Behavioral processes in marketing channels

Week 3

Instructor: Jungwan Lee

Learning objectives
Understand that behavioral processes such as conflict, power, role, and communication are inherent behavioral dimensions in marketing channels Know the major causes of channel conflict Recognize the major issues involved in managing channel conflict Delineate the bases of power in marketing channels

Marketing channel characteristics

An economic system A social system: behavioral process
Conflict Power Role Communication process

Conflict vs. Competition

Conflict: ..is direct, personal, and opponentcentered behavior. ..blocking activities Coupon war Competition: ..is objectcentered, indirect, and impersonal. ..interference Private brand vs. National brand

Causes of channel conflict

Role incongruities Resource scarcities Perceptual differences: POP displays Expectational differences Decision domain disagreements Goal incompatibilties Communication difficulties

Channel conflict vs. channel efficiency

Channel efficiency ..is the degree to which the total investment in the various inputs necessary to achieve a given distribution objective can be optimized in terms of outputs.

Negative effectreduced efficiency No effectefficiency constant Positive effectefficiency increased General curve

Managing channel conflict

Detecting channel conflict
Early warning system Marketing channel auditing Distributors advisory councils

Appraising the effect of conflict Resolving conflict

Channelwide committee Joint goal setting Distribution executive Arbitration

Bases of power for channel control

Power..is the capacity of a particular channel member to

control or influence the behavior of another channel members.

Reward power Coercive power-Wal-Mart Legitimate power-Franchisors Referent power Expert power

Behavioral problems in channel communications

Goal differences Language differences Other behavioral problems
Perceptual differences Secretive behavior Inadequate frequency of communication