Channel Power

 'Power' is:
 The potential to influence
 To be independent
 Co-operation is positive power influence
 Negative power may result in conflicts
 'Power' is garnering all
revenues/margins to yourself and push
costs to others in the chain
 Channel Power
 Power as the mirror image of dependence:
 Defining Dependency:
 Greater the utility (value & benefits) B gets from A
 Fewer alternative access B has
 Measuring dependency:
 Benefits offered (better than competition)
 High cost of switching
 Channel Power
 Power as the mirror image of dependence:
 Proxy indicators:
 % of sales or profits that you provide
 Performance relative to other competitors
 Five Sources of Power
 Reward Power
 Incentives
 Coercive Power
 Negative sanction for non-performance
 Expert Power:
 Franchising, new product/system opportunity
 Legitimate Power:(legal and traditional)
 Patents, legal commercial contracts, partner size
 Referent Power: Brand image
 Other Sources of Power
 Mediated power:
 Mediated by influencer (third party)
 Influence reward, coercion and legal
legitimate powers
 Expert, referent and traditional legitimate power
are grouped as unmediated power
 Balance of Power
 Net dependence:
 Highly balanced power achieves coordination,
blocks exploitation
 Imbalanced dependence:
 May result in exploitation by the more
powerful party
 Countermeasure for weaker party:
 Develop alternatives, organize a coalition to

attack, exit from the situation

 Balance of Power
 Tolerating imbalanced dependence:
 The most common scenario
 Power differences masked by fair procedures
and impartial treatment
 Exercising Power:
Six Influence Strategies
 Promise strategy
 Threat strategy
 Legalistic strategy (contracts)
 Request strategy
 Information exchange strategy
 Recommendation strategy
 Exercising Power:
Six Influence Strategies
 Promise, threat and legalistic strategies
may provoke backlash as they are
perceived as high-pressure technique
 Request, information exchange and
recommendation strategies are subtle and
generally welcome
 Channel Conflict
 Occurs when the behaviour of a channel
member is in opposition to the channel
counterpart
 Latent conflict
 Perceived conflict
 Felt conflict
 Manifest conflict
 Measuring Channel Conflict
 Number of issues
 Importance of issues
 Frequency of disagreement
 Intensity of dispute
 Consequences of Conflict
 Communicate frequently and effectively
 Establish outlets for expressing grievances
 Critically review past actions
 Devise equitable split of system resources
 Develop a balanced distribution of power
 Develop ways to deal with future conflicts
and keep it within bounds
 Conflict and Channel
Relationship

Economic Non-economic
satisfaction satisfaction

Trust Commitment
Conflict
Sources of Conflict
 Competing goals
 Financial
 Tagets: Segments, multiple markets and
customer accounts
 Loyalty
 Differing perception of reality:
 Product and service attribues
 Application and market segments it serves
 What is the competition
Sources of Conflict
 Clashes over domains
 Interchannel competition
 Multiple channels
 Unwanted channels (Gray markets)
 Conflict begets more conflicts, leading to
threats
Conflict Resolution
 Institutionalized mechanisms to contain
conflict early
 Information intensive mechanism
 Third-party Mechanism
 Building rational norms:
 Flexibility
 Information exchange
 Solidarity to work for mutual benefit
 Conflict Resolution Styles
Cooperativeness: Concern for other part'ys outcome
High Cooperativeness
Accommodation Collaboration
or problem soving
Compromise
Low Assertiveness High Assertiveness
Competition
or
Avoidance Aggression
Low Cooperativeness
Assertiveness: Concern for one's own outcome
Resolving Conflict via
Incentives
 Pay for performance policy
 Compensating for lower volumes by higher
commission rate and vice versa
 Share promotion expenditure,
particularly POP advertising