conflict affect channel
efficiency?
Conflict and Channel EfficiencyConflict and Channel Efficiency44Objective 5:
Effects of Channel ConflictEffects of Channel Conflict44
• 3 Possible Efficiency Outcomes1. Negative Effect
– Diminished efficiency as quarrel continues
2. Positive Effect– Increased efficiency as actors look inward
3. No Effect– Conflict is seen as superficial and
dependency/commitment as more important
Detectingconflict
Appraising theeffect ofconflict
ResolvingconflictManaging
Conflict
Managing Channel ConflictManaging Channel Conflict44Objective 6:
Detecting Channel ConflictDetecting Channel Conflict44
• No precise principles or guidelines, but…
1. Regular surveys of other members’ perceptions of firm’s performance
2. Perform routine channel audits
3. Form an advisory council or member committee
OR
OR
Appraising the Effect of ConflictAppraising the Effect of Conflict44
Subjective process that relies on the manager’s judgment from past experience
Resolving ConflictResolving Conflict44
• Often relies on creativity, but some suggestions include…– Channel-wide committee– Joint goal setting– Establishment of a Distribution Executive (e.g.,
CLO or CSCO)
• Applicability is often a function of size…
Power in the Marketing ChannelPower in the Marketing Channel44Objective 7:
• Power– The capacity of an actor
to control or influence the behavior and actions of another
• Keys to understanding Power…– Dependency
– 5 Bases of Power
– Uses of Power
Source of Power in ChannelsSource of Power in Channels**44
• Power is a function of Dependency
Pab = Dba
Reward Power
Coercive Power
Legitimate Power
Referent Power
Expert Power
The 5 Bases of Power and The 5 Bases of Power and ControlControl
44
*Outside Material*
Graph Provided in Class(i.e., Bucklin’s Theory of Channel Control)
The Use of PowerThe Use of Power**44Objective 8:
• Payoff Function– The amount of benefits (or profits) that accrue as a result of giving up control
Theory of Channel ControlBenefit(eg, $)
Control Given Up
• Tolerance Function– The amount of pain/burden felt as a result of giving up control to another.
Theory of Channel ControlBenefit(eg, $)
Control Given Up
• Zone of Indifference– Corresponds to the indifference of keeping/ending the relationship due to the costs associated with
“breaking-up” an arrangement• Zone is the area between the Tolerance Function and the red line denoting the outside edge of the zone
Theory of Channel ControlBenefit(eg, $)
Control Given Up
• Area “A”– The only area where the Payoff Function is above the Tolerance Function, and it’s increasing– As one gives up more control initially, they experience greater benefit (e.g., why consultants exist)
Theory of Channel Control
A
Benefit(eg, $)
Control Given Up
• Area “B”– The only area where the Payoff Function is above the Tolerance Function, but it’s decreasing
– As one continues to give up control, the benefits begin to fall. Burden simultaneously begins to rise substantially as benefits continue to fall (i.e., steep rise in the Tolerance function).
Theory of Channel Control
A
Benefit(eg, $)
Control Given Up
B
• Area “C”– The area where the Payoff Function is below the Tolerance Function, and still in the zone of indifference– Here the burden felt outstrips the benefit gained, but there’s a cost assoc. w/ breaking up
Theory of Channel Control
A
Benefit(eg, $)
Control Given Up
B C
• What bases of power should be used in “A”? And why should the others not?
Theory of Channel Control
A
Benefit(eg, $)
Control Given Up
• What bases of power should be used in “B”? And why should the remaining not?
Theory of Channel Control
A
Benefit(eg, $)
Control Given Up
B
• Why should the remaining bases of power be used in “C”? What do they do?
Theory of Channel Control
A
Benefit(eg, $)
Control Given Up
B C
Roles in the Marketing ChannelRoles in the Marketing Channel44Objective 9:
• Roles– A prescription defining what the behavior and
actions of a position should be
• Roles change over time• Straying far from one’s role may create conflict.• Roles provide insights into the constraints one
might experience
Roles in Marketing ChannelsRoles in Marketing Channels44
• Questions to help the channel manager…1. What role does the channel manager expect a
particular channel member to play in the channel?
2. What role is this member expected to play by his or her peers?
3. Do the manager’s expectations for this member conflict with those of the member’s peers?
4. What role does this member expect the manager to play?
Communication ProcessesCommunication Processes44Objective 10:
• Common behavioral problems in Channel Communications…– Differences in goals between members– Differences in the kinds of language used– Perceptual differences– Secretive behavior*– Inadequate frequency